What is Innovation?
What is innovation and why does it even matter?
Innovation is what we at Treehouse call a ‘fat word’, in that it means different things to different people. Without doubt, innovation is an overused term, almost to the point where the word itself has lost all significance. Therefore, providing a definition would probably be helpful and necessary!
Defining innovation
At Treehouse, we define innovation as the result of bringing an idea to market for business benefit. It spans invention through to implementation and applies critical thinking to solve problems. In essence, innovation is about making the most of opportunities for both internal and external customers.
Innovation is typically associated with a product or service. However, it can equally be linked to client relations and insight, improvements in production processes, productivity, organisational design and efficiency or competitiveness.
What types of innovation are there?
Innovation spans a wide spectrum; it can be subtle, incremental changes through to ground-breaking, disruptive shifts that introduce entirely new offerings to fresh markets. The Ansoff Matrix is a strategic planning tool that offers a framework for devising growth strategies. The matrix displays different strategies for growth depending on the maturity of the product and the market.
Incremental Innovation
Incremental innovation refers to the systematic and continuous improvement of existing products or services within existing markets. It typically occurs in existing markets, although it can also happen when introducing established products or services into new market areas.
Typically managed using the Waterfall or Stage-Gate project management methodologies, this type of innovation is the lifeblood of doing business today. If you look at supermarket aisles, car dealerships or online retailers, you will see so many examples of incremental innovation. It’s not just a strategy but a crucial part of advancing forward in today’s competitive business environment.
Disruptive Innovation
Disruptive, also known as transformational innovation, occurs when new products or services are launched in new markets. The most transformational instances of this innovation arise when new insights lead to new products and services being launched. This causes disruption which then redefines market boundaries, shakes up existing market structures or revolutionises operating models. This type of innovation tends to use Lean or Agile development to deliver quality products that meet customer needs and allow for rapid adaptation to change.
Organisations that have uncertainty in their product or solution require a Build-Measure-Learn ethos, as documented in the seminal book ‘Lean StartUp’ by Eric Ries. The Build-Measure-Learn ethos is about speed and efficiency and reducing waste. It’s about ensuring that organisations don't invest time and resources into perfecting a product before they've confirmed that it's something customers want and are willing to pay for.
Airbnb is a good example of a market structure disruption. It has emerged as the world’s largest hotel network without owning any hotels. Instead, it is a massive collective of individual homeowners who each rent out their extra space, from spare rooms to holiday homes to travellers and holidaymakers seeking a place to stay. Essentially, Airbnb is a software platform that aligns the supply of available accommodation with the demand coming from guests looking for lodging.
Why does innovation matter?
A consistent flow of incremental innovation is essential if organisations are to avoid standing still. Life evolves, technology develops and, more importantly, client needs and expectations change. Staying consistent and current in a changing world is what incremental innovation is all about. Being focused on customers and delivering products and services that delight them is the key to business growth.
Transformational innovation can revolutionise an organisation’s appeal to investors and its market performance. It paves the way to new markets and opportunities for significant growth, often blindsiding competitors. This kind of innovation can make established products and services seem lacklustre, unappealing and irrelevant in the wake of a market that has changed and evolved.
The roadmap to innovation
We are often asked how organisations can become more innovative. The simple answer is that it starts with your people. According to a benchmarking study conducted by Treehouse, senior leaders from top organisations agree that an innovative organisation is characterised by having at least 66% of its people actively engaged in innovation. These employees are either active facilitators and enablers of innovation or they contribute to shaping the setting and culture in which innovation can grow and flourish.
An organisation can increase its capacity and capability for innovation by empowering its people. This process begins with a clear articulation of the organisation’s vision and the fundamental purpose behind its innovation initiatives. The next step is to identify and define the specific roles that contribute to fostering innovation, with an understanding that the responsibility to encourage innovation lies with everyone within the organisation. To systematically develop people’s innovation capabilities, it is important to evaluate current levels of competency. Following this assessment, individual development interventions can be strategically implemented to bolster innovation skills across the organisation.
Find out more about our Innovation and Change theme of training for your organisation:
