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The 12 Different Ways For Companies To Innovate
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Technology tends to be transforming innovation at its core and allowing companies to test new ideas at prices and speed that was unimaginable even a decade ago. It is possible for companies to stick features on the websites and tell within hours how clients respond. It is possible for companies to see results from in-store promotions, or efforts to boost the process productivity quickly. Today, many CEO’s are considering innovation as a top agenda. For instance, Ford Motor’s CEO claimed that innovations will be the compass by while the company set its direction, and it will adopt innovation as the core business strategy. Companies are considering innovation as the way to keeping customers happy and competitors at bay. According to Mohanbir Sawhney, Inigo Arroniz, and Robert Wolcott, business innovation is the creation of substantial new value for clients and the firm through creatively changing one or more dimensions of the business system. In this essay, I intend to evaluate critically the conclusion and recommendation made by Sawhney, Arroniz, and Wolcott in their article the 12 different ways for companies to innovate.
Innovation is far broader in scope than technological or product innovation. Many companies usually take a narrow view of the definition of innovation by centering on just technological advancement and traditional investment in R&D. Sawhney et al. (2006) suggest three board characterization of business innovation. Business innovation is systematic, it is about new value, not new things, and comes in many flavors. In regards to business innovation being about a new value, it makes no different how a company thinks its new product is innovation. However, what matters is whether customers will realize the new product and pay for it. The customers are the ones who usually decide the worth of innovation through voting with their wallets.
In regards to business innovation being in many flavors, it means that innovation may take place on any dimension of a business system. About business innovation as systematic, it is necessary for a company to consider all the dimensions of its business system.
Sawhney et al. (2006) developed innovation radar. The radar provides a 360-degree visual view of the companies’ current innovation focus and the strategic positioning. It was as a result of an extensive data analysis based on the online assessment test done by six or more managers from the company. The radar serves as a point of departure for the strategic development and broadens the spectrum beyond product delivery and to value creation. It covers innovation in four major business dimensions. The offerings a company creates (WHAT), process it employs (HOW), customers it serves (WHO), and points of presence used to take its offering to the market (WHERE).
According to Sawhney et al. (2006), they argue that no innovation is isolated and that innovation in one area will probably result in other innovations. A product innovation in one area may lead to other production innovations. Between the four business anchors, the authors included eight other dimensions of the business system that may serve as avenues of pursuit. Hence, the innovation radar has a total of 12 key dimensions.
The authors laid out the 12 dimension of innovation mapped on the innovation radar anchored by the company’s offering, the process it employees, who their customers are, and where are its touch points. The offerings refer to the firm’s products and services and innovation in this dimension require the creation of new services and products valued by customers. A platform reverses to a set of common components, technologies, or the assembly methods that serve as the building block for services and products. The platform innovation involves the use of modularity to create a diverse set of derivative offerings more cheaply and quickly than if they are stand alone items (Sawhney et al. 2006). On the other hand, the solution is a customized and integrated combination of services, products, and information that solve the customer problems. The solution innovation tends to create value for clients through the breadth of assortment and the depth of integration of different elements.
When innovation on the dimension of the customer, the company should discover a new customer segment or even uncover unmet needs. The customer experience dimension considers everything that a customer feels hears, sees, and experiences while interacting with the company at all moments (Sawhney et al. 2006). When innovating on the customer dimension, the company should rethink the interface between its customers and the organization. The value capture refers to the mechanism used by the company to recapture the value that it creates. Thus, so as to innovate along this dimension, the company should discover untapped revenue streams, develop a novel pricing system, and expand its ability to capture value from the interaction with partners and customers.
Processes refer to the configuration of the business activities used to conduct the internal operations. So as to innovate along the process dimension, the firm may design its processes for greater efficiency, faster cycle time, and higher quality. The changes involved in this dimension can include relocating the process or even decoupling the front-end from the back-end. Organization refers to the way the company structure itself, its employee’s roles and responsibilities, and its partnership. The innovation in this dimension involves rethinking the scope of the activities of the firm and also redefining the responsibilities, roles, and incentives of different business units.
The supply chain refers to the activity sequence and agents that move information, goods, and services from the source of delivery of the service and products. When innovating in this dimension, the company may streamline the flow of information through the supply chain, enhance the participant’s collaboration, and change its structure (Sawhney et al. 2006). The presence involves the channels of distribution that a company will employ to take the offerings to markets and those places where customers will buy the offerings. Thus, innovation involves the creation of new points of presence or even using the existing ones in a manner that is creative. In networking, a company and its services have a connection to customers through a network that sometimes become part of the company’s competitive advantage. Hence, innovation in this dimension involves enhancement of the network that increase the value of the firm’s offerings.
According to Sawhney et al. (2006), the innovation radar can help a company to determine how its current strategy is doing against its competitors. When using this information, the company can identify the opportunities available and prioritize on which dimension that they will focus its efforts. Innovation must be able to innovate on several of the dimensions mentions. Research supports the notion that a successful innovation strategy tends to focus on the few high-impact dimensions instead of attempting a shotgun approach along many dimensions at a go (Sambrook, 2011). Hence, the innovation radar can guide how a company manages the increasingly complex business system in which they add value, enable innovation beyond products, and also technologies.
Almost all CEOs and the marketing executives usually feel that innovation is an essential component of corporate success. However, most senior managers have a narrow view of innovation as they feel it is about new product development or research and development. The danger of having this myopic view of innovation is that it can erode competitive advantage. Most companies in an industry start copying the best practices resulting in the commoditization of the industry. It is essential for people to view innovation in broader terms than only product and technological innovation.
According to Sawhney et al. (2006), so as to avoid innovation myopic, it is necessary for companies to look at customers outcomes that result from the innovation. It means looking holistically at all the possible dimensions through which a firm can innovate. Sawhney et al. (2006) argue that business innovation is about the new value of creating new things can not be sufficient to create value. Innovation concerns creating value for customers and other stakeholders and the company by creatively changing one or more dimensions in the business system. Hence, when following the innovation radar described by Sawhney et al. (2006), it is possible to understand how to bring opportunities for business to innovate and create value to all concerned.
When considering the innovation radar, it provides a valuable tool for assessing the innovative dimension of solutions. However, it has one severe limitation as it does not say anything about value creation for the society. Based on the radar, it requires the corporations to change and to adapt their existing strategy to refocus actions on clients and the firm. The question that remains is what about other stakeholders? Corporations are the multi-stakeholder entities, and they will not survive for long unless they know this in everything that they do. Hence, ignoring the interests of any of the stakeholders can be fatal, which may happen straight away or in the future. Filho et al. (2010) claims that innovation should not only be about increasing the value proposition for customers and companies, nut also takes into consideration the society as a whole.
According to Hamel (2003) so as to be successful at innovation, a firm should have a well-developed model of how innovation looks like as being an organizational capability. Hamel (2003) state that there are few senior managers who can describe their corporate innovation system. There are also few companies that doing innovation such as Wal-Mart, Starbucks, Dell, and Google. So as to develop an organizational capability in innovation, there is a need for a strategic decision. Just like Sawhney et al. (2006), Chauvel (2011) agree that innovation is a way that an organization can create competitive advantage. So as to implement a strategic decision, there is a need for a significant investment, and there should also be a significant return. The investment in the creation of innovation capability is about making a trade-off regarding how the company will compete. Chauvel (2011) claims that the firm must evaluate trade-offs so as to determine the greatest return.
Today, the technology prowess does not equate with business success. Professor Clayton Christensen from HBS was the first person to understand why that happens in his work of disruptive innovation. Clayton observed that large companies do not spot and capture the new wave of innovation because they focus on serving their customers well (Santos, 2013). The customer-centricity tend to lead companies to focus on the delivery of incremental innovations demand by their best clients while they ignore the new wave of innovation that start with non-clients who adopt lower-end solutions. Being a market leader tend to hinder innovation because the companies to more tied to their current business models that historically served them extremely well. Market leadership and customer centricity tend to lead companies to fail through blinding them to innovations in the marketplace.
It is essential for companies to start re-thinking their innovation strategies because there is a new shift happening in the marketplace. In the 21st century, innovation tends to be happening outside corporation and not inside corporation (Santos, 2013). It occurs because of the widespread availability of knowledge and the capabilities in the economy and through the method of integrating, sharing, and accessing this knowledge. As a result, innovation is coming from users innovating by themselves, from the open-source communities, through crowd-sourcing, and through networks of partners. Hence, those people with proper capabilities and skills are essential, and companies should allow them to consider innovation across the organization. Innovation tends to feature a causal relationship where innovation in one area results in innovation in other areas.
Innovation is the specific tool of entrepreneurs as it is the means in which they can change the meaning and the value of the existing assets. Innovation usually leads to the implementation of new changes, services, and incidents (Schroll & Mild 2011). Innovation is not accidental but occurs as a result of a powerful search for entrepreneurs who are not just looking for, but they have the knowledge to grasp the manner of successful innovation and implementation. Innovation refers to the process of purposeful, systematic, and organized search of opportunities and changes that may result from these changes. According to Sawhney et al. (2006), they define business innovation, and the search for new value and not only products, to skillful seek the opportunities and undeveloped areas of the market and customer. Finally, it is a systematic process of exploration and innovation that encompass the necessary elements like distribution channels.
Baregheh et al. (2012) states that innovation greatly recognized in terms of its important in making the contribution to the organizational performance, success, and survival. . Rowley et al. (2011) states that innovation is the lifeblood of corporate growth and survival. It represents the core renewal process in any organization and today, there is great value placed on intangibles such as market relationships, intellectual property, brands, and knowledge when compared to tangible assets. It is important for companies to make sure that innovation purposefully built around the experiences of people and that they can provide real value. Low et al. (2007) state that innovation positively correlate to market orientation and that the two activities positively correlate to firm performance and the extent of change in the competitive environment of the firm.
Research indicates that aside from the new products, there are very few companies that have taken a hard look at where the firm is spending the innovation money and the relationship between that and the overall corporate strategy. In most cases, companies tend to select innovation targets based on looking at where they always look or in response to the competitor’s innovation (Pearson, 2003). It is important that companies should start being more strategic and deliberate. It is necessary that they start taking a comprehensive look at all the ways that they can do business and select the dimension that they will focus their innovation resources (Low et al. 2007).
It seems like so as innovation can be truly effective for any enterprise, it must be all pervasive and incorporated into all activities of the business from the concept to commercialization. It is also necessary to ingrain it into the organizational culture. Sawhney et al. (2006) presented the 12 dimensions of business innovation that include supply chain, presence, branding, networking, structure, organization, service offering to customer, and structure and processes. Rowley et al. (2011) identified eleven types of innovation including hybrid, technical, administrative, service, product, production, management, organizational structure, commercial, and business system. Based on these researchers, innovation in any of these areas impacts another area. Hence, the management needs structures to examine and also address the causal relationships involved in innovation.
Based on the readings on innovation, innovation can happen in any dimension of the organization’s business model. The measurement of innovation is in terms of the value that it adds to organizations instead of the novelty of its results (Pearson, 2003). For example, a new product that is technologically superior to the competitors and meets the customer’s needs may fail because it does not have an effective sale and distribution channel. When innovation, it is essential for the organization to consider all the dimensions across which the innovation can take place.
Innovation tends to be a difficult concept to understand and also implement. With the current understanding of innovation process, establishing an accurate and adequate measurement system right away tend to be unlikely. When using the 12 dimensions identified by Sawhney et al. (2006), it is possible for a firm to develop its innovation strategy and change the basis of competition. As the dimensions interact with one another in some way, the organization needs to ensure a balance of value preposition and consistent across all related dimensions. It is essential for managers to start approaching innovation from a comprehensive and general management angle. The companies will also need to take an evolutionary approach to relationships, concepts, and competencies develop over time. The management should find a balance between corporate creativity and efficiency so as to turn innovation into commercial reality. Innovation tends to be a broad subject that impacts all aspects of the organization, and it is integral to the firm's successful performance. It is the key to growth that brings the market advantage related to competition and customers and workforce advantage related to performance and talent.
Baregheh, A., Rowley, J., Sambrook, S. & Davies, D., (2012) Innovation in food sector SMEs. Journal of the Small Business and Enterprise Development, 19(2) 300-321
Chauvel, D (2011). Leading issues in innovation research. Academic Publishing International Ltd
Hamel, G (2003). Innovation as a deep capability. Leader to leader, 27
Idowu, S Louche, C & Filho, W (2010). Innovative CSR: From the risk management to value creation. Greenleaf Publishing
Low, R., Chapman, L. & Sloan, R. (2007). Inter-relationships between innovation and the market orientation in SMEs. Management Research News, 30(12). 878-891
Pearson, E. (2003).Tough-Minded Ways to Get Innovative. Harvard Business Review on Innovative Enterprise, pp 27 – 48, Harvard Business School Press
Rowley, J. Baregheh, A & Sambrook, S (2011). Towards an innovation-type mapping tool. Management Decision, 49(1), 73 – 86
Santos, F (2013). The challenge of innovation. Accessed on 9th October 2015,
SAWHNEY, M., Wolcott, R. C. (2006). The 12 Different ways for the companies to innovate: Management of technology and innovation. MIT Sloan Management Review. Spring, 47(3), 75-81.
Schroll, A., & Mild, A. (2011). Open Innovation models and the role of internal R&D: An empirical study on open innovation adoption in Europe. European Journal of Innovation Management, 14(4). 475-495
Sambrook, S (2011). Towards an innovation-type mapping tool. Management Decision, 49(1), 73 – 86
Sherry Roberts is the author of this paper. A senior editor at Melda Research in cheap reliable essay writing service if you need a similar paper you can place your order for a custom research paper from cheap assignment services.
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