“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.
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.
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