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Innovation for products and services
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By Karthik Yajurvedi

Published February 9, 2014

Innovation, a very common word these days comes up in conversations in organizations and institutions. It is important to understand the true spirit behind the buzzword, why it is essential to embrace it and how it needs to be embedded into the fabric of the organization. Service product companies quite different from the pure product companies are increasingly finding new ways of fostering innovation. 

Category: Planning, Analysis & Strategy


The word innovation is definitely high up there on the list of business buzzwords of this decade. With it being thrown around ubiquitously, it is sometimes hard to understand what exactly is innovation. The "you will know it when you see it” approach might help understand its essence. 3M in its early years was on the brink of closing down business. Apple was struggling when Steve Jobs returned for a second stint. Both these companies eventually made it – and made it big, how? How have companies such as Google, Facebook, Netflix, Skype been able to approach markets in unheard-of-ways to create new markets and change the world. It must have been many things - willingness to change, calculated risk taking, determination, challenge the status-quo, never-say-die spirit, etc. 

In this article, let us briefly look at what innovation is, discuss some best practices for adoption in organizations and finally look at an upcoming, relatively new concept of innovation in service organizations.  

Innovation definition 

The word innovation is derived from the Latin noun innovatus that means renewal or change. It is also defined as a process of finding novel solutions to important problems. Innovation is about putting creativity into practice. While creativity is about coming up with ideas, innovation is about bringing ideas to life. David Brier, brand identity specialist in a article described innovation as the ability to see and act upon new, emerging dots. Companies that are able to recognize, acknowledge, understand and act on the new dots are the ones that have the potential to survive, thrive and perhaps bring about ground-breaking changes.  

Mr. Clayton Christensen, HBS Professor and Disruption Innovation Expert classifies innovations into three types: efficiency innovations, which produce the same product more cheaply, such as automating credit checks; sustaining innovations, which turn good products into better ones, such as the hybrid car; and disruptive innovations, which transform expensive, complex products into affordable, simple ones, such as the shift from mainframe to personal computers. A company's biggest potential for growth lies in disruptive innovation, he says, noting that the other types could just as well be called ordinary progress and normally don't create more jobs or business. 

Innovation adoption 

Companies face numerous challenges in baking innovation into their main stream operations. Complex internal processes, fear of jarring existing customers, reputational risk, fear of failure and internal resistance to change are some of them.

Some of the ways innovative giants such as Google have injected innovation into the lifeblood of the organization by ·  

  • Having a purpose/mission that matters so all employees can connect to it and feel empowered to achieve it.
  • Thinking big but starting small so ideas don't just stay theoretical. The idea based on the outcome, might morph into another great idea that was just not visible in the first place·        
  • Striving for continual innovation, not just instant perfection. The iterative continuous delivery process based on customers usage and behavior makes innovation an ongoing process as opposed to a one time hit. Strong innovators listen to customers·        
  • Encouraging diversity and tuning to possibility of getting ideas from everywhere. The best ideas might come from front-line employees who are closest to the market and customers or from someone who shares similar background with customer base. Giving people their space to come up with new ideas, getting out of their way and rewarding calculated risk-takers by championing their efforts unlocks innovation·        
  • Sharing everything. Removing walls and unleashing information to flow freely and fully will get the whole company to interpret and explore possibilities in new ways to foster innovation·        
  • Removing the fear of failure. Encourage risk taking and play down on failure as long as there is learning from mistakes. Failing fast and adjusting is a cost-effective way of efficiently using precious resources. Google's "20 percent time" empowers employees to spend 1 day a week on side projects

Innovation in Service Products 

It is easy to understand innovation in product companies as there are tangible products. But, what about innovation in the service industry - companies that help roll out products as service offerings? Does innovation apply here? It sure does, but lot difficult. The complex nature of service products that are mostly intangible processes instead of objects causes this challenge. Since all service products involve close interaction with customers, it is vital to innovate not just about "what” is being offered, but also about "how” it being offered. For a deep-dive into innovation in services, don't miss this upcoming BPMA event with guest speaker Susan Loconto Penta , Cofounder and Managing Partner - MIDIOR Consulting 

In summary, the true essence of what innovation actually means needs to be baked into people, systems and structure of organizations. Fostering innovation needs to be deliberate, organized and measurable, yet open-ended and fluid in ways that employees can unleash their true creativity without fear of failure It is one of the primary ways to differentiate the product from the competition. When not possible to compete on price, companies need innovative products and ideas to make their business stand out from the crowd. Finally, the challenges of innovation in the services industry where companies don't have unlimited resources to support their innovation programs calls for careful understanding of the service delivery process along with the service offering itself. It is significant though as it presents great opportunities with services being a major part of the revenue stream for mature products.


Karthik Yajurvedi is a technology professional with vast product development experience in financial services and healthcare and passion in customer-oriented high tech products and emerging technologies.

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