One of the more annoying aspects of intellectual life is when a good idea gets so popular it becomes over-invoked to the point that you want to ban it from public use. Such is the current fate of innovation. Most of what you read about it these days is either discouragingly familiar or just plain twaddle. Unfortunately for this blog, however, the concept is central to the whole issue of how U.S. enterprises will compete effectively in the 21st century. So how can we rescue it from the Sargasso Sea in which it currently languishes?
First of all, understand that innovation in and of itself is of no economic value. The latter comes instead from innovation that creates differentiation that causes customer preference during buying decisions. We call this concept escaping the gravitational field of your competitive set. If you are unable to do so, then after you first win the attention of the customer, you must then match or beat the price of any other competitor still in the field of play. This leads to ruinous price competitions. Only by leaving all competitors behind can vendors gain the kind of pricing power they need to profitable enterprises.
Innovation, in other words, should be thought of as a vector. Companies need to innovate in a particular direction and continue to proceed in that direction until their competitors either cannot or will not match their efforts. Alas, most companies do not. Instead, like disoriented hikers, they innovate a little bit in this direction, a little bit in the in the other, going a mile north, then a mile east, then south and west, ending up back where they started, having exhausted their resources while achieving nothing.
What these companies require is an innovation compass (click on Ideas in Action)a model of innovation types that sets forth the various paths they can take. In this model, arrayed against the backdrop of the technology adoption lifecycle and the category maturity life cycle, are fourteen different innovation types which may be grouped into four clusters, as follows.
In the west lies the product leadership zone, where the following innovation types live: disruptive, application, product, and platform. Head north and you will find the customer intimacy zone, where you will choose from another set of innovation types: line extension, enhancement, marketing, and experiential. Go south and enter the operational excellence zone and innovation types such as value engineering, integration, process, and value migration. And finally, go east into the category renewal zone, where companies reinvent themselves through organic and structural innovation.
Each innovation type is a compass point, a vector along which companies can proceed, and which if they pursue with enough consistency and commitment will lead them to the competitive separation they require. Each has unique attributes as you will see when you click on them, and should any two seem confusingly related, you can consult Darwin's Dictionary, which is also on the site. Finally, what companies have gone which directions is the subject of the new book, not that we need to wait for it to start our dialog. What I would like that dialog to consist of in part is discussions of companies in the news relative to their success or failure in achieving competitive separation and how a model of innovation types might help us—and them—better see what they are up to.