In the world of business and entrepreneurship, innovation is probably the term that you come across more often than any other. Of course that makes perfect sense since innovation lies exactly at the core of an established business’ sustained growth or of a startup’s breakthrough success.
Yet, I have come to realize that people don’t clearly understand what innovation really means. It is one of those so common terms that everyone assumes well known, thus no one ever defines anymore and everyone perceives in a different way as if it is open to interpretation. If you randomly ask people to define it, you would get surprised by their inability to do so or by how much they miss the essence of the term in their given definition.
In this post I will scratch the surface of the matter by clarifying basic definitions and concepts.
One of the most common misconceptions regarding innovation is its direct association with advances in technology. While in our era most innovations, in terms of absolute numbers, occur in technology or utilize technological means in order to be implemented, innovation by definition does not require either. So, what is innovation?
Gerry Valentine defines innovation as “something that creates incremental value by providing a new or better solution to a customer’s problem”. I will borrow this definition but with a small tweak on it.
Erasing the word customer from the definition is critical, since innovation can possibly occur in a system’s internal function without necessarily having any impact to the customers that the system serves. In fact, I believe that a key cause for a great percentage of business failures is their obsession with product optimization and their subsequent total neglection of internal methods and/or processes optimization.
Prominent Innovation Examples
Following that, I will present a couple of well known innovations to bring the above definition on the ground and into practice.
Probably the most profound example of innovation in the new millennium is the Apple’s iPhone – and for good reason. When introduced in 2007, the iPhone provided a better solution in the mobile phone industry. We could probably create an endless list of advantages regarding its touchscreen feature as well as its operation system and its overall functionality but there is no need to enter into such details. I just want to mention that what fascinates me most, is that it was a brilliant way to create a device with “keyboard on-demand”, or more precisely “keyboard only when it’s needed”, which I believe was the main reason to dominate the market to the extent and the pace it did.
Another example that fascinates me greatly and in this case is associated with a system’s internal function rather than the customer’s experience, is UPS’s route optimization system. Since around 5 years, UPS truck drivers take virtually no left-hand turns – to be more precise left-hand turns account only for about a 10% of total turns. The company found out that the waiting time while attempting a left-hand turn on a commercial road, usually with traffic, wasn’t sufficient enough. By eliminating left-hand turns (the 10% mentioned above comes from some left-hand turns in residential roads with virtually no traffic) the company saves tens of millions in gas and delivers hundreds of thousands more packages every year, plus has reduced significantly its carbon emissions.
The above examples and their qualitative different innovations allow me to pass seamlessly in describing the different models of innovation mechanics.
Core Concepts of Innovation
If you study any kind of system – natural, mechanical, behavioural or whatever else you might wish, you will almost certainly identify common patterns in the way they grow or operate or adapt or whatever else is relevant in the case study system. In the world of business, a system might be a market or a certain product’s or service’s customers’ behaviour.
Once you identify a pattern in the internal functionality or the outcome, whether physical or service, of a system, then you have a possible space for innovation either by breaking that pattern or by optimizing it.
Pattern-breaking innovation occurs by a genuinely novel idea that fulfills the criteria of the definition given earlier. If you try to imagine a system diagrammatically as a series of nodes that are connected with lines then a pattern-breaking idea would create new, better nodes that would either replace the existing ones or be integrated in the system as additions or enhancements resulting in significantly multiplying the connections.
In the example of the iPhone, Apple created a better device, a better node in the mobile communications system that replaced the existing ones. But in the case of Facebook, Mark Zuckerberg found a brilliant way to enhance existing nodes, in this instance individuals with internet access, allowing them to create way more social connections than before.
On the other side of the spectrum, pattern-optimizing innovation occurs when you don’t change the nodes of the system but you rather improve significantly the way that the nodes interact with each other.
The above mentioned example of UPS’s no left-hand fits perfectly in that category. UPS still uses the same nodes, in its case warehouses and delivery destinations, and the same connection system, in its case delivery trucks moving on the existing road network, but altered significantly the way the desired route is designed achieving outstanding operational advantages.
I believe that all the above are sufficient to create a solid and easily comprehensible framework of innovation. Definitely, it doesn’t cover all of its aspects but I intend this post to be the first part of a small series related to innovation and I will come back soon with additional material tackling on incidents that might occur either inside or outside that framework.
If you have any thoughts on what you just read, either good or bad ones, I would appreciate it if you leave a comment below and let me know. Feedback is invaluable in one’s strive for progress. Until soon!