I am sure that many of you have seen the original film “Shrek” in which the hero, together with his trusty steed – Donkey, overcomes the usual assortment of fairy tale challenges winning tournaments, battling dragons and overcoming evil kings. Like most fairy tales the hero falls in love with a princess, get married and everyone goes on to live happily every after. Until the sequel.
Like in many quests Shrek also has to overcome his own inner demons and in the course of the journey he learns much about himself. There is the usual moral in the tale.
Shortly after setting out on their quest to rescue the princess Shrek and Donkey are discussing the nature of Ogres, with Shrek suggesting that Ogres are like onions. Donkey immediately agrees, noting that Ogres smell and make you cry! However Shrek is trying to make a deeper point – he believes that Ogres are like onions because they “have layers” and are much more than they seem.
So before reading too much into the deeper meanings of a CGI Animated fairy tale what does this have to do with Innovation?
Innovation is also like an onion.
Let’s deal with the obvious retort first – technology innovation is hard, it too can make you cry through highs and lows of anticipation and frustration and when it goes wrong it can definitely leave a bad smell behind – however I believe that, like Ogres, Innovation too has layers.
The Innovation Onion
The key point is that successful innovation with products and services can occur at many points in the supply chain. It may be natural when considering a product or service to focus effort on the tangible aspects, the physical object or the deliverables of the service. If you do this however you will only innovating at a single layer. You will be leaving many opportunities for innovation on the table for your competitors to pick up.
Before looking at how to apply this to technology innovation I would like to examine an example of a chair. You are probably sitting on one right now and there are probably a number of others in the same room with you. Chairs solve a simple problem – providing comfortable support while work or relax in front of the television. What is interesting about chairs is that there are many many different types, office chairs, conference chairs, couches, park benches – all basically providing the same function – the physical design however is just a single layer.
Let’s examine the layers of innovation with a chair
Design – The fundamental shape of the chair, whether it has three legs, four or a cantilevered arrangement, the depth of padding, can it recline, is there a cup holder? Can it pack up small for a camping trip? Is it targeted for a specific type of customer such as children. There is an almost infinite range of possibilities here.
Materials – Closely aligned with the design the material choice is another area of potential innovation. Choices like the wearability of fabrics, wood or steel frameworks, built from recycled materials, natural or man made all have a significant impact on the design, construction, cost and lifetime of the finished chair.
These are the most obvious layers and possibly where a lot of effort is rightly expended – but they are not the only area available for innovation.
Purpose – This is fundamental objective of the chair – it is possible to innovate here as well by having a better understanding of the purpose of the chair. McDonalds and other fast food chains have done this very well, creating chairs in their restaurants that are comfortable only for a limited time of about 30 minutes. The innovation is to use the chairs to encourage customers to eat their meals and leave, making way for the next customer and increasing turnover.
Manufacturing – Another common area of innovation, where the typical response is to outsource to a low cost centre such as China. I am not convinced that moving production to China is innovation anymore, but this is not the only way to innovate – some customers of chairs prefer them to be “hand made” or “made in the UK” enabling retailers to charge a premium or simply differentiate themselves from alternatives. Ikea is a great example of innovation here – they innovate by not completing the manufacture – selling flat pack kits, enabling them to reduce storage space, reduce manufacturing costs, storage costs and enabling maximum number of customers to be able to drive away with their goods.
Retail Experience – When buying a chair everyone has some form of retail experience, whether in a physical store enabling customers to try out the chair before purchase. Specialist retails create lifestyle statements by placing the chair in an aspirational setting, while back in Ikea they are shown in realistic settings surrounded by other Ikea products. The retail experience also encompasses the ordering process, is the chair available to take away, or do we have to wait a month for delivery? At Ikea you have to go and pick the chair up from the warehouse yourself and take it home, while at your local store they will probably offer to drive it round to your home for you.
Ownership – It is perfectly possible to simply rent a chair, for example when staging a property for sale. Increasingly companies are renting office equipment and furniture, or bundling items together to form a package that taken together have a higher value. This has benefits in terms of moving expenditure from a capital purchase to an operating expense, however some organisations may continue to own the chair.
Purchasing – Linked to the ownership is that of purchasing – is it leased, financed or bought outright.
Maintenance– most furniture needs some form of maintenance, who is responsible for managing the maintenance, is it included in the pricing, how long does it take to replace a faulty chair – does the maintenance service hold spares so that there is never a time when a customer is missing a chair. How about cleaning or fabric repairs?
Upgrades – Chairs are often a fashion statement, for example when used in an office reception. At a basic level they need to be kept clean, smart and fully operational to create the right impression – however their appearance, design and style will also convey a message about the company to visitors, a company wishing to portray a modern image might want to change their reception furniture to reflect changing fashion styles and support their forward thinking approach.
Disposal – at the end of the life of a chair it will need to be disposed of. The amount of recyclable material in the chair will impact on the perception of environmental impact of that chair. Alternatively a hand crafted chair might simply be “recovered” to prolong it’s life before at some point becoming an antique with an enhanced value. The disposal experience can also be an area to innovate, for example a retailer when delivery a new couch may offer to dispose of the old couch, since the disposal might be beyond the abilities of many customers – thus preventing a sale of a new couch.
Technology innovation in products and services
Innovation leaders will innovate at all of the above layers – and probably more – to gain an advantage in the market over their competitors. While the above examples are deliberately selected outside of the technology space these layers can be readily applied to an IT product as well.
- Physical infrastructure, own, rent or co-location, physical, virtual, cloud or hybrid, single data centre or multiple?
- External software architecture, SOA/RESTFUL, commercial off the shelf, custom, hybrid, bus, asynchronous?
- Internal software architecture – what algorithms can you apply to improve performance, deliver greater insights or improve integrity?
- Language used
- Frameworks employed
- Database – standard SQL database, graph database or hybrid solution?
However the above list is comparable to the design/materials choices for a chair. In reality for your products or services there are many more layers including
- Purpose – Better understanding, resulting in a better fit with need or the ability to better target a specific niche that may be underserved.
- Manufacturing – how are you going to produce the product or service, in house staff, subcontract, outsource, offshore call centre, outsource non value adding business processes?
- Retail experience – how are your customers going to engage with you, direct sales force, through resellers, networks, alumni?
- Ownership – do your customer own the product or service, or are they buying something less tangible?
- Purchasing – what terms can you offer for customers, reduced price upgrade fees, or bulk discounts for consultancy days, do your customers value these or recognise them as gimmicks? Cloud offerings and many versions of software are now offered on a rental basis, many services on a retainer.
- Maintenance – what happens once you have completed the delivery of the service, do you review the findings against reality after six months? Potentially valuable insights into real world value here.
- Upgrades – how would a customer take advantage of a new version of a product? If offering a service then is there a more detailed analysis that could build upon a foundation of work done earlier, for example an advanced training course?
- Disposal – how does a customer cancel and stop using your service, with cloud based offerings getting the data out is often seen as important even if never used feature. If you are providing an ongoing service then how do you support a customer moving to a new provider? Is making it easy for them to leave reassuring and does this provide the incentive your team needs to deliver outstanding service so they never want to leave?
Hopefully you can see from the above that there is a lot of opportunity to innovate outside of the actual product or service you are offering. Innovating successfully however will require you to understand much more widely about how the customer uses your service or product and the benefits they receive. How do you gain this better understanding?
In order to take advantage of a wider approach to innovation I would simply recommend that your development, sales and delivery teams ask themselves how their customers work? How they see your product or service against the broad categories of Purpose, Design, Materials, Manufacture, Retail Experience, Ownership, Purchasing, Maintenance, Upgrades and finally Disposal. A short brain storming workshop could unearth a lot of means to differentiate your offering – many of which will be simple to implement but deliver significant return.