You’d be hard pressed to find a CEO that is unwilling to evolve their business. The past two years have forced many companies to reconsider their practices: for many, it’s become an “innovate or die” kind of scenario.
Technologies develop in all kinds of ways, and innovation doesn’t always mean implementing fresh and advanced solutions. It can also mean adding preventive measures to anticipate any possible effects different circumstances can have on a business. For instance, according to the 2021 survey by PWC, 71% of CEOs are “extremely concerned” about cyber threats, making the rush for technological advancement in business even more dire. But this isn’t all there is to innovating one’s company.
In our increasingly digital landscape, having a solid innovation model that serves as the foundation for corporate processes is integral for any business that wants to succeed.
This article will explore the most prominent innovation models of today and help you figure out which one suits your business best.
6 Business Innovation Models
Identify, advance, and implement ideas in a way that stimulates your continued success.
In spite of what the words “innovation model” might suggest, those who adopt them aren’t out to make major technological breakthroughs in most cases. The breakthroughs innovation models do facilitate have to do with the way companies handle their processes.
Companies use innovation models as frameworks to identify, advance, and implement ideas in a way that stimulates their continued success. An innovation model is essentially a set of concrete principles and methods aimed at expanding and/or protecting the company’s market share.
Innovation models as a whole can be split into six kinds.
Inventor Model
This is the type of company most people will think of when they hear the word “innovation”. Probably because these corporations position themselves as, well, innovators. Their leaders play no small part in fostering that brand image: a charismatic visionary will not only push for new and bold ideas, but also entice both the team and the public to novelty ventures.
Inventors are disruptive. They don’t just aim to improve an existing product, they aim for breakthroughs. As a result, their products and services have the potential to create a real paradigm shift in the market.
Because of this high-risk and high-reward approach, it’s not uncommon for their inventions to be subject to scrutiny. For example, the now revolutionary iPhone was largely criticized back when it was first announced.
“There’s no chance that the iPhone is going to get any significant market share. No chance,” the former CEO of Microsoft, Steve Ballmer, said to USA Today in April of 2007. And by the end of 2020, iPhone had 23.4% of the global smartphone market share.
Primarily built on: disruptive innovation
Examples of inventor-type companies: Apple, Tesla, Netflix
Problem Solver Model
Problem solvers provide solutions to common obstacles. They do extensive research of the market to directly address the prominent issues their customers face.
The Problem Solver model is outcome-driven. It gathers data on the tasks customers want to do, but can’t for whatever reason. So, the company adjusts its processes to deliver the tools customers could use to achieve their goals.
What distinguishes Problem Solvers from Inventors is that the former deliver the products customers were asking for, while the latter deliver the products customers didn’t know they needed.
GoPro is a great example of a Problem Solver company. As online video sharing platforms became more and more popular, the demand for compact high-quality cameras increased dramatically. People wanted to share their experiences without having to drag a 5kg camera around – and GoPro helped them do exactly that.
Primarily built on: demand for a solution
Examples of problem solver companies: Nike, Starbucks, GoPro
Refiner Model
Refiner companies are defined by their superior processes. They have figured out the ultimate way to deliver their products or services to customers and have honed that new approach to perfection. For them, efficiency is key to surpassing the competition.
IKEA is a great example of a company that has figured out how to deliver affordable, yet quality furniture. It’s all about the winning combination of minimalistic designs and many of the pieces being sold disassembled, which helped drastically reduce manufacturing costs.
What’s more, IKEA stores are known for their expansive layouts. “A great store will give you the sense of comfort and familiarity and will also give you the pleasure of discovery,” says neuromarketer and author of “The Buying Brain” Dr Pradeep. “That is when retail becomes retail therapy.”
Primarily built on: superior processes
Examples of refiner companies: Zara, Toyota Motor, IKEA
Conqueror Model
Conquerors focus on constantly extending their reach by conquering more and more markets, be it through tackling different industries or through global expansion.
Scaling to different markets is often a very expensive and risky venture. Therefore, this approach requires a company to have enough resources to support a broader network and be able to sustain itself in case of failure.
Amazon is the perfect example of a conqueror-type company. What started as an online bookstore has gradually grown into a worldwide delivery service that encompasses a multitude of retail sectors.
As of September 2021, Amazon plans to hire 55,000 staff globally for corporate jobs and roles in robotics, research, and engineering to further fuel the company’s expansion drive.
Primarily built on: resources
Examples of conqueror companies: Amazon, Nestle
Protector Model
Protector-type companies are focused on retaining their place in the industry. This means being on a constant lookout for potentially disruptive innovations and neutralizing threats by means of partnerships and acquisitions.
The companies that follow this approach are common to fields that are slow to change, such as insurance and pharmaceuticals, as well as luxury brands. What’s more, this tactic is generally used by well-established companies with decades of reputation to uphold.
Brand recognition and customer trust are the baseline of this model’s success. It’s incremental, meaning it relies on making small continuous improvements to its service or product over time, while monitoring the current industry trends and potential competitors.
Pfizer is an example of a renowned pharmaceutical company that actively uses acquisitions to maintain and expand its industry share, with the most recent acquisition being Trillium Therapeutics Inc.
Primarily built on: brand recognition
Examples of protector companies: Pfizer, Rolex
Trend Follower Model
Trend Followers are laser focused on quickly responding to trends, either by adopting and improving on their competitors’ innovations or by implementing their own.
The Trend Follower model is built on product adaptation. The company must be able to quickly respond to the needs of the market, adjusting its products to meet the demand as fast as possible while delivering the best possible value.
Xiaomi rose to fame by offering a variety of affordable tech products, always ensuring that the features-to-price ratio of each new phone was more appealing than that of competitors. In 2020, Xiaomi became the world’s largest consumer IoT (Internet of Things) company, with more than 210 million IoT devices (excluding smartphones and laptops) sold across more than 90 countries.
Primarily built on: product adaptation
Examples of trend follower companies: Tencent, JPMorgan Chase, Xiaomi
So which innovation model do you choose?
How does one find an innovation model that’s actually beneficial to the firm?
An innovation model is not a one-size-fits-all sort of deal. What works for one industry may not work for another, and blindly tracing popular companies’ innovation strategies is unlikely to end well for your business. So how does one find an innovation model that’s actually beneficial to the firm?
It’s all about context. Two contexts, in fact: the industry context and your company’s. In the first case, you have to consider the current market climate.
Take for example Blackberry’s failure: a company that once dominated the smartphone market was too slow to adapt to the new industry rules, and thus, declined. In a constantly evolving field such as mobile tech, playing defensively without putting in enough resources to upgrade the core product is a death sentence.
But that’s not to say there’s an end-all-be-all innovation strategy for any particular field. Companies working in the same industry can succeed while using wildly different innovation models. And that’s where individual context comes into play.
Ask yourself these general questions:
- How important is innovation to the company’s strategy?
- How important is innovation to the company’s competitive position in the larger market?
- How will innovation enhance the company’s distinct advantages and capabilities?
These will help you solidify why your business needs an innovation model in the first place. Once you realize the concrete benefits of adopting one, you can get to deciding which innovation model will be the best for achieving said benefits.
The model you choose has to accentuate your business’ inherent strengths. To find out which innovation model will work for you, consider the following questions:
- Do you see innovation as a defensive tool or a growth engine?
- How strong is your current competitive position?
- How durable are the sources of your current competitive advantage?
- How important is your brand?
- How strong is your brand equity, relatively speaking?
- How do your innovation capabilities compare to your competitors’?
- How much are you willing to invest in innovation?
- How quickly does your industry change?
- What benefits will your company gain from following the industry trends?
Looking at your competitors is also a great way to determine what works and what doesn’t. Consider the models your competitors aren’t using or using unsuccessfully. If you can use these unpopular models well, you’ll gain a massive advantage over the competition – just make sure said models actually suit your business.
Think of the costs involved – not just the monetary ones, but also how much time you need to spend on implementing the desired upgrades. Finally, see how the different options align with your company’s long-term goals and resources. By the end of it, you should have a pretty clear idea of which model your business should go for.
How do you implement an innovation model?
Finding a suitable innovation model is only half the battle. The challenging part is actually integrating it into your processes. Innovation models are not some vague archetypes. There are specific rules you need to follow in order to make them work.
Start with laying out all the aspects the model requires to properly function:
- your organizational structure;
- your culture code;
- the processes and tools you use for idea generation, commercialization, and portfolio management;
- the metrics you use to track and drive results.
Having done that, you can start figuring out the smoothest way to implement your new corporate innovation model.
Say, your company wants to go for the high-risk Conqueror model. In that case, you need to ensure that its market position and financial situation are secure enough to withstand possible setbacks. This can be assessed by checking internal metrics, such as your working capital.
On the other hand, Problem Solvers need to directly target the needs of their clients. Therefore, their innovation models are most effective when the companies invest in customer research and advanced analytics.
And what if you want to use a Trend Follower model? Due to the nature of the industry, this one is easiest to implement if your company deals in consumer goods. What the company can do to boost its chances of success with this model is implement a flatter organizational structure to maximize speed to market.
Really, whatever innovation model you decide to use, research is integral for making a smooth transition. Consult your team members and industry experts to get the fullest picture possible, and start taking your first steps towards innovation!
Conclusion
Each innovation model can be a powerful drive for a company when applied correctly. The most important thing is figuring out which one suits your business best. Carefully adjust all your processes in accordance with your model of choice. If you take proper time to assess all the factors involved and gradually implement the needed changes, your company will find itself on a fast track to success.
If you struggle with figuring out the exact innovation model your business needs or feel uncertain about what measures to take in order to implement it effectively, consider consulting a reputable expert. Bamboo Group has experience in nurturing startups from a range of domains, and will be glad to help your business grow. Feel free to contact us here!
