Streamline Training & Documentation: 12 Dimensions of Innovation

Wednesday, November 22, 2006

12 Dimensions of Innovation

What really matters when you're bent on raising your company's innovation quotient? In an article in the Spring 2006 issue of the MIT Sloan Management Review, Mohanbir Sawhney, Robert C. Wolcott, and Inigo Arroniz¹ argue for taking a broad view of what qualifies as innovation, i.e., not thinking solely in terms of new products and technological advances.

The authors define business innovation as

the creation of substantial new value for customers and the firm by creatively changing one or more dimensions of the business system (emphasis added)

The authors then go on to identify twelve dimensions along which a company can conceivably find innovation opportunities if they explore their entire business system. It is important to take a holistic view of the possibilities in order to maximize a company's scope for strategically differentiating itself from its competitors.

Four of the innovation dimensions are what the authors call the "business anchors":

Offerings — Develop innovative new products or services.
Customers — Discover unmet customer needs or identify underserved customer segments.

Processes — Redesign core operating processes to improve efficiency and effectiveness.

Presence — Create new distribution channels or innovative points of presence, or use existing channels and points of presence in a new way.

The remaining eight dimensions fall between the anchor dimensions.

Between Offerings and Customers:

Platform — Use common components, assembly methods, or technologies to create derivative offerings more quickly and cheaply than standalone offerings can be created.

Solutions — Create integrated and customized offerings that solve customer problems (e.g., UPS's use of its logistics capabilities to address customers' supply chain needs).

Between Customers and Processes:

Customer experience — Redesign customer interactions across all touch points and moments of contact.

Value capture — Redefine how the company gets paid (e.g., through a new pricing system), or create innovative new revenue streams.

Between Processes and Presence:

Organization — Change how the company structures itself, its partnerships, and its employees' roles and responsibilities. This often involves adjusting the company's scope of activities.

Supply chain — Streamline the flow of information through the supply chain, change the supply chain's structure, or enhance the collaboration of the participants in the supply chain.

Between Presence and Offerings:

Networking — Create network-centric intelligent and integrated offerings (e.g., to enable just-in-time deliveries of materials to factories).

Brand — Leverage a brand into new domains.

Sawhney, Wolcott and Arroniz identified these particular twelve dimensions through a literature review and by interviewing "managers responsible for innovation-related activities at several large companies across a range of industries." The authors validated the dimensions through a testing process they describe in their article.

To visualize a given company's innovation efforts, Sawhney, Wolcott, and Arroniz use a tool they call the "innovation radar" that depicts the degree of innovation effort along each of the 12 business system dimensions listed above. The idea is to profile the company and its competitors as a step toward:

analyzing each company's strengths and weaknesses

identifying innovation opportunities, preferably in areas relatively neglected in the industry as a whole

In the article, you can see an example of the innovation radar that depicts the innovation profiles of four competing banks.

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¹ Mohanbir Sawhney is a professor of technology at Northwestern University's Kellogg School of Management and the director of Kellogg's Center for Research in Technology & Innovation. Robert C. Wolcott is a research fellow at the Center. Inigo Arroniz was a postdoctoral fellow at the Center at the time that the article was written.

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Labels: Innovation, Strategy

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