ICMA Innovation Award
Introduction to Innovation
The International Classified Media Association (ICMA) and Vaibmu Ltd have partnered to launch the 2010 ICMA Innovation Award. This award is the first ever to bring the classified community closer to innovation and to recognize those companies that are being most innovative in various areas of their organization. The results will be unveiled at the ICMA “Classifieds EVOLVE or die” General Meeting, 5 – 8 May 2010, in Berlin, Germany.
In order to start giving mind-share to the issue, we have selected some interesting quotes and materials on innovation and creativity. Much more has been written and we give an interesting link collection and reading references throughout the post, but we feel that this selection gives a good theoretical overview about innovation.
Innovation Defined
Wikipedia is an innovation itself, so it is the right place to search for a broad definition of innovation:
Innovation is a new way of doing something or “new stuff that is made useful”. It may refer to incremental and emergent or radical and revolutionary changes in thinking, products, processes, or organizations.
Source: Wikipedia.
This defines that innovation can occur in addition to product development also in marketing, sales, production, service delivery and so forth. Innovation is often considered to be the creation of a new product only, but that is rather invention. Something else is needed to make an invention become an innovation. Below is Patrick E. Haggerty’s definition on how to differentiate the two terms.
Texas Instruments, as profit-making enterprise, had to aim at the successful commercialization of some product or service with which to serve customer needs at profit. Haggerty defined this as innovation, in contrast to invention. Source: Mariann Jelinek, Institutionalizing Innovation, Praeger Special Studies, 1979.
Haggert’s “at profit” statement fits very well to the mindset of the classified advertising industry, doesn’t it? Though innovation is directly linked to profit it doesn’t mean that continuous improvements to existing products or services will create sustainable success. In fact, there are two kinds of innovations, at least according to innovation thought guru Clayton M. Christensen:
There is a strategically important distinction between what I call sustaining technologies and those that are disruptive. [...] What all sustaining technologies have in common is that they improve the performance of established products along the dimensions of performance that mainstream customers in major markets have historically valued.
Occasionally, however, disruptive technologies emerge: innovations that result in worse product performance, at least in the near term. [...] Disruptive technologies bring to market a very different value proposition than had been available previously. Generally, disruptive technologies under-perform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Source: Clayton M. Christensen, The Innovator’s Dilemma, Harvard Business School Press, 1997.
In The Innovator’s Dilemma (tip: read it if you can!) Christensen describes how even great companies fail to see radical changes emerging in their markets. The book uses a lot of examples from the high-tech sector, but free classified ad papers are also an excellent example of a disruptive innovation: they took the C2C marketplaces from under the newspapers’ noses while the latter didn’t see the different value proposition emerging and gaining ground within the audience.
The Importance of a Value Proposition
Both sustaining and disruptive innovations become successful if they provide a different value proposition to the existing ones. So, the value proposition is important, but what does it really mean? Christensen -who is devoted to creativity- defines it as follows:
Many companies begin with a product idea and a business model and then go in search of a market. Success comes from figuring out how to satisfy a real customer who needs to get a real job done.
Source: Mark W. Johnson, Clayton M. Christensen, and Henning Kagermann, Reinventing Your Business Model, Harvard Business Review, December 2008.
(tip: the above article is a must read!). Another approach that combines value creation and innovation is called the blue ocean strategy. Theory emphasizes the importance of creating new sources of value for customers and thus to find a way to a blue ocean. (The name is derived from the analogy versus red oceans, where red indicates the “blood shed” from competition between current players and their existing offering).
Value innovation is the cornerstone of blue ocean strategy. We call it value innovation because instead of focusing on beating the competition, you focus on making the competition irrelevant by creating value for buyers and your company. [...] Innovation without value tends to be technology-driven, market pioneering, or futuristic, often shooting beyond what buyers are ready to accept and pay for.
Source: W. Chan Kim, Renée Mauborgne, Blue Ocean Strategy, Harvard Business Press, 2005.
The Metro commuter traffic paper is a good example of a differentiated value proposition. Instead of fighting the existing big traditional publishers with the same model, the founders of the Metro concept had a better idea that changed the rules. That idea -or innovation- served them well.
Motivating Innovators
There is a lot of discussion and writing about nurturing innovation and creativity in our organizations. We’d only like to emphasize that, to be able to transform inventions into profitable innovations, the company leadership has to support and encourage creativity among team members.
Creativity is the process of idea generating. To generate ideas, knowledge, discipline and motivation are required, in addition to seeing the world from a unique perspective.
Source: Minna Forssén, The Life Cycle of Bottom-up Ideas, Helsinki University of Technology, 2002.
Keeping innovators’ motivation up is an important task for all management. In fact, first management should identify the true innovators in their organization and then understand their sources of motivation. The following quote can help to think about how to approach both tasks:
Our research led us to identify five “discovery skills” that distinguish the most creative executives: associating [ability to connect seemingly unrelated questions], questioning, observing [produce uncommon business ideas by scrutinizing common phenomena, particularly the behavior of potential customers], experimenting [try out new ideas by creating prototypes and launching pilots], and networking [devoting time and energy to finding and testing ideas through a network of diverse individuals].
As we examined what motivates them [innovators], we discovered two common themes: 1) They actively desire to change the status quo, and 2) they regularly take risks to make that change happen.
Jeffrey H. Dyer, Hal B. Gregersen, and Clayton M. Christensen, The Innovator’s DNA, Harvard Business Review, December 2009.
Summary
Innovation allows us to continue serving customers with services they need at profit. Innovation can be a new way of marketing or selling, it can be a change in processes, it can be the improvement of an old product or the delivery of a totally a new one. Often it is a combination of many of these. There are basically two types of innovations: sustaining and disruptive. The latter is also named game changing innovation, which may show worse performance in some areas, but ultimately brings outstanding value in areas that were previously unserved.
Successful innovation is often based on totally new kinds of value propositions and some sources even talk about value innovation. Motivating innovative individuals in our organizations is not only related to bonus. Being able to challenge the status quo and having room to take risks and sometimes fail might be more relevant.
Participate in the 2010 ICMA Innovation Award
Now is the time to share your opinion: Who is the most innovative company in the classified advertising industry? Is it you? Someone else? Go to the ICMA 2010 Innovation Award and follow the instructions. Looking forward your submissions!
Vaibmu’s Innovation Services
Vaibmu is a strategy, international expansion & portfolio development company. Contact us for more information about our services. Please review Vaibmu’s training on how to develop a great customer value proposition. You can download our brochure below.
Loading ...
Subscribe to our RSS Feed