UNDERSTANDING

THE
10
TYPES OF
INNOVATION
.
New products are invented from scratch all
the time, but this is merely one way to
innovate.
According to innovation firm Doblin, most
big breakthroughs in history comprise some
.
combination of the following 10 types of
innovation
By tactically examining these 10 different
types of innovation, you may uncover
exciting new product opportunities – or you
may change the business world forever.
 As the venture capitalist Peter Thiel once put it, 
“competition is for losers”.
.
It’s inevitable that every company must be out there battling for
market share, but you don’t really want to be in a situation where the
competition is so stiff that any potential upside is eroded away in the
process—―a scenario known as ”perfect competition” in economics.
To avoid perfect competition, companies must strive to build an
economic defense that gives them a sustainable competitive
advantage over time.
While these protective defense can arise from a number of different
sources, in today’s information economy they most often arise from
the power of innovation.
But where does innovation come from, and is there a universal
framework that can be applied to help consistently make big
breakthroughs?
This is embodied in what is called
THE ART OF DISCOVERING BREAKTHROUGH PRODUCTS
The 10 Types of Innovation
In today’s presentation, we showcase the culmination of
years of in-depth research from Doblin, an innovation-
focused firm now owned by Deloitte.
After examining over 2,000 business innovations
throughout history, Doblin uncovered that most
breakthroughs don’t necessarily stem from engineering
inventions or rare discoveries.
Instead, they observed that innovations can be
categorized within a range of 10 distinct dimensions—and
anyone can use the resulting strategic framework to
analyze the competition, to stress test for product
weaknesses, or to find new opportunities for their
products.
 10
Types of Innovation
.
 Innovation Types #1-4:
“Configuration”
According to Doblin, the first four types of innovation center around
the configuration of the company, and all the work that happens “behind the
scenes”.
Although innovation types in this category are not directly customer-facing, as
you can see in the examples below, they can still have an important impact on
the customer experience. How your company and products are organized can
have a crucial downstream effect, even enabling innovations in other
categories.
Two of the most interesting examples here are Google and McDonald’s. Both
companies made internal innovations that empowered their people to make
important advancements further on downstream.
In the case of McDonald’s, the franchise insight that led to the introduction of
the Egg McMuffin spearheaded the company’s entire breakfast offering, which
now accounts for 25% of revenues. Breakfast is also now the company’s most
profitable segment.
 1. PROFIT MODEL
HOW WE MAKE MONEY.
The new York times pivoted from its traditional ad-driven media
model to digital user subscription.
 NETWORK
CONNECTION WITH OTHERS TO CREATE VALUE.
Henry Ford was one of the first industralists to control
his entire supply chain, a strategy later called vertical
integration
 STRUCTURE
ALIGNMENT OF YOUR TALENTS AND ASSETS.
Google’s “20% rule”, which allowed employees to work
on side projects, led to the creation of what we know
today as gmail and google news.
 PROCESS
SIGNATURE OF SUPERIOR METHODS FOR DOING
YOUR WORK.
McDonald’s franchises were encouraged to develop
and launch their own new food items, leading to wins
such as the Egg McMufflin.
Innovation Types #5-6: “Offering”
When most people think of innovation, it’s likely the offering category that
comes to mind.
Making improvements to product performance is an obvious but difficult
type of innovation, and unless it’s accompanied by a deeply ingrained
company culture towards technical innovation, such advancements may
only create a temporary advantage against the competition.
This is the part of the reason that Doblin recommends that companies
focus on combining multiple areas of innovation together—it creates a
much more stable economic defense.
APPLE has a reputation for innovation, but the product ecosystem
highlighted above is an underappreciated piece of the company’s strategy.
By putting thought into the ecosystem of products—and ensuring they
work together flawlessly—additional utility is created, while also making it
harder for customers to switch away from Apple products
 PRODUCT PERFORMANCE
DISTINGUISHING FEATURES AND FUNCTIONALITY.
Spotify created a seamless music streaming
product that lapped competitors in terms of speed,
responsiveness, and user experience.
 PRODUCT SYSTEM
COMPLEMENTARY PRODUCTS AND SERVICES.
Apple has built an extensive ecosystem of
products that work together, creating
additional value for users.
 Innovation Types #7-10:
“Experience”
These types of innovation are the most customer-facing, but this
also makes them the most subject to interpretation.
While other innovations tend to occur upstream, innovations
in experience all get trailed in the hands of customers. For this
reason, intense care is needed in rolling out these ideas
In the early days of the internet, online shipping was precarious
at best—but Amazon’s introduction of Amazon Prime and free
expedited shipping for all members has been a game-changer for
e-commerce.
Executing on such a promise was no small task, but today there
are 150 million users of Amazon Prime worldwide, including
some in metro areas who can get items in as little as two hours.
 SERVICE
SUPPORT AND ENHANCEMENTS THAT
SURROUND YOUR OFFERINGS.
Amazon Prime comes with free expedited
shipping, which can have products come as
fast as within 2 hours in some metro areas.
 CHANNEL
HOW YOUR OFFERINGS ARE DELIVERED TO
CUSTOMERS AND USERS.
Nespresso locks in customers with its
Nespresso Club, as well as through ongoing
sales of single use coffee pods.
 BRAND
REPRESENTATION OF YOUR OFFERINGS AND BUSINESS.
Patagonia’s brand activism and links to environmental
causes gives it a unique position in the outdoor apparel
market.
 CUSTOMER ENGAGEMENT
DISTINCTIVE INTERACTIONS YOU FOSTER.
Mercedes has launched an augmented reality
owner’s manual that replaces its bulky
predecessor while also highlighting driver and
car data.
 MAKING
INNOVATIONS
. HAPPEN
IN
YOUR
ORGANIZATION
 PROFIT MODEL
1. PREMIUM: Price at a higher margin than competitors, usually for a superior
product, offering , experience, service or brand
2. COST LEADERSHIP: Keep variable costs low and sell high volumes at low prices
3. FORCED SCARCITY: Limit the supply of offerings available, by quantity , time ,
frame or access, to drive up demand and or prices
4. SUBSCRIPTION: Create predictable cash flows by charging customers up front
( a one time or recurring fee) to have access to the product/service over time.
5. MEMBERSHIP: Charge a time-based payment to permit access to locations,
offerings, or services that non-members don’t have
6. Installed Base - Offer a “core” product for slim margins (or even a loss) to drive
demand and loyalty; then realize profit on additional products and services
7. Auction - Allow a market—and its users—to set the price for goods and services.
8. Freemium - Offer basic services for free, while charging a premium for advanced
or special features to cover for the basic service your offered for free.
9. Float - Receive payment prior to building the offering—and use the cash to earn
interest prior to making margins.
10.Risk Sharing - Waive standard fees/costs if certain metrics aren’t achieved, but
receive outsize gains when they are.
 NETWORK
1. Merger/Acquisition - Combine two or more entities
to gain access to capabilities and assets.
2. Open Innovation - Obtain access to processes or
patents from other companies to leverage, extend,
and build on expertise and/or do the same with
internal IP and processes
3. Alliances - Share risks and revenues to jointly
improve individual competitive advantage.
4. Coopetition - Join forces with someone who would
normally be your competitor to achieve a common
goal
5. Collaboration - Partner with others for mutual
benefit.
 STRUCTURE
1. Organizational Design: Align infrastructure with core qualities and business
processes.
2. Incentive Systems: Offer rewards (financial or non-financial) to provide
motivation for a particular course of action.
3. IT Integration : Integrate technology resources and applications
4. Competency Center: Cluster resources, practices and expertise into support
centers that increase efficiency and effectiveness across the broader
organization.
5. Corporate University- Provide job-specific or company-specific training for
managers.
6. Decentralized Management - Distribute decision-making governance closer
to your key staff and customer or other key business interfaces.
7. Knowledge Management- Share relevant information internally to reduce
redundancy and improve job performance
8. Asset Standardization - Reduce operating costs and increase connectivity
and modularity by standardizing your assets
 PROCESS
1. Process Standardization - Use common processes,
procedures, and policies to reduce complexity, costs,
and errors.
2. Localization - Adapt an offering, process, or experience
to target a culture or region
3. Process Efficiency - Create or produce more while using
fewer resources— measured in materials, energy
consumption or time
4. On-Demand Production - Produce items after an order
has been received to avoid carrying costs of inventory
5. Intellectual Property - Protect an idea that has
commercial value—such as a recipe or industrial
process— with legal tools like patents
6. User Generated - Put your users to work in creating
and curating content that powers your offerings.
PRODUCT PERFORMANCE
1. Superior Product - Develop an offering of exceptional
design, quality, and/or experience.
2. Engaging Functionality - Provide an unexpected or
newsworthy experiential component that elevates the
customer interaction.
3. Safety - Increase the customer’s level of confidence and
security
4. Added Functionality - Add new functionality to an existing
offering.
5. Conservation - Design your product so that customers can
reduce their use of energy or materials.
 PRODUCT SYSTEM
1. Complements - Sell additional related or ancillary products or
services to a customer.
2. Extensions/Plug-ins - Allow first- or thirdparty additions that
add functionality.
3. Product Bundling - Offer several products for sale as one
combined product
4. Modular Systems - Provide a set of individual components that
can be used independently, but gain utility when combined.
5. Product/Service Platforms - Develop systems that connect with
other, partner products and services to create a holistic
offering.
6. Integrated Offering - Combine otherwise discrete components
into a complete experience
 SERVICE.
1. Loyalty Programs - Provide benefits and/or discounts to
frequent and high-value customers.
2. Added Value - Include an additional service/function as part
of the base price.
3. Total Experience Management - Provide thoughtful, holistic
management of the consumer experience across an
offering’s lifecycle.
4. Supplementary Service - Offer ancillary services that fit with
your offering.
5. Superior Service - Provide service(s) of higher quality,
efficacy, or with a better experience than any competitor.
6. Lease or Loan - Let customers pay over time to lower
upfront costs.
 CHANNEL
1. Diversification - Add and expand into new or different channels.
2. Flagship Store - Create a store to showcase quintessential brand
and product attributes.
3. Go Direct - Skip traditional retail channels and connect directly
with customers.
4. Multi-Level Marketing - Sell bulk or packaged goods to an affiliated
but independent sales force that turns around and sells it for you.
5. Cross-selling - Place products, services, or information that will
enhance an experience in situations where customers are likely to
want to access them
6. On-Demand - Deliver goods in real-time whenever or wherever they
are desired.
7. Context Specific - Offer timely access to goods that are appropriate
for a specific location, occasion, or situation.
 BRAND
1. Co-Branding - Combine brands to mutually reinforce key
attributes or enhance the credibility of an offering.
2. Brand Leverage - “Lend” your credibility and allow
others to use your name—thus extending your brand’s
reach.
3. Transparency - Let customers see into your operations
and participate with your brand and offerings
4. Values Alignment - Make your brand stand for a big idea
or a set of values and express them consistently in all
aspects of your company.
5. Certification - Develop a brand or mark that signifies and
ensures certain characteristics in third-party offerings.
 CUSTOMER ENGAGEMENT
1. Process Automation - Remove the burden of repetitive tasks from the user to simplify life and
make new experiences seem magical.
2. Experience Simplification- Reduce complexity and focus on delivering specific experiences
exceptionally well.
3. Curation - Use a distinct point of view to separate the proverbial wheat from the chaff—and
in the process create a strong identity for your self and your followers
4. Experience Enabling - Extend the realm of what’s possible to offer a previously improbable
experience.
5. Mastery - Help customers to obtain great skill or deep knowledge of some activity or subject.
6. Autonomy and Authority - Grant users the power to use your offerings to shape their own
experience.
7. Community and Belonging - Facilitate visceral connections to make people feel they are part
of a group or movement.
8. Personalization - Alter a standard offering to allow the projection of the customer’s identity
9. Whimsy and Personality - Humanize your offering with small flourishes of on-brand, on-
message ways of seeming alive
10.Status and Recognition - Offer cues that infer meaning, allowing users— and those who
interact with them—to develop and nurture aspects of their identity.
SUMMARY
1. PRODUCT MODEL
2. NETWORK
3. STRUCTURE
4. PROCESS
5. PRODUCT PERFORMANCE
6. PRODUCT SYSTEM
7. SERVICE
8. CHANNEL
9. BRAND
10.CUSTOMER ENGAGEMENT
THANK YOU
.