There are three different kinds of innovation for which all businesses must strive in order to survive. HFL Principal Associate, Jolyon Bone, examines the different kinds of innovation and why they require different kinds of leadership.
‘Innovation’ is a word that is thrown around a great deal, but is there a common understanding of what the speaker means? Frequently not. Innovation covers a number of activities and outcomes – and this is the result of many different pressures on a business to renew itself, its products and services, and to propel itself successfully into the future.
A consequence of this is that different processes may be required for different types of innovation. And most importantly, different types of leadership are required to make each type of innovation come to life.
In today’s dynamic market, an understanding of innovation and how businesses can improve their innovation performance is essential to survival. It is now a critical leadership capability and one that all of HFL’s clients are increasingly asking us to address in programs and coaching.
We can divide innovation into three distinct types: Incremental (or Sustaining) Innovation, Strategic Innovation, and Disruptive Innovation.
• Incremental (or Sustaining) Innovation is innovation directed at existing products and services with the objective of making small but important changes to obtain the greatest extension to the life cycle of the product/service. These innovations are commonly designed to respond to customer requests, competitive threats, regulatory changes, service and support issues, and incorporate technical improvements. These are ‘normal’ product improvements that some (but not all) businesses currently accommodate. Because of the minor nature of these changes, incremental innovation has not been the driver for cultural change in businesses – until recently.
• Strategic Innovation is innovation that is usually directed from Board level in recognition of a longer term vision of the direction in which the business is to proceed; it may be an extension of the existing product range, or may be significantly different (for example, to capitalise on a particular distribution or manufacturing or technology strength). Strategic Innovation may therefore require a more radical culture shift and leadership challenge than Incremental Innovation. It could also incorporate Disruptive Innovation (below).
• Disruptive Innovation is innovation that significantly changes the business model of the whole business, or at least a large segment. It may come about by an internal business decision (e.g. Apple’s decision to get into the portable music business in 2001, a completely new mass market business model, which led to sales of over 20 million iPods in 2005 alone), or it may come about as a result of new ways of doing things – Henry Ford’s comment that “If I’d asked people what they wanted, they would have told me ‘faster horses’” illustrates the point – and is remarkably consistent with Steve Jobs view that “We can’t expect our customers to know what they want”. Disruptive Innovation is often driven by new technologies, and not by market intelligence. It is also introduces other radical differences to the organisational and leadership challenges.
As you might imagine, each of these different types of innovation will require different skills, different processes, different organisational settings, and possibly different time horizons.
HFL has developed a series of briefing workshops (from half-day explorations to two-day innovation strategy development executions) for leadership teams concerned with ensuring their organisations’ innovations settings are optimised.
We have also developed an innovation culture audit tool (beta version) to assist organisations in understanding how their wider teams impact on and contribute to innovation. We are seeking interested organisations to participate in the pilot of this tool.
If innovation leadership is an important part of your corporate strategy, please contact us for more information. Mail Alistair Gordon for Australia (Alistair.Gordon@hflleadership.com) or Jim Livingstone (Jim.Livingstone@hflleadership.com) for Asia.