Every business knows how important it is to capture and develop innovative ideas. Every business will tell you it is a priority to focus on innovation and high on everyone’s agenda. However, in reality not many companies can honestly claim to do innovation well. Maintaining their innovation ecosystem is one of the common characteristics amongst those companies that do.
There are three main components of an organisation’s innovation ecosystem. Getting the balance right between these three components is crucial:
1) Balance/Mix of innovation types
2) Structure (process, capabilities, culture, funding)
3) Metrics & tracking
In this article we explore how to define what the right mix of innovation types is for your business.
Finding the right mix of innovation for your business
There is no one size fits all solution, the right mix depends on your business and your innovation needs. However, there are some really useful rules of thumb that will help to guide you. In finding the right mix you need to first of all define the different types of innovation and ideas that you have. Our take is borrowed from Igor Ansoff’s classic management model on where and how to allocate funds to growth within a business.
In this definition there are three hierarchical levels of innovation within the business innovation ecosystem. This is probably as simplistic as you can reduce your innovation portfolio down to;
1) Core innovation:
In most businesses the largest amount of effort (c.70%) in terms of time and resource will be given over to ideas and innovation within this category. These are typically more incremental improvements to existing products or services to optimise the delivery, return and experience for the existing customers.
2) Adjacent innovation:
Innovation involves an increasing level of risk as we move away from the core. This type of innovation can be very complex and result in high failure rates. Can involve taking existing products to new markets or, more commonly, developing value-add products or services to existing core propositions.
3) Transformational innovation:
Being the highest risk of all the innovation categories transformational innovation can take up a huge amount of time, even be a distraction, and often be costly. In this category organisations will be looking for new products and services, new markets – big changes to the business. This type of innovation is more popular with early stage and highly innovative businesses.
Not many organisations are able to be good at all three of these innovation types. Those that are successful at all three manage to get the mix and delivery right by respecting the very different requirements of each type of innovation and by having strategies and operational processes to support each.
- Do you know what processes and tools are required to support each of these innovation types?
- Do you have these processes and tools in place?
- Do you know what skills you will need to develop within your workforce to deliver these types of innovation?
- Does your organisational culture support all these types of innovation?
Simon Hill is CEO and co-founder of Wazoku, an idea software company, an Associate Director with the Venture Capital Firm FindInvestGrow and an active member of the London technology and entrepreneurial community.