How Apple, Samsung and Google Take Different Approaches to Innovation - Max Nisen

image credit: Business Insider

When people think of the most innovative companies, they think of ones that are coming out with new and amazing technology. The push for self-driving cars or augmented reality glasses can be a more compelling story than, say, a smaller iPad.

But one thing highlighted in the Booz & Co. Innovation 1000 study and our conversation with co-author Barry Jaruzelski is that pushing technological boundaries is just one of the three successful paths to innovation. Each is as difficult to execute, requires as much innovation in the research and development (R&D) process, and has as much potential as the next.

Here's how Jaruzelski describes them: 

1. Need seekers (think Apple)

"...these are companies who's innovation strategy is essentially around knowing customers better than themselves, identifying unarticulated needs, and then being the first to market with a product that addresses those needs. It's very heavily reliant on direct customer observation rather than market research. It is people telling you what they want, watching customers, seeing how they interact with the product or competitors' products, and observing opportunities in the problems that they're having."

Apple didn't invent the touch screen. But it's made vastly more money than anyone else on it by focusing on how people use it, and being better than anyone else at delivering that experience.

2. Market readers (think Samsung)

"...a market reader is sort of the classic fast follower, it doesn't mean they ignore their customers, but they're very attuned to what competitors are doing and what other people are bringing to market first and observing what seems to be gaining traction, then very rapidly coming up with their own version of that innovation. You can think about the companies set up as almost a massive coiled spring to basically pop out and copy an idea, not reverse engineer it necessarily, but, looking at innovation and coming up with their own version very rapidly to get their share. It's very much rooted in competitive intelligence, classic market research kinds of activities in terms of the front end."

Samsung wouldn't have jumped five spots in three years on the ranking of the world's most innovative companies delivering bad copies of an iPhone. It creates compelling new versions of products, times them well, and adds to them. Pulling that off is an innovative and difficult strategy in its own right. 

3. Tech drivers (think Google)

"The third category is what we call technology drivers. This is much more the traditional technology push kind of model, where the pendulum hasn't swung completely away from customers and markets, but it's much more oriented towards leveraging the technology base, seeing what you can push out, seeing where there might be applications for the technology."

This is the model that's traditionally defined innovation, but being the first to come up with something and the best at making money off of it are very different.

Every company listed here is successful and approaches R&D in a completely different way. The narrative that calls only the last group innovative may be appealing, but it's not what investors or R&D executives care about.

This story originally appeared on Business Insider

via entrepreneur.com

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The Way To Innovate To Beat Radical Discontinuity

In the early 19th century most people lit their homes with lamps that burned whale oil. In mid-century a Canadian physician and geologist named Abraham Gesner developed kerosene, a cleaner-burning alternative made from a newly plentiful resource, crude oil, and founded what became the modern petroleum industry. Whaling, which had been a major world industry, ceased. Then Thomas Edison threw a light switch, and the world changed again. No one wanted the foul smell and dangerous flame of kerosene lanterns in their homes when they could have clean and easy electric light. Demand for fossil fuels plummeted, and they rose again only when Henry Ford came along and made the new technology of automobiles affordable for the masses. Today the ramifications of global warming threaten the automobile, electric power and oil industries.

The history of business is full of such stories, and they can strike fear into anyone who innovates to try to keep up with, or ahead of, markets. The idea that unpredictable, revolutionary forces that lie outside those markets can sweep away entire industries is terrifying. Even within an industry an agile disrupter can come along and overturn everything for those who were there before. And then there are those larger non-technological discontinuities such as the 9/11 attacks or the global financial crisis of 2008.

How can a business meet such unexpected threats? In my forthcoming book, Seizing the White Space: Business Model Innovation for Growth and Renewal, to be published by Harvard Business Press in February, I talk about how businesses can innovate their existing business models in response to radically changing conditions or develop new units with different business models entirely.

The key to innovating your business model in the face of discontinuity is to look for the opportunities in the threat itself. You have to try to understand how the new circumstances will change the jobs customers need to get done or give rise to entirely new jobs they need to do. Understanding powerful external forces in this way can make the suddenly overwhelming far more manageable. Instead of hunkering down and waiting out the storm or freezing your current business model like a deer in headlights, you can transform and renew your company by building better models that take advantage of the shifting environment.

No one I know of is working more creatively to turn a threat into an opportunity than Better Place, the electric car company founded by Shai Agassi, a former SAP ( SAP - news - people ) executive turned green-tech entrepreneur. What could seem less promising than going head-to-head with an entrenched worldwide oil infrastructure using an immature alternative technology targeted at an ambivalent customer base? Yet what challenge could be more important than the shift from gasoline-based transportation to reliance on renewable energy through the wholesale adoption of electric cars?

As big as the challenge is, the tools Agassi is using to meet it are really no different from the ones any company should use to meet the challenge of disruptive change. Perhaps most important, Agassi began as all entrepreneurs and all companies embarking on business model innovation should. He systematically and carefully examined what jobs consumers were getting done when they bought a car. On one level, this was so blindingly self-evident that all the existing automakers might forgivably think they already knew it all. Not surprisingly, for instance, he determined that cars do the job of making people both independent and flexible. To do so, cars have to be affordable to buy, own and operate.

As any automaker or buyer will tell you, there's almost always a strong emotional element in owning a car, too. People want their automobiles to be fun to drive and pleasing, if not downright cool, to be seen in. Perhaps no less obvious, Agassi found that people pay more attention to the cost of buying and maintaining a car than of fuel. Digging a bit deeper, he confirmed what U.S. automakers have long contended, that people are usually not willing to sacrifice passenger capacity for economy. Most cars need to be big enough to carry five people comfortably long distances no matter how infrequently they'll be called on to do so.

Gathering all that insight, he was able to clearly identify his challenge: to make electric cars even more convenient and affordable than the already effective gas-powered alternative, even though they'd have to rely on batteries that can't yet remotely match the range of a gasoline engine. What's more, to truly make the world a better place, he'd needed to make a vehicle that could compete not only with the 50 million new cars sold every year but also with the 700 million used ones that consume the lion's share of fuel.

Bold challenges require bold solutions, and by concentrating on the jobs that cars do rather than on the cars themselves, Agassi came up with one: He would focus on selling not cars themselves but the underlying job, moving people over miles. He would replace oil-fueled miles with electricity-fueled miles in something like the way telecom companies sell cellphones. Two economic facts on his side: Electricity is cheaper than oil, mile per mile, particularly if drawn out of an innovatively managed grid, and government tax policies can help bring down the initial costs of electric cars before economies of scale can be achieved.

Refining this thinking further led Agassi to design the systems-level experiment he is currently running in Israel. Better Place is building a complete alternative clean-tech infrastructure there, a massive network of charging spots to hook up the electric grid to the parking infrastructure. To extend a car's range, its battery will no longer be an installed part of the automobile but will instead be part of the energy infrastructure. You'll be able to charge your battery at a charging station or, on a longer trip, simply swap it out for another one, in a process as quick and easy as filling the tank with gas is now. 

So far Agassi has raised at least $400 million from VantagePoint Venture Partners, Israel Corporation (which holds 33% ownership) and other investors and has a partnership with Renault ( RNSDY.PK - news - people )-Nissan ( NSANY - news - people ), which is building the car. He expects to have nearly 100,000 vehicles on the road in Israel by the end of 2011, and his vision is expanding. He has added new investors and partnerships in Denmark, Japan, Australia, Canada, Hawaii and San Francisco.

There is more to his business model, but the bottom line is that Better Place is an important experiment to watch regardless of its outcome. This kind of business model innovation--fearlessly focusing on the customer's jobs-to-be-done in the face of revolutionary change, and crafting a customer value proposition that can make money in entirely new ways--is exactly what it takes to find the opportunity in discontinuity.

Mark W. Johnson is chairman and co-founder of Innosight, an innovation consulting and research firm. He is the author of Seizing the White Space: Business Model Innovation for Transformative Growth and Renewal, to be published in February 2010 by Harvard Business Press, and is a co-author of The Innovator's Guide to Growth. via forbes.com

Want to increase growth and avoid commoditization? Want to out compete your competitors? Want to bring new products and services to market faster? Want to be more agile? Need a compelling speaker? Hire Innovation and Growth Speaker Jim Woods. Jim works confidentially with start ups, governments as well as profit and for profit enterprises.

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Jim Woods is president and founder of InnoThink Group. A global management consulting firms specialized solely in helping organizations of all sizes in all industries catalyzing top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. To arrange for Jim to speak at your next event or devise an effective growth strategy email or call us at 719-649-4118 for availability.james@innothinkgroup.com

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How to Identify New Business Models #Innovation #Strategy

By Joseph V. Sinfield, Edward Calder, Bernard McConnell and Steve Colson 
Organizations traditionally pursue growth via one or more of three broad paths:

• They invest heavily in product development so they can produce new and better offerings.
• They develop deep consumer insights in order to offer new and better ways to satisfy customers' needs.
• They concentrate on strategy formulation to grow by acquisition or by moving into new or adjacent markets. 

Each of these paths usually involves devoting considerable time and resources to developing a corresponding organizational competency. For example, to build product capability, companies typically invest in in-house research and development departments and/or technology-sourcing expertise. Establishing customer insight capability often requires creating in-house market research units and implementing robust feedback links between the sales force and the developers of product or service lines. And creating a strategy capability generally involves setting up dedicated corporate strategy units and merger and acquisition groups or engaging consultants.
Recently, a fourth path has emerged, one that we might label "business model experimentation": the pursuit of growth through the methodical examination of alternative business models. At its heart, business model experimentation is a means to explore alternative value creation approaches quickly, inexpensively and, to the extent possible, through "thought experiments." The process sheds new light on potential competitors and lowers the risk of taking the wrong or a lesser-potential road — all for an initial investment that is typically quite small relative to what can be gained Research conducted in the last 10 years has established a link between business model innovation and value creation.1 To our minds, this research points to the need for organizations to build a competency in business model innovation — that is, in the process of exploring possible business.
Article available for purchase at MIT Sloan Management Review

via innosight.com

Jim Woods is president and founder of InnoThink Group. A global management consulting firms specialized solely in helping organizations of all sizes in all industries catalyzing top line growth through strategic innovation and hypercompetition. Jim has over 25 years consulting experience in working with small, mid size and Fortune 1000 companies. He is a former U.S. Navy Seabee and grandfather of five. Jim is board president of a charter school located in Colorado Springs whose sole purpose is to prepare otherwise disadvantaged students more competitively for college. To arrange for Jim to speak at your next event or devise an effective hypercompetition strategy email or call us at 719-649-4118 for availability. Subscribe to our innovation and hypercompetition newsletter.   

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Robert F. Brands: Five Key Innovation Questions to Ask

There are plenty of reasons to innovate. Especially now more than ever before, sustained innovation is the means to developing marketplace showstoppers that lead to profitable growth. Innovation is not a luxury that can be placed on the back burner, even for today's successful companies. So before beginning your next innovation effort, here are some key questions to consider for mapping out an effective innovation plan.

1. What type of innovation does your organization need?

The key to implementing innovation is first defining the type your organization needs. The hardest kind of innovation to manage is breakthrough, which creates an entirely new way to deliver value. Few and far between, these game changers hold the greatest potential for business success. Most innovations are incremental, which can mean a tweak on an existing product, process, or service. Examining how your innovation effort fits into the current organization's needs is critical at this go/no go checkpoint. (There is nothing wrong to focus and start with incremental innovation or line extensions, get some early wins, get the organization engaged and excited and create a structured repeatable process).

2. Does your innovation satisfy customer needs?

Customer demand affects the successful outcome of your innovation. Beyond asking your customers what features they would like to see, ask them what their biggest concerns are and that will help shed light on the products and functionalities they require for a more successful innovation.

3. Who are your innovation champions?

The innovator-in-chief needs to truly champion this culture and drive it throughout the organization to make it happen. In order to defeat the devil's advocates and become an agent for change, the leader must democratize the innovation process and select a group of people from different business groups, different backgrounds, and different skill sets joined together for a common purpose. He or She must engage, walk the talk and cannot just delegate the spiritual leadership. The companies with inspirational innovation leaders stand out with their results i.e Apple, Kohler, etc.

4. How will you measure success?

Innovation is ultimately about return on investment. It's critical to use leading and lagging key performance indicators, observe and measure time spent on each segment of the new product development (NPD) process to see how it's progressing. Leading metrics used in the industry can include ideas generated, ideation sessions held, number of patents filed, and for lagging new products released, and percentage of sales due to new products.

5. How will success be rewarded?
With successful innovation comes profitable growth and a win-win situation for shareholders, employees, and customers alike. Incentives are needed for all participants on your NPD staff, and often times the key motivator is less financial than it is about recognition for a job well done. Motivation does not have to be about money -- but it is necessary, so reward your people. They are your best innovation resource.

By focusing effort in the right places, companies can avoid oversight and increase their chance of innovation success. For more tips, see "Robert's Rules of Innovation."

Books by this author

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Robert's Rules of Innovation: A 10-Step Program for Corporate Survival
by Robert F. Brands, Martin J. Kleinman

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