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Doblin's Ten Types of Innovation

 included in  categories Business and Consulting Course and Book Notes
     2236 words   11 minutes 

This book is from 2013 so some examples a little dated/less relevant now.

Every innovation initiative can be helped by thinking like a pirate. By being scrappy and undaunted, by improvising something from nothing, by being dogged, committed, and unconventional. More than likely you expect and plan to startle and defeat a stronger, better equipped, and far richer target. If there are rules, don’t play by them. Indeed, you should take special delight in undermining them. These are qualities every innovator must possess.

  • Innovations don’t have to be new to the world — only to a market or industry.
  • Do you want to improve the known or invent the new?
  • Innovation is a team sport.
  • Don’t mistake activity for innovation.
  • Focus on innovating a small part of the organisation, not the whole thing in one go.
  • Don’t only focus on product innovation (easiest to copy) - use multiple types (5+).
  • Look: within; around (same industry); into the distance (other industries)
  • Reflect: “Why did/didn’t it work? Did any part of it succeed/fail? What should we do differently next time?” Look internally and externally.
  • Insights: Rethink, Reimagine, Reframe; Activities: Engage, Extend, Expand.

This kind of innovation focuses first on configuring assets, capabilities, and other elements of the value chain to serve customers and make money differently. Create this shift by focusing initially on the left side of the framework (the types include Profit Model, Network, Structure, and Process). Then move across to the right to add the supplemental types you need to make the business model hum.

We’ve seen it create particular value in asset-intensive industries such as automobiles and heavy manufacturing, in highly regulated industries such as health care and aerospace, in business-to-business contexts, and in commodities

Platform-driven innovation instead focuses on reinventing, recombining, or finding fresh connections across capabilities and offerings to create new value for customers. Develop one by focusing first on the center of the framework (Process, Product Performance, Product System, and Service).

When customers struggle to do challenging tasks, and when you see fresh opportunities to help them by connecting previously disparate communities, capabilities, or offerings

This kind of innovation initially connects, serves, and engages customers in distinctive ways, influencing their interactions with your enterprise and offerings. Focus first on types on the right side of the framework (Channel, Service, Brand, and Customer Engagement). Then move across to the left to add other types you need to make the experience work.

Where you can build enduring relationships with customers, when they are hungry for better (or simply fresher) interactions, and particularly when the normal industry experience is a drag

Single innovation type - “Find a problem and fix it!”

Are quickly countered by incumbents - good for market leaders, bad for startups.

Low risk, low reward.

Three or four innovation types.

Five or more innovation types.

High risk, high reward.

Every organisation should always be imagining this, even if not acting on the ideas.

How the company makes money: Pricing, margins, costs, user vs purchaser, revenue streams, cash flow, working capital.

  1. Ad-Supported
  2. Auction
  3. Bundled Pricing
  4. Cost Leadership
  5. Disaggregated Pricing
  6. Financing
  7. Flexible Pricing
  8. Float
  9. Forced Scarcity
  10. Freemium
  11. Installed Base
  12. Licensing
  13. Membership
  14. Metered Use
  15. Microtransactions
  16. Premium
  17. Risk Sharing
  18. Scaled Transactions
  19. Subscription
  20. Switchboard
  21. User-Defined

Who the company works with: Partners, franchises, vertical integration, collaboration with competitors.

  1. Alliances
  2. Collaboration
  3. Complementary Partnering
  4. Consolidation
  5. Coopetition
  6. Franchising
  7. Merger/Acquisition
  8. Open Innovation
  9. Secondary Markets
  10. Supply Chain Integration

How the company organises assets: Org structure, abnormal use of equipment, attracting unique talent, standardisation, internal training.

  1. Asset Standardization
  2. Competency Center
  3. Corporate University
  4. Decentralized Management
  5. Incentive Systems
  6. IT Integration
  7. Knowledge Management
  8. Organizational Design
  9. Outsourcing

How the company uses assets: Technical expertise, patents, process standardisation.

  1. Crowdsourcing
  2. Flexible Manufacturing
  3. Intellectual Property
  4. Lean Production
  5. Localization
  6. Logistics Systems
  7. On-Demand Production
  8. Predictive Analytics
  9. Process Automation
  10. Process Efficiency
  11. Process Standardization
  12. Strategic Design
  13. User-Generated

What the company’s product or service does: Market share, premium/budget pricing, unique features, customisation, niche audience.

  1. Added Functionality
  2. Conservation
  3. Customization
  4. Ease of Use
  5. Engaging Functionality
  6. Environmental Sensitivity
  7. Feature Aggregation
  8. Focus
  9. Performance Simplification
  10. Safety
  11. Styling
  12. Superior Product

How company products or services work together (and with those from other companies): Complements, combinations, packages/bundles, platforms.

  1. Complements
  2. Extensions/Plug-ins
  3. Integrated Offering
  4. Modular Systems
  5. Product Bundling
  6. Product/Service Platforms

How the company supports users and purchasers: Maintenance plans, customer support, information and education, warranties, guarantees*.*

  1. Added Value
  2. Concierge
  3. Guarantee
  4. Lease or Loan
  5. Loyalty Programs
  6. Personalized Service
  7. Self-Service
  8. Superior Service
  9. Supplementary Service
  10. Total Experience Management
  11. Try Before You Buy
  12. User Communities/Support Systems

How the company provides the product to the customer: Stores, direct-to-consumer e-commerce, pop-ups.

  1. Context Specific
  2. Cross-Selling
  3. Diversification
  4. Experience Center
  5. Flagship Store
  6. Go Direct
  7. Indirect Distribution
  8. Multi-Level Marketing
  9. Non-Traditional Channels
  10. On-Demand
  11. Pop-Up Presence

How the company is viewed and known by customers: Identity, values, partners, community, uniqueness.

  1. Brand Extension
  2. Brand Leverage
  3. Certification
  4. Co-Branding
  5. Component Branding
  6. Private Label
  7. Transparency
  8. Values Alignment

How the company understands and delights its customers: Social media, simplicity, customer status, customer life improvement.

  1. Autonomy and Authority
  2. Community and Belonging
  3. Curation
  4. Experience Automation
  5. Experience Enabling
  6. Experience Simplification
  7. Mastery
  8. Personalization
  9. Status and Recognition
  10. Whimsy and Personality

Cars led to auto dealers, service stations, drive-ins/drive-throughs, toll-roads, suburban life, …

There were 87 other car companies in existence at the time

Profit Model: 50% payment upfront

Network: vertical integration (rubber plantations, steel factories)

Structure: paid twice the minimum wage and reduced working hours

Process: assembly line

Product Performance: >50% of the engine parts cost 10 cents or less and were available at regular hardware stores

Product System: modification kits were sold—tractors, sawmills, snowmobiles

Channel: dealers (buying wholesale, so capital for Ford)

Brand: Motion Picture Department

Gillette: (Profit Model) Gillette initially charged a premium for the razor handle and sold the blades cheaply. This had the effect of teaching consumers that they could dispose of the blades rather than sharpening and reusing them, which was the norm at the turn of the twentieth century. Only when Gillette’s patent expired in 1921 did the company flip its profit model to monetize its healthy installed base of shavers.

UPS and Toshiba: (Network) UPS technicians from the company’s logistics arm, UPS Supply Chain Solutions, repair customers’ broken Toshiba laptops at the parcel service’s shipping hubs. This complementary partnership cut down on service time for Toshiba, and provided UPS with a new revenue stream.

Whole Foods: (Structure) Each store is composed of self-directed teams that manage departments with unusual autonomy—making decisions about what products to stock and how to display them. Importantly, each team also makes decisions about who to hire; joining a team requires two thirds of its current members’ approval. Each store is measured as an independent line on the Profit & Loss statement, and each team within the store has very clear performance targets.

IKEA: (Process) IKEA developed flat-pack furniture with no variation by region or country. Its products included the same hardware and instructions regardless of where they were purchased, thus helping to streamline the company’s internal production processes.

Dyson: (Product Performance) The Dual Cyclone technology included an innovative transparent, bag-free design that showed people exactly how much dirt was being sucked up off their floor. Within 22 months, it had become the best-selling vacuum in the UK.

Scion: (Product System) Customers pick one of the five Scion cars as a base and then choose from a suite of add-ons and accessories, including offerings not only from Toyota, but also from accessory makers such as Alpine Audio. A separate website is dedicated to aftermarket parts such as neon lights, superchargers, carbon fiber B-pillars, and hundreds of other accessories—so that customers can continue to customize their rides long after they’ve driven off the dealer lot.

Hyundai: (Service) Launched in the middle of the severe recession in 2009, the “Assurance” program guaranteed that customers who bought or leased a new Hyundai vehicle could walk away from both the car and its payments if they lost their job during the first year of ownership.

Nespresso: (Channel) Over 270 unique retail stores and coffee shops of its own worldwide, it operates kiosks within partner stores such as Macy’s and Bloomingdale’s, and it also features a direct, online Nespresso Club that offers an efficient ordering channel for new coffee. Nespresso has also provided business-to-business solutions, partnering with hotels, chefs, and airlines.

Virgin: (Brand) The Virgin portfolio stretches across a dizzyingly diverse array of sectors, including mobile telephony, transportation, financial services, media, and fitness. In general, the leaders of the firm look for arenas that are important but a little tired and dull—assuming they can inject a much-needed dose of fun

Blizzard: (Customer Engagement) The games have been specifically designed so that some of the most sought-after prizes are only accessible to those who have teamed up with others.

Procter & Gamble: (Product) Initially focussed on leak-free healthy premium nappies, but P&G research showed that babies fell asleep more quickly and slept longer when wearing Pampers than wearing those made from cloth - which is what parents really care about.

American Girl: (Product) Where others were selling dolls, Rowland was selling experiences and seeding each with vivid, interesting stories. (Channel) Stores had places for girls to learn how to cook or create and decorate objects to take home. The emphasis was on fun.

Nike: (Channel) The executives indirectly paid for the showcases (stores) out of their advertising budgets, calculating that this marketing would do as much for their brand as any ad campaign ever could. The after-hours private industry events held to show other retailers how they might market Nike shoes and gear more effectively. Nike has hosted the buyers of, say, Foot Locker, inviting them to schmooze with sports stars and designers.

GSK Consumer Healthcare: Open Invitation (Open Innovation + Competency Center + Crowdsourcing)

Procter & Gamble: Open Invitation (Open Innovation + Competency Center + Crowdsourcing)

Zipcar: Collaborative Consumption (Metered Use + Process Automation + Safety + Values Alignment)

Airbnb: Collaborative Consumption (Switchboard + Process Automation + Safety + User Communities/Support Systems)

LinkedIn: Free-Based (Freemium + Switchboard + Membership + Ad-Supported + Engaging Functionality)

Zynga: Free-Based (Engaging Functionality + Freemium + Microtransactions + Ad-Supported)

Cemex: Radical Optimization (IT Integration + Process Automation + Process Standardization + Guarantee)

Aravind Eye Hospital: Radical Optimization (Process Standardization + IT Integration + Process Automation)

GE Aviation: Predictive Business (Risk Sharing + Predictive Analytics + Product Bundling + Guarantee)

Johnson Controls: Predictive Business (Product Bundling + Predictive Analysis + Risk Sharing + Guarantee)

Harry Potter: Franchise (Superior Product + Complements + Brand Extension)

Febreeze: Franchise (Superior Product + Complements + Brand Extension)

Kickstarter: Exchange (Switchboard + User-Generated + User Communities/Support Systems)

Craiglist: Exchange (Switchboard + User-Generated + User Communities/Support Systems)

Threadless: Collaborative Creation (Crowdsourcing + Process Automation + User Communities/Support Systems + Values Alignment + Status and Recognition)

Wikipedia: Collaborative Creation (Crowdsourcing + Process Automation + User Communities/Support Systems + Values Alignment)

Amazon Web Services: Competency-Driven Platform (Complementary Partnering + )

Caterpillar: Competency-Driven Platform (Superior Product + Diversification+ Complementary Partnering + Intellectual Property)

Apple iTunes: Experience Ecosystem (Licencing + Alliances + Strategic Design + Performance Simplification + Product/Service Platforms + Go Direct)

Foursquare: Status-Based (Loyalty Programs + Personalization + Status and Recognition)

Discovery: Status-Based (Loyalty Programs + Personalization + Status and Recognition)

Cabela’s: Immersion (Strategic Design + Flagship Store + Experience Enabling)

Alinea: Immersion (Strategic Design + Flagship Store + Experience Enabling)

Harley-Davidson: Connected Community (Focus + User Communities/Support Systems + Community and Belonging)

Weight Watchers: Connected Community (Focus + Values Alignment + User Communities/Support Systems + Community and Belonging)

Patagonia: Values-Based (Focus + Transparency + Values Alignment + Whimsy and Personality)

Whole Foods Market: Values-Based (Focus + Values Alignment + Transparency + Whimsy and Personality)

Wii: Simplification (Ease of Use + Engaging Functionality + Experience Simplification + Whimsy and Personality)

Mint.com: Simplification (Experience Simplification + Engaging Functionality + Ease of Use + Whimsy and Personality

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Notes on how to change a company culture to include innovation - not relevant to me yet so speed-read through without many notes.

Innovation always feels obvious in retrospect. Yet the journey from idea to implementation is anything but; it is fraught with doubt and danger, and as a leader you will be second-guessed by analysts, shareholders, and employees alike. Your job is to sustain the effort. As Bezos explained in a shareholder meeting in 2011, “Any time you do something big, that’s disruptive, there will be critics . . . You listen to them, because you want to see, always testing, is it possible they are right? But if you hold back and you say, ‘No, we believe in this vision,’ then you just stay heads down, stay focused and you build out your vision.”

History is littered with cautionary tales about companies that missed fundamental shifts in their markets—from Xerox developing but then ignoring many of the integral components of personal computing, including the mouse and graphic user interfaces, to Blockbuster failing to respond to the existential threat that Netflix and video-on-demand posed to its business model. Your job as a leader is to stand in the future and embrace it bravely, regardless of its implications for today’s business—and then to help your organization stand there as well.

Concept Visualisation → Focused Prototypes → Functional Prototypes → Early-Stage Pilots → Late-Stage Pilots → Launch

Configuration: Value Web; Process Diagrams and Simulations

Offering: Product and Service Illustrations; Feasibility Analysis

Experience: Experience Vignette; Value Pitches

Updated on 2023-04-25
 Books, Book Summary, Innovation, Business, Entrepreneurship, Business Models
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