Look deeper to see innovation below the surface

Awards season seems to be well under way and there are more than a few opportunities to reflect on the performance of our business sector, writes Grant Frear.

Awards season seems to be well under way and there are more than a few opportunities to reflect on the performance of our business sector. 

Whether it be innovation, entrepreneurship, fast growing businesses or the Top 200, we should all be glad that our business sector is performing quite well. 

​It was therefore somewhat of a surprise to be confronted by a slightly pessimistic introduction to a recent Prof Clayton Christianson event at Sky City on Disruptive Innovation.  In the face of all the good news coming out of the awards season the audience was presented with a sober perspective on our future and fortunes as the backdrop for Prof Christianson's talk.  Even more of a surprise was that once again Air New Zealand's Sky Couch was held up as the pinnacle of our innovation story.  While we should not take anything away from the achievement of the Sky Couch as evidenced by the businesses putting themselves out there for the awards season there are plenty of other stories to highlight.

In an earlier article I drew attention to the '10 types of innovation' model from Doblin.  Our fascination with stories like the Sky Couch highlights that our perspective on innovation is skewed by what we can see.  In reference to the model (which I have included again as a reminder) the types of innovation that are the easiest to see are product system, channel and brand.  You can easily take photos of innovations in these areas and they are relatively easy to understand. 

While these innovations are very important, so too is what lies ‘below the surface’.  Service (which is often just below the surface), processes and profit model are all important components of an innovation system which provides for sustained business performance over time.

The computer manufacturer Dell is a great example of innovation in these areas.  Innovations in the area of profit model (maintaining very short cash conversion cycles allowing it to have a dramatically lower working capital requirement), processes (managing inventory down by producing to order rather than to stock) and service (commitment to 24x7 call centres providing full service from sales to support) all allowed Dell to take a leadership position in a highly competitive market.  For Dell it was not about having the most innovative computers that provided its competitive advantage, they chose other innovations around which to compete.

If we revisit some of the successes in the recent awards season we see a range of innovations beyond just the product.  Rod Drury who won the Entrepreneur award is innovating across the spectrum.  Without doubt there are lots of innovations in the product itself, however credit should also be given to the open platform (network) which allows an ecosystem to develop around Xero and the profit model which allows others to participate in the market.

Cxbladder, the winner of the Innovation Award, illustrates the potential of pairing up product innovation and process innovation.  In this case that's providing a test kit that allows doctors to screen and monitor cancer with the patient through urine tests without having to wait for the delays typical in laboratory testing.

Even Air New Zealand is full of alternative stories to the Sky Couch that allows us to understand the whole system of innovation.  Whether it is the changes made to baggage checking (process), the entertaining and sometimes annoying flight safety announcements (brand) or the fare structures (product system) we would all benefit from recognising and celebrating innovation in all its forms.

Grant Frear is a consulting partner and lead partner of innovation at Deloitte