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Innovation is all about coming up with new things that create value for your customers, and your organization. Unfortunately, lots of people have a myopic view of innovation. When you hear the word innovation in conversation, someone is almost always talking about a product or a service. Product and service innovations are great. But I want you to start thinking bigger. There are actually five main targets for innovation. Products, services, processes, technologies, and business models.
Products and services are the classic focus for innovation. We create new versions of existing products, and sometimes completely new products. Services might be for a fee, or sometimes they are free. And they might be stand alone services, for example, an auto body shop. Or they might be bundled with the product. For example, consider different levels of customer service support that might be sold with certain technical products. In any event, since these tend to be our main revenue generators, we focus on them for innovation and in the process, we miss other opportunities.
For instance, likely the most interesting and unheralded target of innovation. Is process innovation. Every organization is nothing more than a series of processes. How a product is designed, is a process. How it's manufactured is another process. How it's shipped around the world, yet another. If you can make your processes work faster, cheaper, and/or at higher quality, well that's dollars in your pocket and increasingly happy customers. Next, let's consider technologies as a target for innovation. Traditionally the realm of research and development, this is where scientists and technicians strive to discover new properties for a host of materials that might become part of a future product.
Increasingly modern businesses look outside the organization to purchase potentially useful technologies, and to find partner organizations with whom they can share the risks associated with new technologies. A relatively new target for innovation is the business model. This refers fundamentally to how we make money and add value as an organization. Consider the music industry. The old business model, was to sell albums, on records, then cassettes, then CDs. But now, most music is sold digitally online.
When's the last time you thought about the need for a fundamental change to your business model? The real problem with innovation is that people think too incrementally and often too exclusively about products and maybe services. Targets for innovation are all around you. If you and the team will take an honest audit about the types of innovations you've been pursuing. And compare them to the five targets we just discussed. You're likely to find several new areas of the organization ripe for innovation.
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