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Jeffrey Phillips

Innovation

Three Innovation Types: Evolution, Preventive, and Creative

Convince management that the first two are possible in the short term

Published: Tuesday, November 7, 2017 - 12:02

I

was thinking over the weekend that for years we've positioned innovation incorrectly. Too often we position innovation as creating a new and valuable offering or solution, ready when customers demand new products and services. In other words, we've positioned innovation as something to do to prepare for future business, future needs, and future demands. 

Innovation does answer for these issues—identifying needs and developing ideas for products and services for unmet and perhaps unanticipated needs. But in the hustle and bustle of day-to-day business, the main focus is on the now. What can you deliver today, this week, this month, this quarter? How can you help me achieve my quarterly revenue and income goals?  Sure, the future is nice, but I’ll worry about that when I get there. With this mentality, cost cutting, becoming more efficient, and gradual but general improvement is the key focus, not innovation per se.

Making innovation more relevant right now

So the question becomes, how do you make innovation more relevant, right now, to executives and managers who are so focused on the short term? One approach would be to focus on the “short term,” i.e., what can innovation do for us to put better products on the shelves in fewer than 90 days? The general answer to that, given product development cycles, channel issues, and customer awareness is: Not much, except perhaps in the virtual world. Building, modifying, and releasing a physical product is going to take more than 90 days, and 90 days is the magic time frame. Anything we can do to affect revenue and cost within 90 days is good. The time frame beyond 90 days seems almost imaginary.

Innovation, where practiced at all, becomes incremental because of this pressure to generate rapid results. Even if we can speed up innovation activities (e.g., we’ve run innovation programs from problem definition to fully developed prototypes in under a week), you’ve still got to go through the product development and launch cycle. This means innovation will be focused on items and attributes around the periphery—messaging, packaging, claims—rather than on interesting or radical innovation of the product or solution.

Another approach is to use innovation to ferret out efficiency gaps. If we can’t create better products and services, can we use innovative thinking to shorten any barriers or gaps to bringing our products to market with less cost or with fewer inputs? This has been the management focus for years—right-sizing, outsourcing, automating. It doesn’t necessarily lead to new products but may lead to less expensive products or more rapid turns of incremental products. 

So, while we can speed up the existing processes and use innovation to identify gaps or inefficiencies, or use innovation to make some changes to the periphery of the product or service, there’s not a lot of innovation that can be delivered that will affect the bottom line in 90 days. So we need to think about innovation differently, or perhaps in different categories.

Categorizing innovation

Clearly, as I’ve defined above, there's a real need for focus on process and peripheral innovation. These innovations are meant to gradually improve the product or service, cut costs, and deliver more bottom-line value, and do so quickly. The driving pressure for this innovation focus is cost reduction, time reduction, and the desire to show customers something “new,” even if the newness is relatively minor.

There’s also a need for preventive innovation. I’ll call any work that blunts attacks by existing competitors or new entrants preventive. This kind of innovation identifies potential openings and gaps in a product line, or new “in demand” features or benefits that you don’t currently offer. Preventive innovation considers a slightly longer time frame—perhaps two or three quarters—and doesn’t necessarily create a new product as much as identify missing features or product-line gaps, and carefully evaluate what competitors and potential entrants are doing. 

Then there’s radical or disruptive innovation, i.e., creating a completely new product or service, or disrupting an existing adjacent market. This kind of innovation takes focus and planning, commitment for quarters or even years, and full commitment over several planning and budgeting cycles. This kind of innovation ends up on the magazine covers and is what every CEO wants but can’t quite understand how to deliver, given the demands for quarterly results.

Three horizons

The three categories I’ve defined above are exceptionally similar to the “three horizons” model that many innovation consultants talk about. But rather than call them “incremental,” “radical,” and “disruptive,” I think it makes more sense to describe them based on what they are: constant evolution, preventive, and creative.

The first type of innovation is necessary (and is almost always underway) because your products and offerings can’t sit still. You must find ways to cut costs, make your delivery more efficient, and tinker around the edges of existing products. The second type of innovation is probably the least understood because too many companies don’t understand what their competitors are doing, and are often shocked by the offerings of new entrants. Companies need to do a lot more preventive innovation, from a defensive point of view, to ward off new entrants and sustain or grow market share. 

Everyone acknowledges the importance of creative innovation—that is, the creation of a completely new offering that radically changes the competitive landscape—but few truly know how to do it or are willing to commit the resources to do it.

Investment cycles

Here’s where every innovation consultant will lecture you about how much time and investment should be made in each of these three portfolio segments. You can think about the three horizons, or my evolution, preventive, and creative phases, as components of an innovation portfolio and next ask: How much time, energy, and investments should go into each one? The general rule of thumb answer is 70:20:10. Seventy percent of your innovation effort should go into evolution, 20 percent into preventive, and so on. But what if your budget for innovation is zero? What if executives demand innovation but don’t provide budgets or funding or resources?

The inevitable fallback position is to conduct efficiency innovation (evolution) because that’s something your teams understand and can do relatively well now. And, of course, you’ll build and staff one high-profile team to explore some really interesting innovation (creative), but they won’t have the commitment or funding to stick it out—it’s merely window dressing because you expect to show some immediate results from the evolution innovation during the next few weeks, and everyone will be satisfied.

Let’s change the language

I think innovation champions and teams would do themselves a big favor by refocusing innovation language and talk about innovation in line with processes and outcomes.  We can flavor our language with evolutionary innovation to deliver short-term benefits, preventive innovation to resist new entrants and sustain market share, and creative innovation to win adjacent markets and customers. 

Once we win the language battle and demonstrate we can deliver on evolution and preventive efforts, we can get the funds and resources to do truly creative innovation.

First published Sept. 11, 2017, on the Innovate on Purpose blog.

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About The Author

Jeffrey Phillips’s picture

Jeffrey Phillips

Jeffrey Phillips is the lead innovation consultant for OVO, which offers assessments, consulting, training and team definition, change management, innovation workshops, and idea generation space and services. Phillips has led innovation projects in the United States, Western Europe, South Africa, Latin American, Malaysia, Dubai, and Turkey. He has expertise in the entire “front end of innovation” with specific focus on trend spotting and scenario planning, obtaining customer insights, defining an innovation process, and open innovation. He’s the author of Relentless Innovation (McGraw-Hill, 2011), and 20 Mistakes Innovators Make (Amazon Digital Services, 2013), and co-author of OutManeuver: OutThink—Don’t OutSpend (Xlibris, 2016).

Comments

Innovation

Most of the solutions will be within, around, or near to the problem. Out of the box is something becomes more of as concept like.