In a world marked by rapid change, where technological advances reshape the business landscape quickly, one thing is clear: innovation is essential for any business. The need for companies to innovate is a matter of survival, as reflected in the decreasing lifespans of businesses, especially those on the S&P 500 Index. Companies that don’t adapt and embrace change risk fading into obscurity within a decade.
We can gain insights into continuous innovation from an expert in the field, Corina Kuiper. With over 25 years of experience in various roles, including strategic, financial, and innovation management positions, Corina is an expert in corporate venturing and innovation. She’s the Founder of The Innovation Family and a Director and Board Member of the Corporate Venturing Network. Her extensive experience makes her the perfect guide for continuous innovation. Innovation is the foundation of resilience and sustainability in today’s business landscape. Corina offers unique insights, emphasizing the importance of changing perspectives and understanding the multifaceted nature of innovation.
Adapting to a Changing Landscape: The Need for Continuous Innovation
Imagine a company that thrived for decades but is now fighting for survival. It’s not far-fetched; it’s a reality for many businesses. The S&P 500 Index, which measures corporate success, shows a grim picture. Companies on this index used to have lifespans of 50 to 60 years, but today, it has fallen to just 10 years. For companies outside the index, lifespans are often even shorter, sometimes less than 10 years. The culprit is what we call “big bang disruption,” driven by digitalization. In the digital age, innovative ideas, especially digital products, or services, can quickly be scaled. Unlike the past, where entry barriers involved constructing massive factories and complex supply chains, today’s innovators can bring their ideas to life and release them quickly. While this lowers entry barriers, it also makes innovation easily replicable. An innovative idea can be quickly imitated, making it vital for companies to transform every 8 to 10 years to stay relevant and competitive.
Three Perspectives on Innovation
So, how do we navigate this ever-changing landscape of continuous innovation? Corina shares three perspectives that can transform our approach:
i. The Four-by-Four Innovation Metrics: Not all innovations are the same. Innovation comes in various forms and requires a different approach, organisational structure, and key performance indicators (KPIs).
When it comes to Innovation, allocating resources based on the 70/20/10 rule: 70% to improved products, 20% to adjacent categories, and 10% to new-to-the-world innovations.
The “Four by Four Innovation Metrics” presents a classification of innovation into four categories written below. Each category necessitates a different approach, organisational structure, and set of key performance indicators (KPIs).
1. Improved Product: This involves modifying an existing product with minor enhancements. Your customers can still use it in the same way.
2. New Product: A product that offers something genuinely innovative but doesn’t require a significant shift in customer behaviour.
3. Adjacent Category: Innovations in this category require customers to adjust their behaviour, potentially buy from different stores, or adapt to new configurations.
4. New-to-the-World: These innovations are so transformative that they are practically unrecognisable compared to the previous offer. They often require extensive customer training and a substantial behaviour change.
ii. The Minimal Viable Ecosystem (MVE): Modern innovation is interconnected. Understanding the ecosystem in which your innovation exists and collaborating with partners is crucial. Innovation often requires the cooperation of other entities to realize its full potential.
iii. The 10 Types of Innovation: Don’t limit innovation to just one type. Consider how each type can create value for your customers and business.
1. Configuration: Change the composition and design of your product.
2. Offering: Innovate in the services or features you provide to customers.
3. Experience: Elevate customer experience through services, channels, brand, and customer engagement.
4. Profit Model: Modify how you make money, such as changing your pricing structure.
5. Network: Build partnerships or ecosystems to enhance your value proposition.
6. Structure: Reorganise your internal operations for efficiency and effectiveness.
7. Process: Streamline the way you deliver value to customers.
8. Product Performance: Enhance the core capabilities and attributes of your product.
9. Product System: Expand or complement your product with a system.
10. Channel: Rethink how customers access your product or service.
Continuous innovation, as Corina Kuiper emphasizes, is not merely about tweaking a product; it’s a comprehensive mindset shift that involves various aspects of your business.