Innovation isn’t just about creating new products or services. While this is critical to an organization, it is also essential to look at other areas such as business model innovation, process innovation, and marketing innovation.
The Framework for New Products
We use the FIRE framework, which we have discussed many times on the show. The primary goal of this framework is to think about innovation with a full 360 view. The framework looks at three dimensions: the who (the customer), the what (the new product or service), and the how (ex., supply chain). Everybody tends to focus on “the what,” but all three are vital to successfully doing innovation.
Business Model Innovation
Business model innovation focuses on the mechanism of exchange of your product or service with the customer. One business model we have all seen is a subscription model. I pay monthly for my Adobe Creative Cloud subscription and receive many apps in return. Bundling is another business model in which a company combines various things to offer more value.
Freemium is another where mobile apps offer something for free but give more capabilities for a price. Razer and blades model is another one, where a company sells something for a low price, but a complementary good is needed to use that product. An example of this would be printers and ink. Leasing a car is another popular business model.
Lastly, crowdsourcing is where a company builds excitement around a product by offering pre-order and then manufactures the product based on the interest level.
Process innovation deals with delivering a product or service to the customer. It also deals with the sequencing, information, and communication aspects of the process. Ultimately, you need to figure out how to deliver more cost and time effectively to the customer.
How you provide the product can be just as important as the product itself. For example, the people who built the MINI cars used to keep the customer updated on the vehicle’s manufacturing process. They would also personally sign a letter for the customer that bought the car. This move created an emotional attachment for the customer and the company.
This process is what we call the “how” dimension. In today’s world, it is hard to break through the noise level and make something exciting. Packaging is one area of marketing that is a prime example of innovation. At HP, we tested our packaging a ton to make sure it arrived successfully to the customer. In one situation, we partnered with a university to have students create packaging designs. One group of students created a design that we loved, and we cut a deal with them to use the packaging for the company.
Another area is product placement, or how you get your product noticed. At HP, we did product placements on movies, tv shows, and even with the NBA. Lastly, it is essential to innovate on the pricing model and product promotion.
To know more about other aspects of innovation besides new products or services, listen to this week's show: Innovation Isn’t Just About New Products.