Why do most innovation projects fail? More importantly, what can you do to keep your own innovations from succumbing to the same fate?
In Ten Types of Innovation, Larry Keeley, cofounder of the Doblin Innovation Firm, and his Doblin colleagues Ryan Pikkel, Brian Quinn, and Helen Walters answer these questions. Based on their experience coaching companies through innovation projects, they argue that the answer lies at least partly in knowing how to classify innovations. They observe that there are ten fundamental types of innovation.
Read below for a brief overview of Ten Types of Innovation.
What Is Innovation?
It’s worth noting that the authors define an “innovation” as anything that is new or novel in its context and that contributes to making a product or service viable and profitable. So taking a technology or business model that’s widely used in one industry and applying it in a different industry where it stands out as unique counts as innovation, but copying best practices in your own industry doesn’t. And the authors view innovation as a matter of degree—the distinction between what’s innovative and what’s not isn’t always black and white.
In Ten Types of Innovation, Larry Keeley, cofounder of the Doblin Innovation Firm, and his Doblin colleagues Ryan Pikkel, Brian Quinn, and Helen Walters group their ten types of 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.
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.
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.
The authors also identify four types of innovations that relate to how your customers perceive and interact with your company:
- Distribution innovations
- Support innovations
- Branding innovations
- Gratification innovations
Why Innovation Projects Fail and How to Succeed
The authors identify a number of reasons that innovation projects fail, most of which they explain in terms of the ten types of innovation that we’ve just covered: A project can fail because it doesn’t incorporate enough types of innovation, tries to incorporate too many types at once, or focuses on the wrong types.
Problem: Insufficient Scope of Innovation
According to the authors, the most common problem with innovation projects is that they aren’t bold enough: They don’t change anything enough to make a difference for your customers because they focus on minor improvements that include only one or two of the 10 types of innovation. Thus, even if they succeed in developing an improved product, they fail to generate new value for your company.
Solution: Implement at Least Five Types of Innovation
The authors’ solution to this problem is to think big: Tackle the difficult problems that nobody else is addressing and employ several types of innovation to build a solution that’s unique and difficult to copy. They assert that most historically significant innovation projects involved at least five of the 10 types of innovation.
Problem: Lack of Clear Direction
The authors also observe that innovation projects often fail because they don’t have a well-defined scope or clear objectives. What market should your innovative new product disrupt? What problems or pain points does it need to solve in order to be valuable to buyers in that market? Perhaps most importantly, which of the 10 types of innovation do you most need on this project? In the authors’ experience, assigning a team to brainstorm ideas for new innovations without giving them clear goals along these lines seldom generates beneficial innovations for your company.
Solution: Visualize Your Industry to Identify Opportunities
Before you dive into an innovation project, you need an objective. You may not know how to achieve your goal yet—figuring that out is the purpose of the project—but you should know what you want to achieve and how it will benefit your company.
How do you come up with this initial vision? The authors say you need to analyze your industry to determine where the real opportunities are. Usually, there are industry trends that lead most firms to focus on a few specific types of innovation at any given time. But the greatest opportunities usually lie in innovating where nobody else is.
So ask yourself—or experts in your industry, for that matter—what the current trends are. What are the driving factors behind those trends? Who are the industry leaders that are currently exploiting them?
Once you’ve answered these questions, then ask yourself what you could do to change the driving factors in a way that gives you control. Are there types of innovation that nobody is applying? Are there problems or pain points that the industry currently ignores? Have there been transformations in other industries that nobody has implemented in your industry yet?
As you do your research, the authors recommend constructing a 3D graph showing the amount of each of the ten types of innovation that’s taken place in your industry over time. Such graphs can help you visualize industry trends in innovation and see at a glance what types of innovation are absent.
Shortform Commentary: Choosing Your Direction With Blue Ocean Strategy
Blue Ocean Strategy prescribes a similar approach that provides additional perspective and tools you can use to implement Keeley’s advice as you formulate your goals and overall strategy for an innovation project. Much like Keeley, the authors of Blue Ocean Strategy recommend focusing on the areas where there are opportunities to create value for the user that no one else is taking advantage of. This creates a greater opportunity for profitable growth than competing head-to-head with other companies in areas where they’re already active.
One particularly useful graphical tool that the authors of Blue Ocean Strategy introduce for identifying areas of opportunity is the “strategy chart” or “strategy canvas.” This tool helps you see what areas other products or companies are focusing on and what areas they’re neglecting. It’s similar to Keeley’s recommended 3D graph but arguably clearer. Here’s an example of a strategy chart:
To create a strategy chart, list the defining characteristics of products in your industry at regular intervals on the horizontal axis and record how well each one is currently addressed in each competing option by marking a dot on the graph. Then connect all the dots that represent the same option, creating a profile curve for that option. The shape of the curves shows you at a glance how similar or differentiated different products are. For example, on the strategy canvas, Product X and Product Y are clearly very similar offerings.
If you’re analyzing products against the ten types of innovation, you could make a strategy chart using the ten types of innovation as the factors listed on the graph. Or you could just determine what types of innovation influence each of the factors and group factors affected by the same type next to each other. Either way, the shape of the curves would then show which types of innovation each product focuses on.
Problem: Incorrect Direction
Of course, there’s always a possibility that your initial vision for an innovation project was wrong. As the authors observe, innovation projects also fail when they focus on solving problems that customers don’t care about or implement solutions that work well on paper but not in practice.
Solution: Iterate on Prototypes
To make sure you’re working on the right problem and developing a truly practical solution, the authors advise you to build and test prototypes—not just of your core product, but of every type of innovation that you hope to implement. For example, if you’ve come up with a novel revenue stream and a relational innovation, try building a “prototype” of these by diagramming how they would work or testing them on a small scale.
Prototypes mitigate risk in an innovation project by allowing you to test your assumptions about how things will work and what customers will like. The authors say your first prototypes should be extremely low-cost models that you can put together with minimal effort. He recommends starting with “paper prototypes.” A paper prototype might be a sketch illustrating the flow of information, value, and material between different parties, or a written story describing day-to-day operations with your proposed solution in place.
Refine your solution as much as you can based on what you learn from your first prototypes. Then build a set of slightly more refined prototypes and repeat the process. For the second round, you might use simple mathematical models or video animations instead of sketches and stories. Continue to iterate until you get close to a final solution that you can roll out with confidence.
Problem: Inadequate Execution
While the authors see insufficient ambition and misdirected focus as more common and more fundamental problems, they acknowledge that the opposite problem is also possible: Sometimes companies can’t execute their innovation projects successfully because its scope or complexity exceeds their capabilities and resources. The more types of innovation you incorporate into a project, the more complex it becomes. So innovating across more types does carry some risk.
Solution: Keep Your Expectations Realistic
To mitigate the risk of failing at execution, the authors say you need to approach innovation projects with the right level of ambition. Assess what kinds of innovation you actually need to make your product successful and only work on those types. As we discussed earlier, you’ll probably need several types of innovation to disrupt the market. But maybe you don’t want to disrupt the market. The authors concede that if you’re already the market leader, periodically making minor improvements in one or two areas may be sufficient to stay in the lead.
Problem: Undisciplined Approach to Innovation
The authors assert that many companies don’t know how to practice innovation as a formal discipline. They treat it as something almost magical that can’t be predicted, much less planned or implemented by employees on a regular basis. This undermines their ability to execute innovation projects successfully or, more commonly, prevents them from undertaking innovation initiatives in the first place.
Solution: Develop Your Capacity for Innovation
If you suffer from this problem, the authors say you need to get past the idea that innovation is somehow special and simply develop a capacity for it, just like you have a capacity for record-keeping, internal communications, and other business activities.
The authors recommend developing a standard set of generalized innovation strategies. For example, turning a product into a service through a combination of organizational, relational, revenue stream, distribution, and support innovations might be a standard innovation strategy. Base your standard strategies on successful innovations of the past and refine them with lessons learned from your own projects—both successes and failures.
Then you can use these strategies like a sports team uses a playbook: You practice thinking through how you would apply them until they become rote. Then, in a given situation, you can quickly run through them in your mind and pick out which ones might be most effective.
The authors observe that sometimes managing an innovation project is more a matter of managing emotions than anything else. People are naturally risk averse and afraid of the unknown. Innovation projects tend to make them nervous because they have to do new things or explore unproven options. Some of them will object to the project just because it pushes them out of their comfort zone. So if your employees raise objections, listen to their concerns empathetically, then reiterate your vision and encourage them to move forward. And make sure your company’s reward system and metrics align with your emphasis on innovation so that everyone has an incentive to practice innovation.
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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