Sussex Innovation CEO Nigel Lambe explores what innovation really means, and what we can learn from successful past innovation strategies
2020 was a unique year in all of our lives and also in the evolution of every business enterprise. There was not a single organisation that will not have had to adapt, evolve and innovate to cope with a world that was never previously envisaged.
Most enterprises have had to adapt and innovate in three key areas; their products or services, their business processes, and in many cases, their fundamental business models. They have needed to react in order to accommodate the restrictions placed upon us all, whether in response to the specific Covid-19 regulations placed upon their industry, or to the changes of customers’ demands or desires brought on by the immense changes in everyday life.
At Sussex Innovation, we understand that having a clear innovation process is critical to the success of any innovation initiative. However, we are also clear that selecting the best innovation process for a given problem is always situational.
Up until the mid-1990s British Airways and Virgin Airlines were brilliant innovators, continually outdoing each other to improve the quality of their services and on-board experience. However, it wasn’t until Ryanair and EasyJet (copying the innovations of Southwest Airlines) pursued a low-cost model, that the bigger operators realised they had been innovating down a path that the consumer didn’t particularly care for – and certainly weren’t willing to pay for any longer.
They did manage to survive that industry transformation - unlike the computer industry, where every generational change in computer technology led to the almost total annihilation of every single incumbent producer.
It is an astonishing fact that as technology moved from mainframes to minis and minis to PCs in the early years of the computer industry, truly innovative companies had a 100% failure rate in trying to repeat that successful innovation into the next generation of technology.
In innovation, context is everything.
• Product innovation is the most familiar and recognised kind; whether an entirely new style of product that completely shakes up an existing industry (think of the original iPhone compared to the mobile hardware that existed before it), or incremental improvement within an existing product category (as seen with the one-upmanship between major smartphone manufacturers ever since).
• Process innovation is an internal change that focuses on your operations, productivity or supply chains. It could mean creating efficiencies that have a huge impact on your variable costs and bottom line, such as the famous story of Henry Ford and the first mass-manufactured automobiles. Increasingly in recent years, process innovation has played into branding and public perception, with companies adopting more sustainable and ethical practices.
• Position innovation is slightly harder to pin down, but can often result in the biggest shifts in the way a market behaves. It is about changing the contexts in which a company’s products or services are introduced, capitalising on the strategic advantages of the current business to unlock a new audience. A company like BIC - who went from manufacturing cheap and reliable pens into similarly cheap and reliable razors and cigarette lighters – are masters of position innovation.
• Paradigm innovation is best thought of as a challenge to pre-existing business models, informed by the way consumer demands are changing. Changes to paradigm are responsible for some of the most famous ‘disruptive tech’ innovations of recent years, such as Spotify driving the shift in music consumers’ habits from buying one-off physical products to a subscription streaming model.
Download the Sussex Innovation white paper How Innovation Drives Growth for a deeper dive into the process of innovation, practical examples of local start-ups harnessing innovation, and how to build an innovative business for yourself: https://bit.ly/3wmmBdz
If you’re an East Sussex SME reshaping your innovation strategy for growth, take a look at the Bamboo Club peer networking programme, facilitated by the team from Sussex Innovation. The Bamboo Club is part of the Business East Sussex Pivot Programme, managed by the Business East Sussex Growth Hub on behalf of East Sussex County Council and the South East Local Enterprise Partnership: https://bit.ly/3oCidoi