strategic design & innovation

Three Lenses to Understand and Demystify Innovation

culture & capability value creation

Innovation is a word in very broad usage, but it can be hard to pin down exactly what people mean when talking about it. And when organisations don’t have a common language to talk about innovation, inevitably there are misunderstandings about goals, expectations and outcomes.  

Three Lenses to Understand and Demystify Innovation

To start off the new year, I thought I'd share a perspective as to how to demystify what we mean by ‘innovation’, by considering the term through three lenses.

Where can innovation occur?

On hearing the word ‘innovation’, it’s all too common for our minds to jump to either tangible new products such as Apple’s Airpods, or to new digital apps such as Uber, or the new generative AI application, ChatGPT.

Whilst new products are certainly a very important outcome of innovation, they are not the only one.

Innovation occurs throughout all areas of your business, and your business model.

Since you can easily lose people by starting to talk about ‘business models’, a simple theatrical analogy can be helpful:

  • there's innovation that occurs 'on-stage' – these are the products and services that your customers purchase and are primarily interested in engaging with
  • there’s innovation that occurs at 'front of house' – this is the customer, stakeholder and employee experience of interacting with your organisation
  • and innovation that happens 'backstage' – within your internal business processes and ways of working that customers don’t see but are integral to delivering your unique proposition

 How does innovation occur?

There is a media-fuelled perception that innovation is brought into the world by lone geniuses through some mysterious means. Incredibly innovative individuals such as Steve Jobs, Elon Musk and Jeff Bezos have become household names.  

Whilst this might occasionally happen, this is very much the exception.

Innovation is a team sport, underpinned by a creative yet disciplined, evidence-driven process.

Once you frame innovation as your organisational capability to consistently follow a repeatable process, achieving the desired outcomes becomes that much easier:

  • innovation is a disciplined process through which new ways of working, products, services and customer experiences which creates value for your customers, stakeholders, society and your business are designed and delivered.
  • strategic innovation is responsive to trends and shifts in your external environment, aligned to your business strategy, and builds your competitive advantage, enabling you to win in those domains in which you’ve chosen to play. 

What does innovation look like?

It is also very common to hear people disagreeing about what constitutes innovation – does it have to be something new to world and ground-breaking or does continuous improvement count?

The reality is that, given innovation is about creating new value, it all counts.

Innovation occurs across a broad spectrum of ambition, commonly distinguished on three levels.

The specific articulation of these needs to be relevant to your organisation, but here's one expression of these different “levels of innovation ambition”:

  • ​​​​​​​core - optimising and refining today’s processes, customer experience and value propositions through continuous improvement
  • adjacent - sustaining tomorrow’s business by extending value propositions, adding new channels, entering new markets
  • transformational - imagining and developing your future growth engines, entirely new value propositions and business models

There’s a very big difference between asking you team to improve the known the known and invent the future. Achieving a common language and understanding of where innovation happens, how it happens and what it looks like within your business, is a key first step to enabling you teams to deliver it.

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