SOURCES OF INNOVATIONS WITH EXAMPLES

1. Unexpected occurrences – Find the unexpected users of your product or service. Who
is using the product in an unexpected way? Where are sales higher than you thought they
would be? Then understand why. Observing these users can often provide useful insights
into ways to develop, or perhaps adapt, products and services into new markets and new
audiences.

2. Incongruities – take a look at the differences that exists between what products and
services are, compared to what they should be, or promise to be. Take a look at your
company’s complaints letters to find areas for improvement and innovation.  Look at
your competitors product reviews and ratings. Follow chat room discussions. Understand
the problems that exist and find ways to solve them.

3. Process Needs – take a look at ‘how things are done’ and find better ways to do them.
On-line check-in at airports is a classic example. Biometric passports and eye scans that
reduce waiting times at immigration another. It’s also worth looking at your own internal
processes to find improvements. Some of these small ‘innovations’ can deliver big
results.

4. Industry and Market Changes – where is customer demand moving away from the
norm. Study early adopters in your industry. Look out for the companies who are trying
to ‘disrupt’. Uber is transforming the way we book taxis – ‘fast followers’ in this industry
have the opportunity to benefit from Uber’s hard work in convincing us there is another
way. In the face of disruption, the tendency for incumbents is to ‘defend’ rather than
‘attack’. History suggests this is rarely the right strategy for survival

5. Demographic Changes – changing demographics is the most reliable of all forecasting

techniques. All of the people who will be young adults in 2025 are already out there.
What are they doing differently? You only have to look at how children consume TV to
know that the future of broadcasting will change. Growing rates of obesity will open up
all sorts of ‘opportunities’.
 6. Changes in Perception – it is no longer acceptable to drink and drive. Recycling is a
‘social responsibility’. Sunbathing without sunscreen is ‘irresponsible’. Look for the
changes in perception and build in new or additional features into your product or
service, or create new products and services, to match these perceptions. If you are in the
confectionery industry, is sugar going to be the next social taboo and if so, how are you
going to deal with it?

7. New Knowledge – advances in technology bring about opportunities for all sorts of new
products and services. Drucker describes this area as the arena of the ‘superstars of
innovation’. But it’s also one of the most challenging. Frequently these innovations have
the longest lead times since there is often a protracted period of time between the
emergence of the new ‘knowledge’ and it’s transfer into a usable technology. That’s not
to say we shouldn’t go there – but we shouldn’t ignore the other six sources of
innovation.

Innovation almost never fails due to a lack of creativity. It’s almost always because of a lack of
discipline.” So say the team at Dolbin who are the creators of the Ten Types of Innovation
framework. They argue that the solution is to look beyond new product innovation and to
include, where possible, nine other types of innovation that when combined are proven to deliver
sustainable competitive advantage.

The Ten Types of Innovation framework is the result of an exhaustive study of more than 2,000
successful innovations, including Google, Lego, McDonalds, Amazon.com, Microsoft, Cirque du
Soleil, the Ford Model-T, and thousands more, to uncover the 10 innovative concepts that
innovators successfully deploy.

Where the Ten Types of Innovation excels is that its research highlights those patterns of
innovation that have been successful within a wide range of industries. Not only that, the
research shows that companies can identify innovation opportunities and evaluate how they are
performing against competitors.
The following table lists examples of each type of innovation and the tactics used to successfully
execute in each one.
INNOVATION TYPE EXAMPLES
PRODUCT Corning (tough thin glass)
PRODUCT SYSTEM Microsoft (Office), Mozilla
(Firefox)
SERVICE 7-Eleven (Japan: bill
payment), Zappos (customer-
centric culture)
CHANNEL M-Pesa (mobile payment),
Amazon (Kindle), Nike
(stores), Nespresso (stores,
clubs)
BRAND Virgin (‘fun’ companies),
Intel (Inside), Trader Joe’s
(destination labels)
CUSTOMER Apple (annual conference),
ENGAGEMENT FourSquare (‘mayorships’),
Blizzard (World of
WarCraft)
PROCESS Zara (apparel design),
Hindustan Lever (sachets),
Zipcar (rentals), Toyota
(Lean), Ikea (flat-packs)
STRUCTURE FabIndia (local community
ownership), Southwest
Airlines (only one type of
aircraft)
FEAUTURES
New functionality, ease of use,
customization, performance, safety,
style, environmental sensitivity
Complements, extensions, plug-ins,
modular system, bundling, software
platforms
Loyalty programs, self-service,
concierge, experience management,
try before you buy, guarantees
Go-direct, cross-selling,
diversification, flagship stores,
multi-level marketing, non-
traditional channels
Brand extension/leverage, co-
branding, certification, private
label, transparency, values
alignment
Community, personalisation, status,
experience simplification, curation,
autonomy
Crowdsourcing, lean production,
IP, localisation, on-demand
production, predictive analytics,
process automation,
standardisation, user involvement
Competency centre, corporate
university, decentralised
management, incentives, IT
integration, knowledge
management, outsourcing,
organisational design
 PROFIT MODEL Gillette (stick + blades), Hilti
(power tools on loan),
Schibsted Media (freemium
classifieds)
Ad-supported, auction, bundling,
low cost, financing, freemium,
licensing, membership,
microbilling, forced scarcity, risk-
sharing, switchboard

NETWORK GlaxoSmithKline (co- Alliances, coopetition, M&A, open

innovation), Natura (research innovation, supply chain
network with universities) integration, franchising

Innovation affects everyone. It can begin in an adjacent vertical and quickly spill over into your
sector. Online accounting software had a massive impact on those businesses that printed
journals and ledgers. In a short space of time their market evaporated as businesses and
accountants moved all their business software accounting requirements online. It was a similar
story for the whip maker who looked at the Model-T and never saw the automobile as a threat.

Creativity and the disciple to drive innovation is neatly captured in the Ten Types of Innovation
framework. No matter what business you are in or the size of your business, plan to put time
aside and use the framework to brain storm on ideas for your business. You won’t be
disappointed!