Innovation is not just about inventing something new or improving something existing. It is also about finding new ways to create value for your customers and differentiate yourself from your competitors. Innovation can happen at any stage of your product development process, from ideation to launch, and can involve any aspect of your product, from its features to its delivery. By the end of this article, you will have a clear understanding of the 10 dimensions of innovation to create value for your customers.
What Are the 10 Dimensions of Innovation?
- Profit Model: How you make money from your product or service
- Network: How you connect with others to create value
- Structure: How you organize and align your talent and assets
- Process: How you use signature or superior methods to do your work
- Product Performance: How you design your core offerings
- Product System: How you create complementary products and services
- Service: How you support and amplify the value of your offerings
- Channel: How you deliver your offerings to customers and users
- Brand: How you represent your offerings and business
- Customer Engagement: How you foster distinctive interactions
These 10 dimensions of innovation are grouped into three broad categories:
Innovations in the ‘configuration’ category are all about how the organization is set up to deliver value. This category includes the types of innovation that are mostly internal, low visibility, but high impact. These are the innovations that affect how you make money from your product or service, how you connect with others to create value, how you organize and align your talent and assets, and how you use signature or superior methods to do your work. These are the innovations that create value for your business and give you a competitive edge. Examples of configuration innovations are:
Innovation in Profit model: How you make money from your product or service. For example, Netflix changed its profit model from DVD rentals by mail to streaming subscriptions. The New York Times changed its traditional ad-driven profit model to user subscription model.
Innovation in Network: How you connect with others to create value. For example, Airbnb created a network of hosts and guests to offer peer-to-peer accommodation. Ford was the first company to control entire supply chain, and introduced a strategy later known as vertical integration.
Innovation in Organizational Structure: How you organize and align your talent and assets. For example, Zappos created a structure based on self-management and customer service. Google introduced 20% rule which allowed employees to work on side projects, which led to the creation of Google News and Gmail. Apple adopted functional organizational structure and leadership model to excel in innovation.
Innovation in Process: How you use signature or superior methods to do your work. For example, Toyota developed a process based on lean manufacturing and continuous improvement.
Innovations in the ‘offering’ category are focused on what the organization makes and offers to sell. This category includes the types of innovation that are mostly external, high visibility, but low impact. These are the innovations that affect how you design your core offerings (products/services), and how you create complementary products and services. These are the innovations that create value for your customers and attract their attention. Examples of offering innovations are:
Innovation in Product performance: How you design your core offerings and their features. For example, Apple designed the iPhone with a touchscreen, a camera, and a music player.
Innovation in Product system: How you create complementary products and services. For example, Amazon created a product system of e-books, e-readers, and online store. Apple has developed an ecosystem of products that work together.
Innovations in the ‘experience category are focused on how customers experience your offerings. This category includes the types of innovation that are mostly external, high visibility, and high impact. These are the innovations that affect how you support and amplify the value of your offerings, how you deliver your offerings to customers and users, how you represent your offerings and business, and how you foster distinctive interactions. These are the innovations that create value for your customers and differentiate yourself from your competitors. Examples of experience innovations are:
Innovation in Service: How you support and amplify the value of your offerings. For example, Starbucks provides service by creating a cozy atmosphere, offering free Wi-Fi, and personalizing drinks.
Innovation in Channel: How you deliver your offerings to customers and users. For example, Uber delivers its offerings by using a mobile app, GPS, and rating system.
Innovation in Branding: How you represent your offerings and business. For example, Nike represents its offerings and business by using a swoosh logo, a slogan (“Just do it”), and celebrity endorsements.
Innovation in Customer engagement: How you foster distinctive interactions. For example, Lego fosters customer engagement by inviting customers to co-create products, share ideas, and join communities.
These 10 types of innovation are not mutually exclusive or sequential. They can coexist and complement each other in different ways. However, they have different levels of impact, visibility, and difficulty. Therefore, it is important to understand them well and choose the right ones for your product.
How to Combine Different Types of Innovation to Create a Unique Value Proposition
While each type of innovation can create some value on its own, the real magic happens when you combine different types of innovation to create a unique value proposition for your product. This will allow you to offer something that no one else can match, and create a loyal and passionate customer base.
To combine different types of innovation, you need to think holistically and creatively about your product. You need to consider how each type of innovation can enhance or complement the others, and how they can work together to create a coherent and compelling product story.
Here are some tips and techniques to help you combine different types of innovation:
- Start with the customer problem: The first step is to identify the customer problem that you are trying to solve, and the customer segment that you are targeting. This will help you focus on the types of innovation that are most relevant and valuable for your customers.
- Use the jobs-to-be-done framework: The jobs-to-be-done framework is a powerful tool that helps you understand what your customers are trying to achieve, and how they measure success. It helps you go beyond the superficial features or benefits of your product, and focus on the underlying needs and motivations of your customers. By using this framework, you can identify the types of innovation that can help your customers get their jobs done better, faster, or cheaper.
- Use the value proposition canvas: The value proposition canvas is another useful tool that helps you design and test your value proposition. It helps you map out how your product fits with your customer segment, and how it creates value for them. It helps you align your types of innovation with your customer pains and gains, and communicate them clearly and effectively.
- Use the business model canvas: The business model canvas is a strategic tool that helps you describe, design, and test your business model. It helps you map out how your product creates, delivers, and captures value for your customers and your business. It helps you align your types of innovation with your key resources, activities, partners, channels, revenue streams, and cost structure.
- Use the innovation radar: The innovation radar is a visual tool that helps you assess and compare your innovation performance with your competitors. It helps you plot each type of innovation on a radar chart, and see where you stand in relation to others in your industry or market. It helps you identify your strengths and weaknesses, as well as potential opportunities and threats.
By using these tools, you can combine different types of innovation in a systematic and effective way. You can create a unique value proposition that sets you apart from the crowd, and delivers real value to your customers.