The 7 Dimensions of Innovation

Written on May 27, 2007 by 

A while back, I developed a model of “the 7 dimensions of innovation” as a tool to help clients orient themselves to the innovation topography – to identify where they are in relation to the innovation landscape, as a starting point to developing their innovation strategy. I am putting the approach forward under Creative Commons licensing (see end of article) which means under defined conditions you can use the model commercially with clients and, under the terms of the licensing, adapt, extend and distribute variations of the model. If you’d like to suggest some improvements to the model, I’m very happy to consider those as well.

The model is as follows: an organization can orient itself to its innovation context and do preliminary planning for developing the Innovation Plan by considering the following 7 Dimensions of Innovation:

1. Where Innovation Takes Place

Innovation may take place in relation to almost any aspect of your organization, its capabilities, and its outputs. While innovation is often thought of as taking place primarily as investment in Research and Development (R&D) activity leading to product innovations that may subsequently be commercialised, recent research has emphasised and underscored the fact that innovation often occurs through means other than R&D investment. It is by now widely recognized that innovation may occur across a number of dimensions within the organization, including innovation in:

  • Products
  • Services
  • Business processes
  • Logistical and other improvements in the supply chain – the links between the company and its suppliers, and the company and its customers
  • The business model

It is therefore worth considering what innovation your organization does across each of these dimensions.

2. Industry Context

It is important to understand the competitive context for innovation. What are your competitors doing? What are they not doing? The ‘status quo’ just for keeping up with the pace of existing industry innovation activity may dictate a base level of requirements for innovation in your industry and market, and reveal opportunities for innovating to distinguish your organization from the competition.

It is also important to note that the nature of innovation varies by industry, and the requirements for innovation are different in different market contexts. For example, companies in the manufacturing industry tend to invest relatively heavily in product innovation and operational innovation, while companies in service industries will tend to prioritise service innovation. While there are common requirements, it is useful to determine if there is anything specific about the nature of the industry in question that impacts on development of the Innovation Strategy. Innovation requirements may vary greatly from industry to industry and in different market and competitive environments.

3. Which Innovation Domains to Focus On

The third dimension of innovation is to recognise that concern for innovation issues may be addressed on a number of levels. For example, the focus might be on one or more of

  • individual creativity
  • team creativity
  • organizational innovation
  • inter-organizational networks
  • government innovation policy

It is important to identify which levels are important for the innovation issues you are seeking to address. For example, an advertising agency might be concerned with individual and team creativity leading to the generation of many innovative and useful ideas, an organization might be focused on organizational processes for processing, filtering and acting on ideas generated by employees, a university might be concerned with building networks to share and commercialise ideas with outside companies and organizations, and state or national government might be concerned with construction of a policy environment and appropriate infrastructure to further innovation on the state or national level.

In general, the innovation domains are linked. An organization, for example, would typically be concerned with individual, team and organizational innovation, but this takes place in an environment enabled or constrained by government innovation policy.

Recognising that innovation occurs in a number of linked domains allows for a detailed analysis of how your organization performs on its innovation activities in each of these related domains that it is involved in.

4.The Sources of Ideas

Eric von Hippel noted in his classic 1988 book The Sources of Innovation that innovations may arise from a number of sources. New ideas and innovation may be driven by

  • customers
  • employees
  • suppliers
  • management
  • the activities of competitors
  • ideas in the public domain or academia

Innovations may be introduced from each of these – and other – sources. It is, therefore, worthwhile to consider what your organization does to foster and support innovations from each of these groups. Does your organization recognise and enable or ignore and obstruct each of these sources of new ideas?

5. Stage of Organizational Growth?

The fifth dimension of innovation is to ask at what stage of growth your organization is at. For example, is your organization:

  • a start-up
  • a mid-size and growing organization
  • a mature organization looking for opportunities for further growth

The requirements for innovation may be quite different for organizations at different stages.

Start-up organizations funded by Venture Capital, for example, may typically start with an innovative product, service, and/or business model. The business processes, structures and strategies may well change and adapt innovatively to market conditions as the company tests and then establishes its business case and viability. Similarly, organizations starting up in a bootstrapping fashion without the benefit of Venture Capital finance may have to be extremely innovative and adaptable in terms of their marketing and business strategies, undergoing cycles of rapid feedback from customer prospects and rapidly evolving business models and processes. A bootstrap organization will tend to be heavily customer focused, as it is dependent on customers for initial revenue, and product and service innovations may be very much driven by the customer.

Whether a start-up is funded with Venture Capital or the start-up proceeds in a bootstrapping fashion, the start-up tends to be characterised by a high level of innovation in product, service, business processes, and business models. At this stage, communication between individuals is rapid and fluid, business processes are malleable and adaptable, and business models can be readily tested and changed.

After starting up, however, an organization may well have entered a stage of market consolidation and growth. The challenge here is not to prove the initial products, services, and business case, but to acquire market share and to continue to grow. Innovation in products and services, business processes, and business models may be vital to lifting performance and acquiring market share. Innovations here may serve to improve marketing and lift sales, to identify and deliver new features and benefits to customers, to improve efficiency and lower costs, or to identify potential improvements in the product or service delivery cycle or to deliver increased customer service and value.

When an organization reaches maturity in a competitive market, it may be difficult to grow by improving processes, reducing costs, and displacing competition. Cost reduction and process reengineering can only lead to so much growth: growth must instead be fuelled by innovation in developing new products and services for existing customers or finding or creating new markets for existing products. For example, mature organizations such as Procter & Gamble and General Electric have turned to innovation to fuel the required growth and deliver shareholder value.

For such organizations, it is often the case that internal research and development cannot deliver sufficient innovation to fuel the required growth. In such cases, organizations often turn to “open innovation” to access innovations by individuals and organizations external to the organization.

6. Size and Complexity of Organization

The sixth dimension of innovation is the size and complexity of your organization. Clearly, smaller organizations with a flatter organizational structure allow for greater, more rapid and more intimate communication between employees. In larger organizations, more care must be taken to design and cultivate appropriate networks, communication channels, and innovation processes to cultivate communication, creative thought, and intelligent progression of creative ideas into commercially productive innovations.

It is pertinent, therefore, to consider how your organization’s size and structure impacts on collaboration between individuals, and how organizational processes and culture facilitate or retard the recognition and commercialisation of innovation within the organization. In general, the larger and more complex the organization, the more structured and disciplined your approach to innovation will need to be, and human factors including organizational culture and change management will play an increasingly important role in the solution.

7. Organizational Innovation Maturity

The final dimension of innovation presented here is the level of organizational maturity. Does your organization have a well defined and managed organizational culture? Do you have good processes capabilities for executing change? Can you put structure and discipline around your innovation initiatives?

An organization may be seen as progressing through the following four stages of innovation maturity:

  • ad-hoc
  • managing innovation effectively in particular innovation areas (e.g. product innovation)
  • learning how to introduce organizational processes and structures to manage innovation consistently and effectively across all business processes, products and functionality
  • learning to continually assess and improve both innovation performance and the organization’s processes for managing and monitoring innovation

It may be useful, therefore, to consider where your company is along the innovation maturity curve.

Concluding thoughts

Organizational innovation has been likened by one commentator to “the mating of pandas: infrequent, clumsy, and often inefficient.” Just as the mating of Panda Bears is essential for the survival of that species, however, the survival of modern businesses will depend on their capacity to innovate. The above article is intended as a tool to generate discussion and thinking about the nature of innovation, and where your organization can or should begin to look to its innovation performance and areas for improvement.

Copyright and Licensing

 

This model of the 7 Dimensions of Innovation is provided as an ‘open souurce’ piece of intellectual property specifically under “Creative Commons Attribution Share-Alike 2.5 Australia” licensing.

Creative Commons License

This means you can use it commercially with your clients and even extend it, but in any and every use of it (in whole or part) you must refer to this original version as being from Lauchlan Mackinnon of Cognitive Transitions (e.g. provide a link reference back to this page).

Any distribution of the work must be under the same Creative Commons Licensing (e.g. link back to this text or copy this text).

Any extension of it must cite that your work is based on the original (but not in any way suggest that I endorse you or your use of the work), must cite the original version (e.g. link to here), and must state its relationship to this original version (e.g. the path of variations on which it is based), and if distributed must be provided under the same Creative Commons licensing.

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