Many consumer facing brands are forced to innovate or become obsolete. MIT has studied some of these brands to result in a list of 12 dimensions of business innovation. Their research explains that organizations will be successful when they blend our growing knowledge of human intelligence with new technology.
In actuality, “business innovation’’ is far broader in scope than product or technological innovation, as evidenced by some of the most successful companies in a wide range of industries. Starbucks Corp., for example, got consumers to pay $4 for a cup of latte, not because of better-tasting coffee but because the company was able to create a customer experience referred to as “the third place” — a communal meeting space between home and work
where people can unwind, chat and connect with each other. Dell Inc. has become the world’s most successful personal computer manufacturer, not through R&D investments but by making PCs easier to use, bringing products to market more quickly and innovating on processes like supply-chain management, manufacturing and direct selling. And Google has become a multibillion-dollar goliath not because it has the best search engine, but because it pioneered “paid search” — the powerful concept that vendors would be willing to pay Google to match consumers with relevant offerings as a byproduct of
free searches the consumers conduct.
Conversely, technological innovation in the laboratory
does not necessarily translate into customer value. For
instance, high-definition television is a radically new innovation from a technological perspective, requiring new recording, transmission and receiving equipment, communication frequencies and programming. But the result — an incremental improvement in picture sharpness — is of limited value to the general consumer. One of the most technologically advanced computers ever created was the NeXT Cube, developed by Steve Jobs’ company NeXT Computer, Inc. The product featured a host of technological advances, including clickable embedded graphics and audio within e-mail, object oriented programming, magneto-optical storage and an innovative operating system. But the NeXT Cube was a commercial flop. Few compatible software applications were available, and consumers balked at the prospect of switching to a radically new system.
Defining Business Innovation
To avoid innovation myopia, we propose anchoring the discussion on the customer outcomes that result from innovation, and we suggest that managers think holistically in terms of all possible dimensions through which their organizations can innovate. Accordingly, we define business innovation as the creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business system. This definition leads to the following three important characterizations.
1. Business innovation is about new value, not new things.
2. Business innovation comes in many flavors.
3. Business innovation is systemic.