Innovation Strategy: Do you innovate or renovate?
Not everything new is an innovation and some is more renovation than in innovation. Here is a framework that helps to distinguish an innovator from a renovator and works for entrepreneurs and intrapreneurs alike. It is important to understand which role to play and when; it all depends on what you need to achieve and critical to reach your goal!
The word ‘innovation’ is used inflationary; few seem to understand though what they mean when they demand or offer ‘innovation’ in an organization. What adds to the confusion is that not everything new is also innovative.
Let’s continue with the generic definition of innovation from the “What does it take to keep innovating? (part 1 of 3)” post: “innovation is different from a novelty: it is the combination that translates a novelty into a marketable product (or service), so an innovation brings together the newness, the value it creates and the adoption to something marketable”.
So, where does the ‘renovation’ come in and how does it affect your role as an innovator?
Goal clarity comes first
Whether you are an innovator or not depends on several criteria and mostly along these four dimensions:
- Objective – “what” is your starting point? Are you creating a totally new business or reinforce an existing business?
- Scope – “where” you focus on: Are you looking into (specific) new products, processes, and services, or into (general) new business models or systems?
- Intensity – “how much” you change the status quo: Are you taking incremental steps (evolution) or bringing about a radical change (disruptive)?
- Boundaries – “with whom” you are collaborating: Are you using resources and partners within your organization with or without tactical out-sourcing? Or, perhaps, you collaborate with external partners to complement your internal capabilities strategically?
Innovation Strategy: a Matrix of Roles
We introduced and discussed the role of the ‘Executive Champion’ in the post “How to become the strategic innovation leader? (part 2 of 3)”. The Executive Champion fills the organizational gap to connect the Technical Champion and the Business Champion, so ideas become reality.
As an Executive Champion, you take active part in the process – but even as the champion, there are different roles needed for different scenarios. The four dimensions (Objective, Scope, Intensity, and Boundaries) open up a matrix that points to four different roles, one of each suited for a specific scenario:
- “Sponsor” – You are a sponsor, when you create a totally new category of products or services. This role focuses on the bigger picture, the vision, and sees it through within the organization (which includes tactical out-sourcing). A sponsor guides this endeavor while nurturing and empowering the staff.
For example, broad usage of the MP3 format revolutionized the music industry in unforeseen ways. MP3 players where a disruptive technology that made your CD collection obsolete, which has had replaced your cassette tapes and vinyl records markets some time ago.
- “Architect” – It takes an architect to build a new and never-before business model or system. The architect forms coalitions, alliances, and strategic partnerships with the big picture in mind and providing win-win incentives for all players in the business model.
While entrepreneurial examples come to mind easily, less obvious is an architect who operates within an organization as an intrapreneur. For example, the NxGen business model (as outlined in “Build ERGs as an innovative business resource!” and “Starting an ERG as a strategic innovation engine! (part 3 of 3)”) disrupted the common paradigm and mental model of “how-business-is-done” within a company by engaging and leveraging employees in new ways.
- “Coach” – You need a coach to get a new-and-improved product or service on the way within an organization – just like this tough but supportive sports coach you remember from school or try to forget…
A new car model, for example, has more bells and whistles than its predecessor and may outrun the competitor’s model by a tad. In the end, however, it remains being a car. It offers the same common way of transportation we are already used to, i.e. it is an evolutionary, an incremental improvement.
- “Orchestrator” – Imagine a conductor directing an orchestra: The orchestrator brings to life a new-and-improved business model or system in concert with strategic partners outside the organization. It takes skill to interpret and continuously integrate the moving parts.
Ducati it an Italian high-end motorcycle manufacturer known internationally for its performance bikes that consistently win races. Very early on, Ducati outsourced nearly all company functions to focus on their core competency: design and engineering. Even manufacturing is outsourced! Ducati became the first company to offer a new motorcycle model exclusively on the internet – and sold its entire production before the first bike was even built! This does not only prove enormous brand power and marketing skill, Ducati also proved they can be a leading and very successful motorcycle company by engineering and outsourcing.
So, do you innovate or renovate?
The core of innovation and entrepreneurship is around creating new businesses around completely new products or services, or even entire business models that are disruptive to the status quo. So, this points directly to the roles of the Sponsor and the Architect as strategic innovators and game-changers.
In contrast, reinforcing or enhancing an existing product, system, or business model with incremental steps is renovation, just as you would renovate an older house to bring it up to modern standards. It is the Coach and the Orchestrator role, who fix to improve or come up with the next new-or-improved product or way of doing things.
Now, there is nothing wrong with being a renovator. It is most important to be clear about what it is you are trying to achieve and remain flexible, so you can deliberately assume the best role to get to your goal. Consider also that these roles are not mutually exclusive, so over-stepping boundaries at times might just be what you need to lead your venture to success!