Co-Creation and the 12 Different Ways for Companies to Innovate

There is neat article in latest Sloan MIT Management Review by Mohanbir Sawhney, Robert Wolcott  and Inigo Arroniz, The 12 Different Ways for Companies to Innovate (subscription required): Here is an excerpt:

..what exactly is innovation? Although the subject has risen to the top of the CEO agenda, many companies have a mistakenly narrow view of it. They might see innovation only as synonymous with new product development or traditional R&D. But such myopia can lead to the systematic erosion of competitive advantage, resulting in firms within an industry looking more similar to each other over time. Best practices get copied, encouraged by benchmarking. Consequently, companies within an industry tend to pursue the same customers with similar offerings, using undifferentiated capabilities and processes. And they tend to innovate along the same dimensions. In technology-based industries, for example, most firms focus on product R&D. In the chemical or oil and gas industries, the emphasis is on process innovations. And consumer-packaged goods manufacturers tend to concentrate on branding and distribution. But if all firms in an industry are seeking opportunities in the same places, they tend to come up with the same innovations. Thus, viewing innovation too narrowly blinds companies to opportunities and leaves them vulnerable to competitors with broader perspectives.

How to think differently

Mohan and his co-authors then continue to explain how companies can avoid innovation myopia...

We propose anchoring the discussion on the customer outcomes that result from innovation, and we suggest that managers think holistically in terms of all possible dimensions through which their organisations can innovate. Accordingly, we define innovation as the creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business system.

The authors define twelve such innovation dimensions in total. These are: Brand, Networking, Presence ("where"), Supply Chain, Organisation, Processes ("how"), Value Capture, Customer Experience, Customers ("who"), Solutions, Platforms and Offerings ("what"), They then continue...

Traditionally, most firms’ innovation strategies are the result of simple inertia or industry convention. But when a company identifies and pursues neglected innovation dimensions, it can change the basis of competition and leave other firms at a distinct disadvantage because each dimension requires a different set of capabilities.

Co-Creation and new theory of Disruptive Innovation

I am particularly interested in how certain of these innovation dimensions are now more capable of disrupting incumbent firms than others. For example, I had a chat with Karl Long about how co-creating firms have the potential to disrupt existing markets in new ways (Clayton Christensen in The Innovators Solution writes only about how simpler, cheaper, more convenient products and technologies can disrupt existing markets). So for example, using the article's dimensions – co-creating firms should seek to innovate along a co-ordinated combination of Brand (Engagement), (Social / Community) Network and Customer Experience (Design / Elements) dimensions. Importantly, to be a successful co-creating open business, it is not enough to excel in one alone but all three simultaneously.