Innovators and entrepreneurs are constantly searching for the next new technology, solution or capability that will vault their businesses into the realms of Amazon or Uber. This search is made more complex by the range of innovation possibilities. For example, an entrepreneur or inventor may create a completely new technology that supersedes an older technology. A new circuit or switch as an example. Or an entrepreneur may introduce a new business model, such as when Google offered software at no charge and covered costs (and made a nice profit) by selling ads. Or an entrepreneur may choose to focus on other aspects of the solution - the channel, the customer experience or other factors.
When you understand how many options an innovator or entrepreneur has, it becomes a little easier to understand why innovation is challenging. Just identifying and understanding the innovation options can be quite difficult. Here are a couple of ways to think about the various innovation types, and when and why they are useful.
Reducing the Complexity of Choice
Let's reduce the complexity of outcomes to three important "types":
- What's new or different about the offering or solution (technology/product).
- What's new or different about the cost or price (price, cost, model)
- What's new or different about the experience (channels, CX/UX)
Virtual products (search, email, data sharing, social) have capitalized on the channel and business model differentiator, creating products that customers value (Facebook, Pinterest, Instagram) that are "free" to the user. They can do this because there's almost ubiquitous access to the internet and the customer already pays for the handset, so for all intents and purposes these applications are free riders on platforms others built and paid for. In doing so they also tap into the second choice above, innovating based on price or business model.
Many innovators focus on the offering or solution, seeking to create a new technology or product that offers better capabilities. In the days when I worked in high technology we called this feeds and speeds. The challenge with this type of innovation is that there is always someone, somewhere who is focusing on the next version, and the cost of many basic technologies is falling fast. Increasingly it's difficult to simply stay abreast of technology, much less innovate, unless you can radically disrupt a technology or platform to move to a new platform (CD to MP3 as an example), and there you are fighting not only technologies but value chains and standards.
Where the real opportunity lies
As more and more of our basic needs are met, and we suffer from complexity and wealth of choice, focusing on the experience seems to me to be one of the best ways to innovate and differentiate. How a customer acquires a product or service, the experience in the acquisition and afterwards, and the disappointment or delight in interactions with products or solutions after sale are all important to the customer, riddled with gaps and a significant opportunity for innovation.
Whoever gets the experience right will be the winner, because people don't always want the least expensive thing, and early majority and late adopter customers don't appreciate the newest technology, but everyone wants a great experience. Since experience can be improved in any product or service, in any industry or situation, the opportunities to improve customer experience are virtually unlimited, and simply waiting for the right entrepreneur or innovator to come along.