Why does this book matter?

I have spent months thinking about innovation and how to reach it, and I found this task very challenging, especially in getting useful references that are easy to understand and practise to manage innovation. For many people, there are a lot of misconceptions about innovation and how to develop it, making this book a valuable resource to guide you to reach innovation and specifically answer the following questions:

1. What is business innovation?
2. What is the framework of innovation?
3. What are the types of innovation?
4. How do you diffuse a business innovation?
5. How can you design a business model for innovation?
6. What are the best practices and models of innovation?

1.   What is business innovation?

Innovation is creative thinking and practical creativity to make novel ideas that bring significant value to customers and companies. Innovation comes in a variety of outcomes as new or improved products, invented or upgraded processes, enhancement of customer experience, marketing activities, or breakthrough technology. Besides, innovation is vital for both customers and businesses as it enhances the value propositions, improves product design and usability, reduces costs, and increases customer experience, yet it leads to business profitability and sustainability.   

2.   What is the framework of innovation?

One of the book’s merits is designing a comprehensive framework for innovation, explaining four key subjects: inputs, processes, outputs, and control. This framework enables readers to understand innovation flows and requirements. 

• Innovation inputs, whether for businesses or individuals, must include a clear vision inspiring the future of a business, coupled with a strategy to answer basic questions like what, when, and how to manage innovation projects. Any innovation initiative also needs visionary leadership influencing employees to inspire ideas, products, and services. Besides, business owners planning innovations will need to plan, acquire and manage resources like talented teams, capital, assets (e.g., technology and physical facilities), and intangible assets (e.g., intellectual propriety, copyright, know-how, and experiences). In addition, innovation inputs further include a management system that shows processes to manage innovation and a structure that describes roles, duties, authorities and staff relationships. Lastly, an organisation must adhere to a culture that allows disciplines, values, norms, attitudes and behaviours among employees who believe in and collaborate to aspire to innovation.
• Innovation processes are ways to perform duties and include four tasks: (1) inspiration, (2) synthesis, (3) ideating and experimenting, and (4) implementation. Inspiration involves observing people and sparking creativity, and synthesis reveals identifying problems that are most critical for quick fixing. The ideating and experimenting process focuses on inventing and testing solutions in the market, and the implementation phase involves rolling out innovation in the marketplace.
• Innovation outputs cover three spaces relevant to customers, businesses, and technology. Customer-centred outcomes involve creating a new market, targeting low-end customers and improving customer experience. Whilst business-centred outcomes aim at increasing efficiency throughout upgrading processes or inventing new businesses. The third angle of innovation outputs is a breakthrough technology, which focuses on developing new technologies and applications. These outputs, whether related to customers, businesses, or technologies, come as radical (i.e., novelty significance) or incremental (i.e., improved products or services). Moreover, the innovation attributes, such as the level of novelty, value propositions, and created demand, judge the significance of innovation. 
• Innovation control aims at ensuring full compliance of activities with rules and reaching targets. This control is a systematic process embedded in the firm’s daily work, involving a collection of tasks, including aligning activities, monitoring and reviewing performances, quality checks, testing, assessment of impact, and change actions. Companies usually deploy up-to-date policies, systems and resources to ensure proper control. 

3.   What are the types of innovation?

There are many types of innovation, although they all share the same concept of innovation attributed to novelty and value advantages. Innovation comes in different shapes according to the segregation bases used, including (1) creating new or existing markets, (2) being a product or process, (3) relevant to disruptive or incremental innovations, (4) targeting low-end (new users) or high-end customers, (5) innovation spaces (e.g., customers or businesses) and (6) technology diffusion lifecycle and categories (e.g., new technology or product).

Accordingly, innovation results in different types, like relevant to lifecycle categories, disruptive, incremental, product, process, business model, configuration, and open or closed model of innovation.

• In the technology lifecycle, innovation comprises five categories (or types): (1) breakthrough technology, (2) new product and platform, (3) customer intimacy (aims at increasing customer experience), (4) operational significance (aims at increasing efficiency of operation) and (5) renewal innovation (e.g., organic and external growth techniques).
• The disruptive innovation type reveals targeting the new demand of low-end customers and non-consumption markets with better offerings and lower selling prices. Whilst incremental innovation involves upgrading existing products or processes.
• Product innovation results in developing a new or improved product and typically includes product performance and system. The product performance addresses the values, features, benefits and quality of the company’s offerings. While a product system involves design, materials and apps to make the system function. Whilst process innovation is an effort to improve or invent processes to increase operational efficiency.
• Open innovation is crowdsourcing, whereby a corporation opens up and exchanges ideas with mass outsiders for the advantage of the organisation and market. Whilst close innovation is the old approach to managing innovation, focusing on the enterprise resources to create innovation, making the innovation process expensive and risky.
• Configuration innovation is another way to show how a business is structured to perform innovative duties and includes details on the profit model, network, structure and process.
• In the customer experience type of innovation, the focus is to improve value-offering to customers and increase operational efficiency. Customer-experience innovation aims at optimising benefits extended to customers and includes services before and post-sales, channels, promotion, branding, customer engagement, positioning, unique solution, pricing, and reducing lead time to the market.

4.   How do you diffuse a business innovation?

The diffusion of technological innovation explains how innovation rollouts in the market. In the technology lifecycle, an innovation product begins as a breakthrough technology developed by techies, then diffused to the market as technology products and applications by early adopters. Then, these technology products are transformed into innovation platforms by the early majority, followed by slowing down the growth rate of revenues and reaching maturity, encouraging late majorities to involve sustainable innovation to improve customer experience and operational excellence. Last, the cycle reaches a maturity where laggards involve in renewal activities of innovation, including improving organic and external growth, followed by discontinuance of innovation. The book highlights influences affecting the diffusion of innovation and provides tips to improve the diffusion rate of innovation.

5.   How can you design a business model for innovation?

A business model explains how a firm creates, delivers, and captures values. A business model typically identifies three elements: (1) value creation, (2) transaction, and (3) resources. The value-creation identifies the novel benefits and features of a product or service, for instance, the capacity, speed, battery duration, size, and weight of a laptop. The transaction determines activities to create, deliver and capture values like producing, distributing and selling a new product. Last, the resources define assets (e.g., human and capital) required to perform activities.

The book discusses the three types of business models, including (1) the basic, (2) start-up, and (3) the growing model. The basic model describes the value creation, transaction, and resources. Ash Maurya designed a business model for start-ups to test their products in the marketplace. Maurya’s business model comprises information on value creation (i.e., identifying value propositions), value delivery (i.e., identifying the problem-solution fit, metrics, cost structure, and value propositions), and value capturing (i.e., identifying customer segment, value proposition, channels, unfair advantages, and revenue streams). The third type is the business model (Canvas) developed by Osterwalder, designed for businesses planning to grow and includes details on nine business blocks. The nine business blocks are customer segment, value proposition, channels, customer relationship, revenue streams, partnership, activities, resources, and cost structure.

In assessing the significance of any business model, the book argues criteria of testing, comprising (1) desirability, (2) feasibility, (3) viability, and (4) scalability. The desirability test measures the degree of created demand for new products, and the feasibility test assesses the quality of products. The viability test measures the profitability of the new value, and the scalability test measures the degree of the growing potential of the innovation project.

The book created a business model for innovation that comprises eight business elements. These elements are (1) customer segment, (2) customer-value fit, (3) commercialising, (4) activities, (5) resources, (6) partnership, (7) profitability, and (8) measurement. This business model is a helpful resource for guiding innovators to manage innovation projects.

• In the customer segment, every business model begins by identifying the customer segment target, who are the potential buyers of specific products. A customer segment comprises people who share, for instance, common interests, demographic profiles, value preferences, behaviours, or attitudes. In creating customer segments, you may use the blue-ocean approach to achieve it. The blue-ocean method involves four sets of actions: (1) reconstructing the market boundaries, (2) reaching beyond existing demand, (3) drawing your strategy, and (4) getting the strategic sequence right. Reconstructing market boundaries reveals looking for new opportunities across substitutes, strategic groups, offers, buyer groups, or value chains. In reaching beyond existing demand, innovators may look across non-existing buyer groups who are of necessity or refuse or never thought to buy your product. Then, you need to draw a strategy identifying objectives and initiatives to accomplish them. Finally, get your strategic sequences right, including your offers of utilities, price, cost and adoption rate.
• In customer-value fit, the business model identifies the value mapping, customer profiling, and customer-value fit. Value mapping identifies information on products, gain creators, and pain relievers. Customer profiling comprises details on customer segments, including job-to-do, pains, and gains desired. Customer-value fit tests whether the value-mapping matches the customer profiling in the marketplace.
• Innovation commercialisation involves three elements: (1) innovation desirability, (2) feasibility, and (3) viability. Innovation desirability shows the recognition of new markets or demands for innovative products. Quality control and the best way to produce products are what innovation feasibility looks for. Whilst innovation viability involves selling and generating profitability.
• Innovation activities are key actions organisations conduct to create, deliver, and capture values. These activities describe efforts to make the business model work involving, for instance, production of values, supply chain management, acquiring and managing resources, reaching markets, maintaining customer relationships, and earning revenue.
• Innovation resources include human resources, capital, physical assets and non-physical assets (e.g., patents, know-how, goodwill, copyrights or valuable experience). Resources describe assets required to make a business model work; moreover, a company can own, lease or partner to get them.
• In partnership, for every innovation project, partnerships are critical to navigate value streams and network with partners to make the business model work. Innovation partnership describes the network of suppliers and partners that make the business model work, reduce risk, or gain resources.
• Innovation profitability tests the viability of the innovation project and shows the potential surplus of its revenues over expenses and healthy cash flows. A business makes profits if only it generates revenues exceeding the associated expenditures for a specific period (e.g., one year).
• Innovation measurement is a quantitative method a business model identifies to estimate and evaluate the progress and outcomes of the innovation project. There are four methods used to measure innovation: (1) setting KPIs and metrics, (2) innovation accounting, (3) return on investment, and (4) the balanced scorecard. 

6.   What are the best practices and models of innovation? 

The book illustrates some best practices and models of innovation. Here is a brief description of these models:

• Lean start-up thinking: is a method for developing new businesses and products. It aims to shorten product development cycles and discover the viability of a business model. The lean method comprises a loop of solution creation, hypothesis, experimentation, product development, and validated learning.
• Blue ocean strategy: is an approach that divides any market into two streams: red and blue oceans. Red oceans represent all the existing industries, which share common characteristics like a known market space, defined industry boundaries, and accepted game of competitive rules. Contrarily, blue oceans denote all the industries and markets, which are not in existence, and act to create new markets and spaces to meet unmet needs.
• Business model Canvas: is a strategy that shows how a start-up or company creates, delivers, and captures values. A business model (canvas) comprises nine business blocks: customer segment, value proposition, channels, customer relationships, revenue streams, partnership, activities, resources and cost structure.
• Good-to-great thinking: argues that attributes like leadership, talented teams, a culture of disciplines, core values, focusing, technology application, built to last, and strategic management, characterise great companies.
• Traction thinking: refers to the initial progress of a start-up and growth. When you achieve “traction”, you have a clear indicator that your product or service is viable, you’ve achieved some level of product/market fit, you’re getting attention from your target customers, and you’re growing your business.
• Design thinking: is a customer-centric approach popularised by the IDEO and aims at uncovering unmet needs. Design thinking involves observing people, inspiring opportunities, understanding their jobs, pains and gains, ideating solutions, developing prototypes for quick learning and validation, designing experimentations with new solutions, and implementing to roll out innovative solutions to the market.
• Job-to-do thinking: focuses on understanding the jobs that customers try to do before creating solutions. This approach involves collective efforts like studying customer profiles, jobs-to-do, pains related to job-to-do, desired gains, and professional, social and emotional objectives customers ought to achieve.
• The growth hacking approach: is a subfield of marketing focusing on the rapid growth of a company using a set of processes and digital skills. The goal of every growth hacker is to build a marketing machine that reaches massive audiences by itself.
• The SPRINT model: is a lean-start-up approach, which guides a team of up to five staff over five consecutive days to discover innovative solutions for problems and test them.
• The customer development model: is a customer-centric approach aiming at discovering, validating, creating, and growing customers.
• The frugal innovation model: is an approach that focuses on the ability to “do more with less”. It is about creating significantly more business and social value while minimising the use of diminishing resources.
• Open innovation: means that valuable ideas and resources can come from inside and outside the company. It is an approach that capitalises on internal and external resources to manage innovation.
• Predictive business analysis: is the way organisations evaluate and predict outcomes. The power of analytics is to turn volumes of data into a smaller amount of information and insight.
• The innovation model by McKinsey & Company: is a strategic framework focusing on business growth and innovation. It classifies causes of business growth and innovation into three horizons: (1) core business (e.g., focus on the main line of products), (2) adjacent business (e.g., focus on the new or extended production line), and (3) new or disruptive business (e.g., focus on creating new businesses).
• TRIZ for problem-solving: is a systematic approach to problem-solving and involves a practical method, knowledge base, and model-based technology for generating innovative solutions for problem-solving.
• Minimum winning game: argues that innovators will win the innovation game if they think strategically about three interrelated drivers. These drivers are (1) a strategic business, (2) product development, and (3) technology development.
• Osborn and Parnes’ Problem-Solving: is a brainstorming approach to generating innovative ways to address problems.
• Divergent Thinking: is a method for developing ideas using divergent and convergence thinking. Divergent reveals thinking to explore multi ideas or thoughts about solving an issue, whilst convergent thinking focuses on a single way of thinking to make ideas.
• Christensen’s Disruptive Innovation: is a term coined by Clayton Christensen and reveals making a new product/service, inventing value propositions, creating a new market, targeting low-end customers, and is best conducted by start-ups.
• Ries’s Validated Learning: involves a reiterated loop of ‘Build-Measure-Learn’. The ‘build’ involves crafting MVP, and the ‘measure’ reveals testing MVP in the market. While, the ‘learn’ is about whether to accept, reject or change the MVP hypothesis.
• Schroeder’s innovation journey: is considering innovation as it is an unknown journey that begins from initiation to development and ends in the implementation phase.
• Usher’s Path of Cumulative Synthesis: innovation results from the cumulative synthesis of two extreme approaches. The transcendentalist approach views innovation as coming from miraculous intuition to rare genius, and the mechanistic approach argues innovation is a predictable, gradual process, but this is rare.
• Van de Ven’s Leadership Rhythms: reveals that creating a new idea and moving from formation, development, to implementation will involve different leadership roles to keep new ideas progressing. Leadership roles needed for entrepreneurs to make their journey successful include entrepreneurial, sponsor, mentor, institutional, or critic roles.
• Friend’s Three Types of Uncertainty: an entrepreneur often faces three typical uncertainties related to (1) the environment (e.g., places and locations; deciding on the target market and customers), (2) agendas (e.g., plans to manage the project idea; deciding on the business concept, values, offer, growth), and (3) objectives (e.g., quantitative targets for innovation development).
• Rogers’s Innovation Adoption Curve: illustrates how any technology innovation moves from development through implementation to the market streams.
• Abernathy and Utterback’s Three Phases of Innovation: argue that any disruptive innovation, whether a product or process, will go through three distinctive phases: (1) fluid, (2) transitional, and (3) specific.
• Powell and Grodal’s Networks for Innovation: is a network matrix influenced by two sets of variables: fluid/rigid and formal/informal. Generated networks can be primordial, invisible, supply chain agreements, and strategic alliances. Networks can be primordial when it is informally created by homogenous members who share similar interests. In invisible networks, similar or diversified members build a network informally. Similar-interest partners can make a formal supply chain agreement. Last, homogenous or diversified partners can formerly create a strategic alliance network to meet strategic objectives. 
• Boyd’s OODA loop: is the decision-making process and involves a cycle of observing, orienting, deciding, and acting.
• Third-Way Innovation: emphasises the assumption of combining new values with the central product or service.  

Final note: the book is an actionable guide to innovation from beginning to end. Enjoy reading the book, and I look forward to your reviews.

• This post is sourced from my new book- Your Guide To Reach Innovation 
• For more information about the book: https://growenterprise.co.uk/your-guide-to-reach-innovation/
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Author: Munther Al Dawood

www.growenterprise.co.uk

maldawood@growenterprise.co.uk