10 Types of Innovation

10 Types of Innovation

Profit Model Innovation Premium Forced Scarcity Switchboard Flexible Pricing Licensing Price at a higher margin Limit the supply of Connect multiple sellers Vary prices for an Grant permission to than competitor, usually offerings available, by with multiple buyers; offering based on some other group or for a superior product, quantity, time frame or the more buyers and demand individual to use your offering, experience, access, to drive up sellers to join, the more offering in a definedTACTICS OVERVIEW service or brand. demand and/or prices. valuables the way for a specified switchboard. payment Cost Leadership Subscription Auction Float Metered Use Keep variable costs low Create predictable cash Allow a market-and its Receive payment prior Allow customers to pay and sell high volumes at flows by charging users- to set the price to building the offering- for only what they use low prices. customers up front (a one for goods and services and use the cash to earn time or recurring fee) to interest prior to making Scaled have access to the User-Defined margins Transactions product/ service over time. Invite customers to set Financing Bundled Pricing Maximise margins by a price they wish to pay pursuing high volume, Membership Capture revenue not Sell in a single large scale transaction Freemium directly from the sale of transaction two or more when unit costs are Charge a time-based a product, but from a items that could be sold relatively fixed. payment to permit Offer basic services for structured payment as standable offerings access to locations, free, while charging a plans and after-sale Micro- offerings, or services premium for advanced interest. Disaggregate Risk Sharing transactions that non-member does or special features Pricing not have. Ad-Supported Waive standard Sell many items for as Allow customers to buy fees/costs if certain little as a dollar- or Installed Base Provide content/ exactly-and only-what metrics aren‘t achieved, deven only one cent- to services for free to one they want. but receive outsize drive impulse purchases Offer a [core] product for party while selling gains when they are. at volume. slim margins (or even a listeners, viewers or loss) to drive demand and *eyeballs* to another loyalty; then realise profit party on additional product and services.

TACTICS OVERVIEW Network Innovation Merger/ Supply Chain Competition Alliances Secondary Acquisition Integration Markets Join forces with Share risks and Combine two or more Coordinate and someone who would revenues to jointly Connect waste streams, entities to gain access integrate information normally be your improve individual by-products, or other to capabilities and and/or processes across competitor to achieve a competitive advantage alternative offerings to assets a company or functions common goal those who want them. of the supply chain. Open Complementary Innovation Consolidation Partnering Collaboration Franchising Obtain access to processes or patents from other Acquire multiple Leverage assets by Partner with others for License business companies to leverage, companies in the same sharing them with mutual benefit principles, processes, extend, and build on market or companies that serve and brand to paying expertise and/or do the complementary similar markets but partners. same with internal IP and markets offer different products processes and services.

Structure Innovation Process Innovation Organizational Outsourcing Asset Flexible Lean Process Design Standardization Manufacturing Production Standardization Assign responsibility for Make form follow deveoping or maintaining Reduce operating costs Use a production Reduce waste and cost Use common products, function and align a system to a vendor. and increase system that can rapidly in your manufacturing processes, procedures, infrastructure with core connectivity and react to changes and process and other and policies to reduce qualities and business modularity by still operate efficiently. operations complexity, costs and processes. standardizing your errors.TACTICS OVERVIEW assets. Icentive Corporate Process Logistics System Localization Systems University Automation Manage the flow of Adapt an offering, Offer rewards (financial Provide job-specific or Apply tools and goods, information and process or experience or non-financial) to company-specific infrastructure to other resources to target a culture or provide motivation for a training for managers. manage routine between the point of region particular course of activities in order to origin and the point of action. free up employees. use. IT Integration Decentralised Crowdsourcing Process Management Strategic Design Efficiency Integrate technology Outsource repetitive or resources and Distribute decision- challenging work to a Employ a purposeful Create or produce more applications making governance large group of semi- approach that manifests while using fewer closer to the customer organised individuals. itself consistently across resources- measured in or other key business offerings, brands, and materials, energy interfaces. experiences. consumption or time Competency Knowledge On-Demand Intellectual Center Management Production Property Cluster resources, Share relevant Produce items after an Protect an idea that has praactices and expertise information internally order has been received commercial value- such into support centers that to reduce redundancy to avoid carrying costs as a recipe or industrial increase efficiency and and improve job of inventory. process- with legal tools effectiveness across the performance. like patents. broader organization

Product Performance Innovation Product System Innovative Superior Feature Conservation Complements Product/Service Product Aggregation Platforms Design your product so Sell additional related or Develop an offering of Combine existing that customers can ancillary products or Develop systems that exceptional design, features found across reduce their use of services to a customer connect with other, quality and/or offerings into a single energy or materials. partner product and experience. offering. services to create a holistic offering.TACTICS OVERVIEW Ease of Use Added Customization Extension/ Integrated Functionality Plug-ins Offering Make your product Enable alterring of the simple, intuitive and Add new functionality product or service to Allow first- or third- Combine otherwise comfortable to use. to an existing offering. suit individual party additions that add discrete components requirements or functionality. into a complete specifications. experience. Engaging Performance Focus Product Functionality Simplification Bundling Design an offering Provide an unexpected Omit superfluous specifically for a Offer several products or newsworthy details, features, and particular audience at for sale as one experiential component interactions to reduce the expense of others. combined product. that elevates the complexity. customer interaction. Safety Environmental Styling Modular Sensitivity Systems Increase the customer‘s Impart a style, fashion level of confidence and Provide offerings that or image Provide a set of security. do no harm- or individual components relatively less harm- to that can be used the environment. independently, but gain utility when combined.

Service Innovation Channel Innovation Try Before Concierge Personalised Diversification Pop-up On-Demand You Buy Service Presence Provide premium Add and expand into Deliver goods in real- Let customers test and service by taking on Use the customer‘s own new or different Create a noteworthy time whenever or experience an offering tasks for which information to provide channels. but temporary wherever they are befrore investing in it. customers don‘t have perfectly calibated environment to desired. time. service. showcase and/or sell offerings.TACTICS OVERVIEW Guarantee Total Exp. User Community/ Flagship Store Indirect Context Specific Management Distribution Remove customer risk Support Systems Create a store to Offer timely access to of lost money or time Provide thoughtful, showcase quinessential Use others as resellers goods that are stemming from product holistic management of Provide a communal brand and product who take ownership appropriate for a failure or purchase the consumer resource for a attributes. over delivering the specific location, error. experience across an product/service offering to the final occasion, or a situation. offering‘s lifecycle. support, use and user. extension Loyalty Supplementary Lease or Loan Go Direct Multi-level Experience Programs Services Marketing Center Let customers pay over Skip traditional retail Provide benefits and/or Offer ancillary services time to lower upfront channels and connect Sell bulk or packaged Create a space that discounts to frequent that fit with your costs. directly with customers. goods to an affiliated encourages your and high-value offering. but independent sales customers to interact with customers. force that turns around your offerings- but and sells it for you. purchase them through a different (and often lower- cost] channel. Added Value Superior Self-Service Non-Traditional Cross-Selling Service Channels Include an additional Provide users with Place products, services, service/function as part Provide service(s) of control over activities Employ novel and or information that will of the base price. higher quality, efficacy, that would otherwise relevant avenues to enhance an experience or with a better require an intermediary reach customers. in situations where experience than any to complete. customers are likely to competitor. want to access them.

Brand Innovation Customer Engagement Innovation Co-Branding Component Process Mastery Whimsy and Branding Automation Personality Combine brands to Help customers to mutually reinforce key Brand an integral Remove the burden of obtain great skill or Humanise your offering attributes or enhance component to make a repetitive tasks from deep knowledge of with small flourishes of the credibility of an final offering appear the user to simplify life some activity or subject. on-brand, on-message offering. more valuable and make new ways of seeming alive. experiences seemTACTICS OVERVIEW magical. Autonomy and Status and Brand Leverage Transparency Experience Authority Recognition Simplification *Lend* your credibility Let customers see into Grant users the power Offer cues that infer and allow others to use your operations and Reduce complexity and to use your offerings to meaning, allowing your name- thus participate with your focus on delivering shape their own users- and those who extending your brand‘s brand and offerings. specific experiences experience. interact with them- to reach. exceptionally well. develop and nurture aspects of their identity. Curation Private Label Values Community and Alignment Use a distinct point of view Belonging Provide goods made by to separate the proverbial others under your Make your brand stand wheat from the chaff- and Facilitate visceral company‘s brand. for a big idea or a set of in the process create a connections to make values and express strong identity for yourself people feel they are them consistently in all and your followers. part of a group or aspects of your movement. company. Brand Extension Certification Experience Personalization Enabling Offer a new product or Develop a brand or After a standard service under the mark that signifies and Extend the realm of offering to allow the umbrella of an existing ensures certain what‘s possible to offer projection of the brand. characteristics in third- a previiously customer‘s identity. party offerings. improbable experience.

A long period of competition selling cheap razor $1.7handles with premium replacement blades, Gillettereturned to maximise its profits through premium billionrazor handles and cheap blades as reverse innovationof profit model. © UCSI Consulting Group 2016Acquisition of The Art of Shaving 68.2%results in the birth of premiumrazor, Gillette Fusion ProGlide, Market shareselling at minimum $40 a set. Successfully switches profit modelGillette Fusion ProGlide enables through reverse innovation, whichpremium brand to be embedded charges premium for handles andalongside the luxury shaving cheaper for blades.brand.Profit Model InnovationHow you make money

Creation of Malaria candidate vaccine Mosquirix in 2015 at a not-for-profit price. Advancing the phase II clinical trial for their candidate TB vaccine, developed in partnership with Aeras. Open Lab has built a portfolio of 51 research projects, supported 64 visiting scientists, and resulted in 44 scientific publications and several promising drug discovery leads.How? GlaxoSmithKline Network Innovation Glaxosmithkline developed co-innovation relationships that Impact How you connect with others to create value uses open innovation to tackle R&D challenges. Creation of Patent & Compound Pool GSK leads patent pool through contribution of 800 patents for compounds or processes, a step followed by Alnylam which added 1,500 patents for researchers worldwide to research.Identification of Alliances & Partners Creation of open innovation ecosystemPartner with other pharmaceutical firm like Alnylam Pharmaceuticals . Co-founded WIPO (World International Patent Organisation) Re:Search as aSource funding and grants from Bill and Melinda Gates foundation. platform to share patents for partnerships.Partner with local group such as BIO Ventures for Global Health to maximiseresearch effect in local. © UCSI Consulting Group 2016

Process Innovation How you use signature or superior methods to do your workYearly sales growth 2bn The locations Productionaverage of 10% for new stores process, takes SHAOvPerNagOeW are carefully only 2 - 3 profit a selected to weeks. year ensure a more Deliveries of efficient supply new clothes chain twice a week. management. A Spanish fashion Very responsive house that to any change in pioneered the fast- fashion trend, fashion industry. with new design delivered in 3 weeks time. © UCSI Consulting Group 2016

Crowdsourcing: Lean production: Process Innovation IKEA work with product developers and specialists to Developers and designers work with a How you use signature or superior methods to do your work design IKEA product. This encourages the synergistic diverse team of technicians, manufacturers effort within the team to come out with more that 9500 and specialists right on the factory floor products in IKEA’s home finishing range. during the early stage of production.Ikea developed flat- Process Efficiency: Standardisation:pack furniture withno variation by Value chain optimisation, Standardised products,region or country. building long term supplier warehouses, and design inIts products included relationship, investing in every 315 stores across 27the same hardware automated production and countries.and instructions producing large volume.regardless of wherethey were Reduced pack size of specific 770Annual figure of millionpurchased, thus furniture by as much ashelping to visitors to their stories.streamline the 50%.company’s internalproduction 2-3%Reduced specific furniture prices by per annum.processes. © UCSI Consulting Group 2016

A web browser that is Knowledge sharing forum: 520 built based on open- million source concept that The developer teams of browsers from allows independent Google, Microsoft & Mozilla often Firefox developers to make hold meeting, conference to update & users hundreds of discrete brainstorm on improvisation, new ideas plug-ins to the browser. & collaborative initiatives. $$1.1Product Free for use: $ billionSystemInnovation Firefox maintains its market share as contract free-for-use browser with enhanced from YahooComplimentary Products functionality, with >85% of its revenuesand Services churned from search partnership model, allowing costs to be completely absorbed. Open source platform: 15.1% 15% Open source allows features to be added browser onto Firefox at no cost, thus gaining market share browser market share among increasingly-demanding browser users who look for additional functionality. Search partnership revenue model: Search partnership model allows Mozilla to maximise revenues while optimizing browser efficiency & brand concurrently through partnering with internet giant e.g. Google & Yahoo. © UCSI Consulting Group 2016

Product System Innovation $ Microsoft Office continues toComplimentary Products and Services Subscription model (yearly 1st lead in enterprise software fees with free updates) Microsoft office is bundled segment, which is used in 4/5 together as an integrated allows consumers to even out system, rather than usage costs while enjoying latest Fortune 500 companies individual product, which version of office. This also provides became a productivity suite Microsoft with recurring income. Licensing/subscription that is widely used by businesses/individuals Bundle individual office $$$ model creates worldwide. This is on top of products into one office suite, subscription model that recurring revenue helps organisations to which promotes convenience and reduce software-purchase seamless experience in one go. stream for Microsoft costs which is usually one- Product bundling helps customers to off. How…save costs as an all-in-one package. New Office 365 overtakes 25 Google Apps in Enterprise segment with 25.2% % market share in 2015 © UCSI Consulting Group 2016

Product Performance Innovation How you develop distinguishing features and functionalityResearch & development Best ExpandedIn coming up with My M&M’s, MARS, through its R&D div., explored Selling Candy customisationthe methods of developing customisation at a lower cost. Brand in US in into brick & mortar retailLeverage on e-commerce 2014 MyThe launch of the customisation was done through a link M&Mfrom its main website, to capture the e-commerce trend. Is now its ownFeedback mechanism business unitMARS uses customer feedback as a guide forpricing, customisation options and minimum orders.In March of 2004, Mars, Inc. launched My M&M’s®, an experiment that would soonbecome a thriving independent business unit called Mars Direct. My M&M’s allows buyersto personalise the company’s best-selling M&M chocolate candies with texts or images. © UCSI Consulting Group 2016

Channel Innovation 1994 2007 2016Support and amplify the value of your offerings Inception of Inception of 7.9% tablet Amazon Amazon Kindle Tablet market shareProvide value added service to +$ Provide on demand free 3G plan The on-demandcustomer that turns into cross- to kindle customers for them to Whispernet serviceselling channel for the purchase and download e-book on the Kindle is aorganisation to generate new in less than 60 seconds. closed wirelessrevenue through sales of e-book network, a 3G plan that is free for Kindle 3G plan allows users to customers, which access to website and allows users to purchase book anytime, purchase and anywhere they want. download an e-book - ready to read in less5.2 million Grabs 7.9% of tablet than 60 seconds. market share in 4thKindle tablets sold in © UCSI Consulting Group 20164th quarter of 2015. quarter of 2015.Estimated $265- Doubled e-book market530 million sales shares from 7% tofrom e-book per annum. 13% in 2015.

How Nike uses Channel Innovation in Direct-To-Consumer StrategyFlagship Store as Channel Innovation Impact ~68% 2nd• Create ‘brand experience’ focused-flagship stores US athletic footwear most followed brand on that showcase distinct product categories and the market share Instagram with 42.9mn story behind them. followers• Hire store assistant who is passionate about sports. > 20% MostDirect Selling as Channel Innovation sales made from Direct- innovative company in• Open outlet store that directly captures market To-Consumer Channel 2013 by Forbes base while delivering high value to consumers. NIKE, Inc.Digital Brand Experience as Channel Innovation fosters a culture of invention, which creates• Enable consumers to customise sport shoes online products, services and experiences with preferred design and name to create brand for today’s athlete while solving problems experience. for the next generation.Pop Up Presence It engages in the design, development, marketing, and sale of sports and lifestyle footwear, apparel, and equipment,• Create pop up presence in accordance to latest accessories and services. In 2015, Nike's global revenue amounted international sporting events. to about 30.6 billion U.S. dollars.• Design seasonal products based on latest events to create buzz. © UCSI Consulting Group 2016

24% In 1991, the first The logo is easily Brand Innovation year of Intel recognisable due Initial logo to its simplicity. How you represent your offerings and businessawareness Inside campaign, Also introduced a tune to let users Simple logo sales rose 63% know that their PCwith a familiar has Intel chips. Introduced a logo chime that symbolises the The brand innovation How presence of Intel increased the processor inside a perceived value of PC. any product showing the brand over non- marked alternatives. Elaborate Resulting advertising logo campaign awareness How 91% © UCSI Consulting Group 2016

Sense of Community and Belonging Create Anticipation Apple Anticipation is created across region during product launching. 65% 10% 9% 15% Create New Roles Revenue Breakdown in 2016 Q2: Iphone, Mac, Ipad and Other Services Apple designed specific vacancy and jobCustomer Engagement positions to facilitate and assist users to get set up, get trained on Apple products.How you foster compelling interactions Namely: Genius, Creative and Expert to create and deliver amazing learning experience for 1st time users. Free Works Shop To educate the users of the diverse tools and technology of Apple’s product, Apple offers free workshops, Summer camp and Labs for Apple users. © UCSI Consulting Group 2016