Talking about innovation, stories like those of Uber are glamorous examples of how new approaches create the foundation of a company’s success.
A decade ago, Uber massively redesigned public transit and disrupted an entire industry – without owning a single taxi itself. The San Francisco-based company provides a digital service that is easy to use to match customers and drivers. They combined digital technology with flexible and predictable pricing strategies and travel time estimations for customers while simultaneously providing a platform for reliable drivers. By doing so, Uber removed several inefficiencies in the traditional transportation industry, saving time and hassle.
Technological Progress and Changing Customer Expectations
The Uber example shows that two narrowly connected factors are pushing digital innovations. Technological advancement enables and drives a change in how people communicate, live, buy and work, causing a tremendous shift in the customer needs our businesses are based on.
Inefficiencies in services and products become even more evident in the customers’ perception and can be resolved for the first time ever or in a completely new manner. And moreover, not necessarily by competitors established in the market as shown by the start-up Uber. New players and business models create novel customer needs or solve existing needs and hidden desires much better.
So, when talking about being innovative, the question is: How can we tackle changing and hidden customer needs or create new ones? Answering this requires a creative but focused approach.
Start from Scratch – What is Innovation?
But first, let’s have a look at the theory to provide a better overview on the innovation topic. The term innovation is derived from the Latin verb ‘innovare’ and literary means renewal. Colloquially, the term innovation is used for new ideas and inventions. Besides this, innovation is also the process that renews an area, product, or service through the use of new workflows, the introduction of new techniques and technologies, or the establishment of successful ideas.
The Subject of Innovation
In literature, we can find various criteria to cluster innovation. The most common regards the subject, where we can cluster:
- Business Model Innovations: Create entirely new concepts to deliver value
- Product Innovations: Design, produce and offer new products or services, or essentially improve existing products and services
- Process Innovations: Do things differently to provide better products and services or to reduce costs and inefficiencies in the value chain
- Organizational Innovations: Establish new structures in organizations and the value chain delivering value or reducing costs
The Degree of Renewal and Influence of Innovation
We can further cluster innovation regarding its degree of renewal and its impact on the current market situation. When contemplating the degree of renewal, evolutionary innovations that improve, adapt, or imitate existing products or services, and revolutionary innovations about entirely new approaches to current problems, can be seen. Looking at the innovational impact, we can see sustaining innovation, which strengthens the own position in an existing market, whereas disruptive innovations destroy existing markets and suppress market leaders.
Sounds like innovation is an easy, manageable task, right? So why don’t we see big transit companies leading the transportation industry transformation? Why are established companies often not leaders in global digital innovations throughout all industries?
Why Established Companies Often Struggle with Innovation
In fact, innovation for established players is the proverbial open-heart surgery and far easier said than done. To stay competitive, companies must develop and deliver new products constantly, discover or even create new markets, reduce costs, improve processes and convince their customers of the advantages of their products and their company while handling the daily business.
A Widely Discussed Phenomenon We Need to Take into Consideration is the Innovator’s Dilemma.
In established markets, especially disrupting innovations mean that companies could be forced to torpedo their own market or market share. The strategic question considering limited resources is: Shall we focus on increasing our market power, or should we instead go for a new approach and/or technology?
Besides the business strategy, the reasons for limited innovative power can also be found in people and leaders’ common beliefs and mindsets. Even though large companies are often drivers of innovation since they have the budget and the resources for dedicated innovation departments, or they cooperate with start-ups and suppliers, they are often wasting its potential. Have you ever heard the sentence “I’ve always done it like this, why should I change something.”? The bigger a company is and the longer it’s been around, the harder it is to get processes to change and disrupt patterns that have been in use for years.
In Fact, Innovation is Being Actively Suppressed.
On the one hand, because it’s more comfortable to stick with the known. On the other hand, because failure is seen as something negative in our society and a person’s career path, and people are frightened to take a risk. When the fear becomes more significant than the will to take risks, there is no ground left for ideas and innovation.
Companies need to take risks to innovate because if the course of history has shown us one thing, it is that competitors that provide an innovation-friendly work environment will eventually end up with ideas for the market that you simply cannot compete with – such as the taxi industry with Uber.
Conditions like these are slowing down a company’s innovative potential. But there’s no reason to surrender. You can unleash innovational power in every organization, and that’s where Tagueri can help you out.
The Tagueri Way
We, at Tagueri, see several pillars when it comes to innovational strength:
- The deep understanding of your customers and their needs, and especially the hidden desires.
- The knowledge of the technical possibilities in your industry and beyond.
- The establishment of an innovation mindset throughout your organization.
- The creation of a breeding ground for innovative ideas.
- The blunt questioning of your business model and your products, processes and organizational structures with regard to weaknesses and inefficiencies.
- The adoption of lean start-up methods.
The art of being an innovator is to master all of those pillars continuously and balanced. In our integral approach, innovation methods are an essential part. Chosen wisely and applied constantly, they are a crucial element to realize your innovative potential.
The right set of methods can lead your way to ask the exact right questions and to get the innovative answer you are looking for.
In this blog series, we want to give you an idea of how we use selected innovation methods internally and to support our customers on their way to the next groundbreaking renewal. Stay tuned.
Written by:
Andreas Schad