This is part 2 of a multiple part article. Part 1 can be read here: https://bit.ly/3s2T7PH
Watch out for complexity in offers
Every organization wants to innovate and the boards are very supportive of innovation efforts. But how good are you at recognizing the smoke that indicates that innovation is now a priority?
An analysis of the great organizations that have failed to survive disruption in their industry, will show that even great organizations can fail to see the danger signals or grab disruption opportunities.
The early warning signs that you should be innovating, is there waiting for you to recognize and can be classified in 3 buckets
Tough to differentiate between products or offer
Offers have become too complex and customers are struggling to use them
Under or overpriced markets
In this part, we look at the situation where the offers have become too complex and over engineered.
A look at the professional imaging industry will give you an example of an industry that makes things complex. These are the things that are required to shoot an image with a digital camera.
A device that often requires the user to dangle it around your neck or carry it in a dedicated case.
Learn some basics of photography or regret missing some key moments
Shoot picture and review it in a poor quality display
Download picture into a computer to edit it (you may require some expensive software if you want to do something that goes beyond cropping or adjusting brightness and color)
If you are interested in shooting a panorama or HDR image, then you have to invest in tripod and other paraphernalia.
For a vast majority, who just want to capture a memory and post on social media, this represents a significant complexity. Enter camera phones, you can whip it out from your pockets, view the scene, shoot it, reject if you don’t like and share it with anyone you want.
What the phone cameras did to the digital camera industry is create a platform shift. Platform shift involves creating new value for customers, that go beyond product performance, by combining other capabilities to your offer. The innovation types include product innovation, service innovation, product system innovation and process innovation. Combining all these types of innovations let you create robust product systems.
Great platforms enable customers to do hard things with ease. Digital solutions available today, enable even hardware based organizations to create platforms. Innovators usually figure out how to integrate their value network / partners in the platform, increasing value for all. They also end up creating new profit model and create better customer engagement models.
Plenty of other industry are ripe for such disruption as well. If you have created an environment in which your customers are struggling to get things done or are using only a fraction of the product / offers capability and features, your industry is ripe for such disruption. B2B business are more likely see such disruptions than B2C industry.
At Castrol they examined the way their industrial clients were using their lubricants, cutting oils, greases etc. They discovered that customers weren’t using their product to its true potential. This insight enabled them to create a new platform, the chemical management solution. They offered to manage the entire chemical portfolio used in production process in the most optimal fashion for a management fee. It resulted in a profitable and sustainable business in a competitive market.
The platform shift innovation starts by examining the product performance; is your offer have redundancies and has features that can be done away with? A key innovation opportunity is to create an offer that is simplistic and yet functional at lower price. Other opportunities include product safety, styling, aggregation of features etc.
A second type of innovation is to create a product system. This includes creating an integrated offering like the camera phones that combines discrete components into a complete experience. Modularisation, creating plugins/extensions and product bundling are other opportunities to create a product system
A third type of innovation is to focus on servitization; can you create a service model that converts a capex purchase to opex purchase? Another key opportunity would be the ability to eliminate intermediaries in the overall life cycle of the offer. Service innovation also involves examining opportunities to remove customer risk with usage (pay for results), supplementary services, added value etc.
The fourth critical type of innovation is process innovation; how does the organization deliver the offering? A platform based offer would normally take different process to deliver as compared to delivering just the process. The organization would have to leverage it’s unique delivery capabilities, process automation, artificial intelligence, strategic design etc.
Ofcourse, platform shifts are strengthened by innovations that improve the customer experience, develop new business model or create innovation in leveraging the value chain network.
Are you examining opportunities to create platform shifts?
Do reach out to me for help in building a sustainable innovative organization.
Krishnan is a leading innovation consultant and focuses on helping people and organizations innovate and build capabilities for innovation. He brings over 25 years of experience in the industry and consulting. You can reach him by phone / WhatsApp: +919791033967 or email: firstname.lastname@example.org