Innovation

Developing an innovative product/service or business model requires to develop a strategy and juxtapose it with the client’s capabilities. Innovation can come from internal innovation “task forces”, where consultants can assist with initiating or improving internal processes that foster open circulation of innovation ideas. It can also be brought in from external players (outside-in innovation), thought M&A or strategic alliance for example. In this case consultants are more likely to engage in market research and due diligence activities.

Discovering innovation opportunities can be attempted using any number of primary and secondary market research activities and watching for warning “signals”. Researchers who specialized on growth and innovation recommend to go beyond what customers “say” and directly observe what they “do”. Observing their consumer decision journey can uncover compensating behaviors, workarounds, and pinpoint inadequacy of existing solutions. These disparities are the hallmark of innovation opportunities.

The concepts of jobs-to-be-done, blue-ocean, and disruptive innovation for example, provide outstanding frameworks to any effort aimed at discovering opportunities that arise from non-consumption. In targeting “non-consumers” who face a barrier inhibiting their ability to get a job done, competitive responses from existing players is minimized because the innovation responds to the need of a new market, a market that does not fit the definition of any pre-existing company’s target market.

Disruptive innovations create new markets, but also transform existing ones though simplicity, convenience, affordability, or accessibility, addressing the need of “over-served” consumers. Innovating does not necessarily require a new product. An innovative business model (how a company creates, captures, and delivers value) can disrupt markets as severely as any new technology. It suffices to look at companies such as Netflix, Google, and Amazon, to see how business model innovation without any new technological advance can re-shape the dynamics of entire industries.

Method:

1. Coordinate brainstorming sessions between executives and middle managers for innovative ideas. Alternatively, the consultant can gather proposals directly from them. But managers should be made comfortable discussing ideas without the usual organization self-imposed financial and operational restraints, because they are the closest to day-to-day value adding activities
2. Gather potential outside-in innovation ideas from other players in the industry and adjacent industries, using due diligence activities
3. Determine for each suggestion whether it represents a sustaining or a disruptive innovation
4. - For sustaining innovations, decide upon projects with most potential based on highest return, lowest risk, and best fit/synergy with current core competencies
5. For disruptive innovations, analyze the costs and benefits under alternative assumptions (see scenario planning above), get top-level commitment by emphasizing the threat of the disruption, and create an autonomous organization that will manage the new business initiative. It is essential that the spin off organization frame the innovation as a top growth opportunity (not a threat)
6. Develop internal information systems and teamwork incentives so as to enable the client in the future to capture insights from executives, middle managers, and other employees
7. Develop external processes to facilitate outside-in innovation in the future, such as initiatives aimed at building a reputation of innovative partner, and alliances with innovative partners

Back to methodologies