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What is innovation and how does it relate to leadership? This is answered in the book “Breaking Away: How Great Leaders Create Innovation that Drives Sustainable Growth - And Why Others Fail” by Jane Stevenson and Bilal Kaafarani. The first section of the book focuses on defining types of innovation and the risk that is involved in each of those levels of innovation.
Breaking Away defines innovation as a product, service, or company that is “unique, valuable and worthy of exchange.” Steve Jobs left a legacy of innovation with his Apple products including the iPod, iPhone, and the iPad changing the markets and categories he worked in and adding much value to his shareholders along the way.
Apple is an example of one of the four types of innovation described in the book. The following section describes these types as well as the risk associated with each one:
Transformation Innovation - “a disruptive breakthrough that changes society.” Examples would include electricity, the internet, and mass produced cars. This of course takes the most risk and often needs an incubation period to create in order to allow for its longer term payback.
Category Innovation - this is the new application of ideas, products or services rather than a creator of inventions. Examples include Apple’s products. The risk here is an equal mix risk and opportunity as it builds incrementally on current revenue streams.
Marketplace Innovation - this is building or creating new markets by coming up with unique modifications for products, services, and delivery methods. Examples include environmentally friendly packaging introduced for Sun Chips as well as the social networking marketing program used for the launch of Ford Fiesta. The risk here is fairly controllable as you it’s broadening a customer base instead of creating one.
Operational Innovation - this is innovation in the “how” of the business to stay efficient, productive, and evolving. Examples include Dell’s building computers to customer specifications and sending them directly to customers. This is the least risky as it is internal innovation, but still can have a big impact.
Overall innovation can be done in many different ways, but the impact is the same - something is created that is different, adds value, and people want to spend money on it. It is also about progress and moving forward in your business or organization. I believe innovation is a key way to have your organization stand out from others and truly make a difference, just like Steve Jobs did.
Have you created anything valuable in your business or organization? How can you can be more innovative in your day to day work? Which type of innovation has the most opportunities for your business?
Next time I will discuss how leadership impacts innovation.
Monica Thakrar has over 14 years experience in business focused mainly on strategy, change management, leadership development, training and coaching resulting in successful implementations of large scale transformation programs.