Eclectic Sheep - John Clegg

“Do Androids Dream of Electric Sheep?” – Philip K. Dick

Innovation is a broad ranging and very eclectic topic. With apologies to Philip K. Dick, author of the 1968 dystopian science fiction novel that inspired the movie “Blade Runner”, we can steal from his book title to ask the question: “do innovators dream of eclectic sheep?” Answer: they should.

Innovation is all about creating value, which can of course include making profit for customers, the way that many of us have been taught to think about value creation. But value creation can also extend in many other directions including improving the quality of life of those around us in society. As I have noted in earlier posts, organisations can no longer get away with simply creating value for their customers, and nontraditional market forces now exert pressure on all organisations from investors, from employees, and from society. That means we need to think much more broadly about innovation, which requires that we see it as an eclectic mix of value-creating opportunities. That way, we can move beyond innovation for profit and start to look at more social and altruistic forms of innovation, and how we can help to solve societal problems.

I see a lot of articles about how many different kinds of innovation there are. I see nearly as many ways of categorising innovation as there are articles! I like to think of categorising different types of innovation in terms of how they create value (because that’s why we innovate) and, that said, it’s useful to examine the variety of ways in which value can be created.

The image above shows six different ways to create value, and identifies the type of innovation associated with each:

changing the operating model by creating new activities or partnerships is business model innovation
introducing new technology or solutions by making either incremental or radical changes to existing offerings is product or service innovation
introducing scaled-back technology or solutions in order to offer a less capable but minimum viable product is disruptive innovation
reshaping what goes on outside the company by changing how various processes interact with each other is systems innovation
creating and enhancing internal efficiencies by improving techniques and/or equipment is process innovation
and solving societal issues by improving conditions for others is social innovation.

Each of these has a clear value creating step, and the value created does not need to be financial. In fact, the sixth way to create value, social innovation, might not lead to any obvious monetary benefit, although financial success can often follow as organisations who have successfully worked at the “base of the pyramid” have discovered.

Essentially, innovation at the “base of the pyramid” involves providing products, services or solutions to customers with extremely low incomes who need them but who, to date, have not been able to take advantage of them because they can’t afford them (this can of course also include elements of disruptive innovation). Because their reference point is having nothing that solves their problem, these potential customers will initially be content with a relatively modest offering and will not compare it unfavourably with more sophisticated, higher-priced products that are out of their reach. Thus, the entry barrier here is low and may well present opportunity for disruption. The “base of the pyramid” is a fascinating topic, more detail on this in my book (out later in the year) and possibly in a future post.

When you look at the potential value of a project or venture, how many different types of value do you think about? Creating societal benefits in addition to having an economically successful project may help you and your organisation in the future by creating a greater degree of social license. And, of course, it’s the right thing to do! And some of the different ways to create value described above might extend strategy outside your organisation to include the building of a wider value creation system including other players, or new platforms or ecosystems.

What do you think?

References and Further Reading

Dick, P. K. (1968). Do Androids Dream of Electric Sheep? New York: Doubleday.

Prahalad, C. K., & Hart, S. L. (2002). The Fortune at the Bottom of the Pyramid. Strategy & Business 26.

2 thoughts on “Eclectic Sheep”

Bryan C Dugas
April 20, 2021 at 1:06 pm

Competitive innovation from “Challenges” to both the private and public sector seem to accelerate the development of societal innovations. The four basics food, water, sanitation and shelter seem to need to most attention and several public/private challenges have provided solutions to these basic problems.
It is much better to define the problem, create a challenge with a monetary reward and get business and universities to “solve the problem”. Several teams often enter these challenges and provide competitive solutions which later help both industry and society in general.
This process has benefited both technological innovation (DARPA, Robotics, etc) and societal innovation (composting toilet). Funding for this type of societal innovation comes from public, private, and individual donations with the monetary/bragging rights for the winners/competitors of these events.
1. John Clegg
  April 20, 2021 at 3:44 pm
  
  Thanks Bryan, good points. This can certainly help and yes it has been demonstrated to do so. There are also some great examples of companies who have deliberately set out to provide societal value and who, having successfully done so, have tweaked their offerings and their business models to attack more developed markets. They have been able to succeed in the developed markets not least because they were forced to completely reinvent overheads and cost models in order to work at the base of the pyramid. More on this, including specific examples, to come!

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