Many of us work in different market environments, but we often make the mistake of using a one-size-fits-all approach to our innovation strategies.
It's common to categorize innovation into disruptive, incremental, or radical types, but this oversimplifies the range of options available. We often make the mistake of refining our thinking too early without fully appreciating the complexities involved in pursuing different innovation strategies.
I admire Geoffrey Moore, the author of "Crossing the Chasm" and "Inside the Tornado," which are both great books to read. Some people believe that his ideas need to be modernized, and he has attempted to do so in a comprehensive update to "Crossing the Chasm." However, my personal favorite book of his is "Dealing with Darwin," where he expands on his ideas by proposing a framework that accurately represents the innovation options available to us.
Categorizing Your Innovation Efforts
According to him, every process has a distinct beginning, middle, and end. The economic factors governing these stages are varied and dictate how you should approach any innovation strategy.
He follows a category-maturity lifecycle that consists of four phases - early life, growth markets, mature markets, and declining markets, culminating in the final end-of-life phase.
He suggests taking a step back, comprehensively analyzing your current position within this lifecycle model, and observing the diverse market dynamics that emerge during this evaluation to enable innovative thinking.
The Four Innovation Zones
The strategy involves dividing the various types into groups, specifically the four innovation zones: product leadership, customer intimacy, operational excellence, and category renewal.
The first three zones are characterized by the value discipline you aim to achieve. The last zone, category renewal, pertains to categories that can no longer support future value creation.
The Clustering of Innovation Types
As you analyze and examine ideas, you may notice that many compete for limited mental space and resources. This can either discourage you or motivate you to pursue innovative solutions to fill these areas of opportunity. By embracing the latter perspective, you may even achieve a unique competitive advantage in the market.
Innovation Types suggested by Geoffrey Moore
Product leadership zone
- Disruptive Innovation. Introducing a technology change that is completely different from what currently exists or implementing a business model that completely disrupts the industry.
- Application Innovation. Exploring untapped markets for their current products, sometimes by creatively combining them in innovative ways.
- Product Innovation. The strategy is to target established markets with existing products, standing out by providing unique features and functions that are not currently available.
- Platform Innovation. By adding a simplified layer, hiding the complex and complicated legacy, allowing the next generation to concentrate on creating new and valuable propositions.
Customer intimacy zone
- Line-Extension Innovation. Making structural changes to an existing offer in order to create a unique subcategory.
- Enhancement Innovation. Continuing the trajectory the company started with line extensions. Driving innovation towards finer and more detailed elements, getting closer to the surface of the offer without impacting the underlying infrastructure.
- Marketing Innovation. Improving customer interactions when making a purchase.
- Experiential Innovation. The worth of this product is determined by the experience it provides rather than its features.
Operational excellence zone
- Value-Engineering Innovation. Calculating the production expenses of a current product while maintaining its original appearance.
- Integration Innovation. The goal is to help customers manage complex operations more efficiently by integrating various elements into one centralized system. This helps to significantly reduce the cost of maintenance.
- Process Innovation. The focus is on enhancing profit margins by eliminating waste from the processes involved in producing our offers, rather than from the offers themselves.
Category renewal zone
- Value-Migration Innovation. Redirecting the business model to move away from commoditizing elements in the market's value chain and instead focus on areas with higher profit margins.
- Organic Innovation. The company is utilizing its own resources to shift its focus towards a category that will promote growth.
- Acquisition Innovation. External mergers and acquisitions can solve the issue of category renewal.
- End Of Life Management for Phasing Out. What can be recycled to reinforce the cradle-to-grave brand value?
The Benefits of Categorizing Innovation
The life-cycle model by category is a useful framework to analyze market forces that may impact your competitive strategy. Identifying different types of innovation can help you focus on specific phases, enabling you to differentiate clearly and gain a more distinct advantage over your competitors.
By utilizing these two frameworks, you can gain a more precise understanding of the innovation landscape. By recognizing the various types of innovation and identifying where they provide the greatest potential for innovation, taking a market-oriented and life cycle approach to your thinking becomes more effective.
While it may appear more complicated at first, exploring different types of innovation can unlock greater potential for effectively managing your portfolio of idea-to-product development across various markets that align with your level of experience.
Having fruitful discussions and creating a life cycle plan can facilitate market progression tailored to specific market curves.
