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Why do the overwhelming majority of innovation projects fail? And more importantly, what can you do to innovate successfully?
In Ten Types of Innovation, Doblin Innovation firm co-founder Larry Keeley and his co-authors argue that the key to success often lies in knowing which types of innovation would most help a given project succeed. Understanding the ten types of innovation and the importance of combining them correctly can help you understand why most innovation projects fail and how to make your projects succeed.
Here’s an overview of Larry Keeley’s types of innovation.
Classifying Innovations
In their book Ten Types of Innovation, Doblin Innovation firm co-founder Larry Keeley and his co-authors colleagues Ryan Pikkel, Brian Quinn, and Helen Walters group innovation into three categories: Those related to your product directly, those related to how you configure your company, and those related to managing your customers’ perceptions of your product and company. We’ll discuss the types in each category in turn.
Product-Related Innovations
The authors identify only two types of innovation directly related to your product or service: innovations related to your core product, and innovations related to how it fits into a larger system of products.
1. Core Product Innovations
This type of innovation includes anything that improves your product or service itself. That could mean adding features that increase its capabilities, removing features to make it simpler and more user-friendly, tailoring it to better meet a certain user’s needs, or just producing it to a higher standard of quality.
Of course, to qualify as “innovation,” the changes need to make it stand out as unique. The authors caution that this type of innovation, by itself, usually makes the least difference in long-term profitability because core product improvements are relatively easy for other companies to copy. And as soon as your new feature or improvement becomes commonplace, it ceases to be innovative.
2. Interfacing Product Innovations
In this type of innovation, you enhance the value or profitability of your product by improving how it interacts with other products. This might mean bundling your product with other complementary products, enabling users to customize your product with third-party accessories, or giving them tools to create their own add-ons.
Company-Related Innovations
The authors identify four types of innovations that relate to organizing your company or its operations. The distinction between them lies in whether they relate to your capabilities, your internal organizational structure, your external relations with other organizations, or how you monetize your product.
3. Capability Innovations
This type of innovation describes any unique method of producing your product or providing a service that allows you to make it better or more efficiently. Maybe you invest in greater automation to increase efficiency, make use of patented production processes, or crowdsource part of your service by giving users tools to help each other.
4. Organizational Innovations
In this type of innovation, you consider any novel corporate structure or other unique arrangement of personnel and assets that gives you an advantage. Maybe an exceptionally flat corporate hierarchy empowers your company by facilitating the free flow of information between upper management and line-level employees. Or maybe decentralizing key production assets lets you adapt more rapidly to changing market conditions.
5. Relational Innovations
With this type of innovation, you find novel ways to collaborate with other organizations so that they bring additional value to your product—in other words, you find ways to leverage your relationships with other companies. This might include absorbing those other companies: The authors consider mergers, corporate acquisitions, and vertical consolidation to be examples of relational innovations when the context makes them unique and valuable. Other examples include finding new ways to leverage the influence of companies that sell complementary products or turning your service into a franchise that you train local companies to provide instead of providing it directly.
6. Revenue Stream Innovations
This type of innovation encompasses anything unique and beneficial about how a company makes money.
There are many different tactics companies use to make money: Some sell products or services, others sell subscriptions or memberships for access to products or services, and still others offer services to users for free while selling advertising space to other companies. Some charge fixed prices, others adjust prices according to usage or outcomes, and still others let prices fluctuate according to demand through auctions or other mechanisms. Many try to price their products strategically, whether by charging a premium to increase profits per sale or accepting lower profits per sale to drive more sales, and thus more total profits, with lower prices.
Any of these could be a revenue stream innovation if you’re the only one doing it in your industry and it provides you or your customers some advantage.
Perception-Related Innovations
The authors also identify four types of innovations that relate to how your customers perceive and interact with your company.
7. Distribution Innovations
This type of innovation focuses on ease of purchasing—making it easy to distribute your product to your customer. With these tactics, you either make your product easy for your customers to purchase or make the purchasing process stand out in a good way. For example, you might set up special stores dedicated to showcasing your products and giving your customers a memorable white-glove experience. Or you might partner with a distributor that your customers already trust (in which case you’d be combining a distribution innovation with relational innovation). The authors note that effective distribution innovations often involve developing multiple distribution channels to reach different classes of customers.
8. Support Innovations
This type of innovation means supporting your customers in their use of your product in exceptional ways. For example, if your product can only be repaired by a small number of certified technicians, you could instead design it with easy-to-obtain spare parts so that any technician can fix it when needed. Or you could guarantee zero downtime and offer to reimburse business customers for any revenue they lose if your product does go down.
9. Branding Innovations
Through branding innovation, you find a way to make customers ascribe additional value to your products based on your brand identity. Maybe they’re willing to pay more for your products because they trust you to stand behind your products more than they trust other companies. Maybe something about how your company does business resonates with their values. Or maybe your brand conveys social status in a way that others don’t.
10. Gratification Innovations
This type of innovation revolves around understanding your customers’ values and aspirations and designing your product so they get more gratification from using it. For example, you might let users customize the appearance of your product when they buy it so that your product becomes a form of self-expression for them.
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Here's what you'll find in our full Ten Types of Innovation summary:
- Why the overwhelming majority of innovation projects fail
- The ten different types of innovation, and which kind to apply to which project
- How to overcome the most common obstacles to innovation projects
