The Three
BIG Patterns are:
1. CUSTOMER EXPERIENCE SHIFT eg Starbucks
The Three
BIG Patterns are:
1. PLATFORM SHIFT eg Amazon
The Three
BIG Patterns are:
1. BUSINESS MODEL SHIFT eg Zipcar, uber.
CHOOSING THE RIGHT APPROACH
(Business Model / Platform / Customer Engagement) ?
Use Business Model Innovation when : • Part of your business offering is over/under valued.
• Large group of potential customers cannot afford your offering.
• Not much variation in industry (in relation to business model).
• Assets in business can be restructured indifferent economic model.
• Internal business systems are strong on reliability, flexibility, value delivery.
• Profit model changes have benefit for customer and business.
CHOOSING THE RIGHT APPROACH
(Business Model / Platform / Customer Engagement) ?
Use Platform Innovation when : • Customers have to show considerable skill/ persistence to get problem solutions.
• A group with similar needs/ideas exists without a forum/hub for them to unite.
• Demand for a complex set of assets/capabilities exists – too difficult to meet.
• It is possible for businesses to combine and allow access to each others assets.
• It is possible to co-opt customers, competitors to ‘work for’ your business.
• There are ways to expand/extend/diversify current business offering.
CHOOSING THE RIGHT APPROACH
(Business Model / Platform / Customer Engagement) ?
Use Customer Engagement Innovation when : • Complaints about service and/or low customer expectations are ‘normal’.
• Many potential customers are not active in market due to poor service.
• Business models have punitive switching barriers, try to get customer ‘lock-in’.
• A different buying model/experience can be found (compared to existing).
• Engagement through values, sense of self, connections to community is possible.
• Excellence on one market can be transferred to another market.
CORE
– change the known - one or two types involved – low risk and reward.
- works best if the business is already a leader in that market
– usually minor product improvements to existing range/same customer base.
ADJACENT – change the boundaries – three of four types involved - higher risk and reward.
- reframing offering to significantly shift customer expectations / value delivery.
- Can bring years of advantage by ‘resetting’ market boundaries.
eg Method – cleaners as ‘household fashion aesthetic’
TRANSFORMATIONAL
- change the game – five or more types involved –high risk and reward.
- market maker/ breaker affecting existing markets –may create new businesses.
- big effect on customer and competitors.
eg iTunes –digital music & movies sales.
CHOOSING THE RIGHT LEVEL OF INNOVATION AMBITION
(Core /Adjacent /Transformational) ?
Use Core innovation when :• Business is already strong in market with products leading growth.
• Competitors are focused on product performance – other possibilities exist.
• Market has not much innovation /excitement, and has high barriers to entry.
• Cash flow is important – short term gains needed.
• Assets & capabilities already in place to drive the innovation.
• Low risk tolerance or low innovation capability in business.
CHOOSING THE RIGHT LEVEL OF INNOVATION AMBITION
(Core /Adjacent /Transformational) ?
Use Adjacent innovation when :• Existing offerings not showing growth, due to strong competitive pressure.
• Competitors using one/two types of innovation outside product performance.
• Market is mature/declining – need to make changes or exit.
• Need significant returns on modest investment, but can allow time to develop.
• Ability to repurpose assets, further invest for flexibility etc exists.
• Business is ready for change (risk, opportunity, new markets etc)
CHOOSING THE RIGHT LEVEL OF INNOVATION AMBITION
(Core /Adjacent /Transformational) ?
Use Transformational innovation when :• Dramatic growth increase needed – need for fundamental changes understood.
• Competitors increasingly active – market structure change may overcome this.
• Market is mature/declining, low barriers to entry, boundaries blurring.
• Time for major change to happen exists, radical new growth needed.
• All existing assets and capabilities are up for review / redeployment / redundancy.
• Both business offering and market served may change completely.
INNOVATION Strategy is found by combining the approach : -
Business Model Shift
Platform shift
Customer engagement Shift
With the scale /size of innovation : -
Core - ‘change the known’
Adjacent – ‘change the boundaries’
Transformational – ‘change the game’
and using innovation tactics – see handout.
IN GROUPS OF FOUR
Recommend a strategy for ONE of
a) A corner dairy in Auckland
b) A video rental business
c) A hotel in Queenstown