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On innovation strategies

Updated: Mar 18, 2022

The most effective innovation strategy for any company is building an innovation-friendly environment. With a culture that welcomes collaboration, is open to change and empowers employees. A clear and well communicated corporate strategy with effective resource allocations. And corporate-wide processes for idea generation, selection and data validation.

But on a more prosaic level, companies can learn from their most successful peers. In their book, The Invincible Company, (Much recommended) Alexander Osterwalder and coworkers use the Business Model Canvas to dissect the innovation strategies of many innovative companies and expose the roots to their success.

I take the liberty to rearrange and simplify some of the examples from the book by applying our Two9Six Consultants Motivation Mapping method. For anyone who has not read this blog (possibly most of you) this method evaluates the added value created by any given product or service along 5 main attributes:

  • Autonomy: Empowering consumers, increasing independence and customizing products to needs.

  • Vanity: Aspects that increase consumers status, sense of joy and visibility.

  • Comfort: Making things simpler, increasing accessibility, and compatibility with existing habits.

  • Caution: Reducing or removing unwelcome attributes: costs, time loss, risk and privacy loss.

  • Virtue: Contributing to loftier causes, such as social and environmental benefits.

The method stimulates seeking multiple features that increase the attractiveness of the product, with the aim of identifying potential benefits that were hitherto ignored.

An important driver to innovation is the elimination of barriers to consumption. It is best demonstrated with a real life example. Introducing Tinder, now the most famous and successful dating site. Tinder did not invent the market and online dating sites were well established when Tinder joined the frey. But Tinder’s exceptional success is owed to 3 new features.

Most importantly, the elimination of the industry’s greatest barrier: A fear of rejection. (In Motivation Mapping method, this features under Caution). As known to anyone who’s ever dated, or even just watched films about teenagers, so many opportunities for happy matching are lost because both parties are too skittish to make a move. Tinder solves this in two steps. First, users are shown pictures of other users in their vicinity that match a given filter (gender, age, preferences…). They then indicates whom is worthy of a second glance. In the second step, Tinder enables only users that have mutually approved of each other to connect. This flow provides at least perfunctory reassurance against rude rejection.

But Tinder didn’t stop there. They exceled in making the process intuitive and simple. (Comfort, in Motivation Mapping method). In Tinder, all that’s required to separate between potential suiters and rejects, is swiping pictures either left or right.

Furthermore, by limiting users to geographical proximity (Accessibility, also a Comfort driver) Tinder succeeds in increasing the potential of fruitful matching. The end result was that Tinder became so successful it drew an ever growing audience, significantly increasing the chance of finding a partner, however fleetingly. Being able to fulfill customers wishes beyond previous capabilities, is an act of Empowerment (Autonomy). No innovation could wish for more.

Companies can identify barriers to consumptions by observing customers and by interviewing non consumers, combined with analyzing all elements of Caution in the Motivation Mapping method, namely: Reducing or removing unwelcome attributes: costs, time loss, risk and privacy loss.

Increasing a user’s Autonomy, is a driver to many famous innovation strategies. This often transpires in one of two forms:

  • Removing dependencies: many breakthrough innovation can be typified by successfully eliminating a dependency on another tool, provider or skill set. For example the Apple iPhone introduced touch screen equipped with virtual collapsible keypads. This enabled maximizing the screen size to the size of the device and made accessing webservices on a mobile device a viable alternative to the PC. This unleashed a whole market for on-the-move webservices. Similarly MPesa provided bank services via a simple mobile phone for people who were too poor, remote (or both) to afford a bank account. Facebook made microblogging accessible to people without the required technical skills.

  • Collapsing market segments: While market segments allow companies to focus their products and adapt them to the need of the market segment, it is sometimes the relaxation of segments that drive the innovation. This empowers consumers by providing them with all the benefits, that were split between confined product categories, in a single product. Thus eliminating the need to select between unsatisfying alternatives. When Land Rover realized that cross country vehicles don’t have to be bare and rugged are they introduced Range Rover creating a new sub category of luxury SUVs. Similarly, Tesla realized that electrical cars don’t have to be spartan and soulless, mingling the electric car category with the luxury car segment.

Yet, in most cases, the essence of strategy is making deliberate choices. And innovation strategy is no exception. Many innovation strategies focus on delivering selected benefits at the expense of others (often in opposition to the orthodox motivation portfolio offered by the more traditional companies). Consider the following examples

  • Costs and time saving (Caution) above Simplicity (Comfort). This choice plays out when outsourcing activities to consumers. The best example is IKEA. It is easier having the manufacturer constructing your cupboard, than doing it yourself. However, by designing furniture that is easy enough to self-assemble (everything is relative!), IKEA was able to save on storage and transportation costs, savings that were passed on to consumers. The low storage costs also means that an IKEA could store stocks on most items, considerably reducing delivery time.

  • Status (Vanity) and quality assurance (Caution) above costs (Caution): Consider the “Intel inside” strategy, that was effective so long intel chips were associated with high quality and seen as a status symbol. This strategy is taken by prestigious components manufacturers to distinguish themselves from commoditized competitors. Other examples include Bosch ABS breaking systems, Dolby sound systems. To achieve this companies invest in branding, and intellectual property.

  • Customization (Autonomy) above Costs (Caution) – and vice versa: Adidas Specialty and Apple Genius store – provide a high level customized experience (with added values such as status and simplicity) at the cost of price competitiveness. The opposite strategy would be to focus on the lower cost by forgoing customization and offering standardized options that most people want but doing those very well. Citizen M hotels are an example of this strategy. This strategy specifically requires for a cost/benefit analysis for the different features to identify which add value at a given price range. For example, Citizen M found that a Spa and a Gym are costly items that are not sufficiently used by customers to justify the investment. However, at a higher price segment, the investment costs for these items remain similar, but earning potential is far greater.

  • Customization (Autonomy) and Costs (Caution) above Compatibility (Comfort). This choice affects channel innovation, for example direct sales. Removing channels generally comes at the costs of compatibility. I.e. the ability to combine several activities in one (for example going to the supermarket to buy a range of different and unrelated products, instead of buying each product in a separate, specialized store). This is justified when it is coupled with lower costs or customized experience. For example Dollar Shaving Club created its own supply chain, as has Nespresso. And Much before them was Tupperware.

  • Empowerment (Autonomy) above Risk (Caution). As products become more complex, the design and production of all components are often beyond the capacity of most companies. Hence companies outsource the production (or management, in case of services) of some of their components. The risk for the user is manifested when things go wrong (as they often do), and the manufacturers of the product and components each blame the other. This risk is acceptable because most of the time, the product works and it’s quality is superior. To remove the risk, companies must work better on their integrating interface to limit disruptions, and quickly identify the causes when they happen. At the same time they need to guarantee they don’t become too dependent on a single supplier, or customer on one hand, and don’t make themselves dispensable by exposing too much intellectual property.

  • Customizability (Autonomy) above Simplicity (Comfort): An exceptional case of the above are platform products, where customers have a free(r) choice of add-ons . This enables users to customize their platform to their tastes. PC’s and smart phones are emblematic of this (Rarely would two smart phones contain precisely the same apps). It does come at the cost of simplicity. A user, must research, download and install the app and learn to operate it (Apple ensured this is not too complicated for the iPhone, one of the many reasons it was such a compelling product). The alternative would have been for the platform manufacturer to make a one-fit-all product. But as customizability is more valued, the open platform is often the preferred solution.

By mapping out as many options possible, the Motivation Mapping method, helps selecting the most viable innovation strategy. We use it alongside the business model canvas and other established innovation methods as we believe that one can never have too much insight.

Please don’t hesitate contacting me for any remarks and questions. I’d be happy to interact.

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