The Innovation Matrix – 4 Important Strategies for Brands and Businesses
A while ago I read ‘De groeimotor’ (‘The growth engine’) by Roland & Rogier van Kralingen. This wonderful book on value creation and innovation is a true classic. A must-read for every innovator.
One of the concepts the authors describe in their book is the Innovation Matrix; the categorisation of business innovations into four strategic pillars:
1. Radical Ideas
2. Big Ideas
3. Smart Ideas
4. Strategic Ideas
I’ll give you a brief description of each of the four classifications.
1. Radical Innovation
The first category, radical innovations, is about ideas that are totally new and disruptive. These are the innovations that change the rules of the game. They are not designed but discovered. They bring major changes to the lives of consumers and producers.
Radical innovations are brought to fruition by great entrepreneurs, and almost always have their origin in technology. Examples of radical innovations are the television, the computer, the (smart)phone, the car and the aeroplane.
It’s extremely difficult for organisations to discover a radical innovation. Mainly because this type of innovation often depends on a breakthrough in technology. Besides, one has to be a great entrepreneur, marketer and leader to convince the world to adapt to a new technology (as Steve Jobs did by introducing iTunes, the iPhone and the iPad).
Being the first to find a radical innovation isn’t a guarantee for success. The adoption process takes time and effort. For both the supplier and consumer. That’s why the initial founders do not always profit from their invention. To flourish and commercialise a radical innovation you simply need a different skill set.
Those who are the first to develop the dominant design for radical innovations are the ones who will profit from it and become its market leader. In their book ‘Fast Second’ Constantinos Markides and Paul Geroski describe how the car was ‘invented’ simultaneously all over the world. By the time Henry Ford created his T-ford, many people before him had already ‘invented’ all sorts of cars (models with 3 wheels, a steering wheel in the middle, a steering wheel in the back etc.). However, in the end, it was Ford who found the dominant design for the car; the design as we still know it today.
In the world of radical innovations, the best strategy for enterprises is to be a ‘smart follower’. Being fast second and creating the dominant design is the most likely way to succeed. To live up to a ‘fast second’ strategy, you will need to be a connected company. You have to be connected with radical innovators, like start-ups, universities and research- & technology companies.
2. Big Innovation
The second category of innovations isn’t as disruptive as the first. ‘Big innovations’ create new market segments within existing markets. Ideas for this category arise from radical innovations and are developed around consumer needs.
Big innovations are always an improvement or addition to an existing assortment. They always start as a niche market, yet can expand into a mass market.
An example of a big innovation is the cabriolet, a new segment within the (radical innovation) category of ‘cars’.
3. Smart Innovation
The third category of innovations is mainly marketing (and management) driven. The main purpose of ‘smart innovations’ is to keep your brand attractive and interesting for the consumer. Especially in a highly competitive market segment, tiny (temporary) changes help to keep (or conquer) a market share.
A market segment becomes particularly interesting when you can keep exploiting it for a long time (thus earning a lot of money with it). By innovating your product, brand, design and advertising once in a while you show your leadership position and prove to be a true market leader.
Clever, likeable, attention-grabbing, inspiring ideas help to stay attractive as a brand. The infamous English advertising agency BBH calls this: ‘creating a busy brand’.
Smart innovations are all about keeping the category (and your brand) alive and kicking.
4. Strategic Innovation
The last category has everything to do with business model innovations. ‘Strategic innovations’ have little impact on the lives of consumers, yet require major adjustments on the side of the supplier.
Strategic innovations don’t necessarily change the product, above all, they change the way of doing business and the business process itself.
A great example of strategic innovation is Ryanair’s business model. Ryanair does not earn their money from airline tickets, they make a profit by ‘importing customers’ to non-mainstream airports.
If you want to know more about the Innovation Matrix, I highly recommend you to read the book ‘‘De groeimotor’. The book contains many valuable concepts and methods that can help you to establish a suitable innovation strategy for your company.