The Problem-Loving Path to Innovation

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Fall in love with the problem, not the solution.  This is my new favourite catch phrase to kick off 2024.

Innovation isn’t about emerging technology or new products. It’s not an event. It’s a discipline.  Innovation is about finding solutions to problems. We’ve had our share of problems over these last few years as a society, which is why at Differly, we have full heartedly embraced innovation.

The key challenge that keeps me up at night as the founder and leader of Differly: how do we embed innovation into our organizations – in particular, the small and medium sized businesses, life blood of our economy – to ensure adaptability and longevity?  

Key to my journey over this last decade has been the study of all innovation models, reviewing the principles they are built on and the context from which they were developed.  I’m sharing a summary of these below as a helpful guide to you. This will be the first of a series focused on innovation.  Let’s review some of the most prominent frameworks:  

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‍Osterwalder's Invincible Company Framework

The Invincible Company, conceptualized by Alexander Osterwalder and his co-authors is one of my favourite models, which calls for leaders to constantly look beyond their current business models, products, and markets to explore new ways to create value based on unmet customer needs and market opportunities. Key concepts include:  

• Aligning innovation with company strategy.
• Balancing the exploration of new business models with the exploitation of existing ones.
• Managing a diverse innovation portfolio.
• Cultivating an innovation-centric culture and organizational structure.
• Mastering business model and value proposition design.

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Doblin's 10 Types of Innovation (now owned by Deloitte)

Moving beyond product innovation, Doblin's framework based on comprehensive data and research highlights ten key areas where innovation typically occurs, in combination:  

1. Business/Profit Model: How you make money

2. Network:  How you connect and collaborate with others to create value

3. Structure: Alignment of talent and assets – org design

4. Internal Process: Unique ways to delivery your product or service

5. Product: Unique features, functionality  

6. Product System: This is the services or complimentary products that surround your core offering to deliver value. Could be packaged offerings leveraged by others.  

7. Service: Anything that enhances or supports a product like community, support and education.  

8. Channel: How and through which channels you deliver value

9. Brand: How it feels to do business with you.  

10. Customer Engagement / Experience: Deep understanding of your customers to create meaningful interactions and loyalty.  

This model encourages businesses to think broadly about innovation, exploring 10 distinct focus areas, that when combined create sustained breakthroughs. The book provides numerous concrete examples throughout history across many markets.  

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McKinsey's Three Horizons of Growth

This enduring strategic framework, developed by McKinsey & Company, is often seen in a useful visual showing the balance required between immediate performance, emerging opportunities and blue-sky, longer term potential growth.  

• Horizon 1: Focuses on optimizing the current core business.
• Horizon 2: Targets emerging opportunities that promise future growth.
• Horizon 3: Explores long-term innovations, often disruptive and groundbreaking.

By managing these three horizons concurrently, businesses can maintain growth sustainability and resilience.  A great book pulling from this main concept is Lead from the Future from Mark W. Johnson and Josh Suskewicz. They argue that leaders who solely think in a present-forward (or first horizon) way, head down solving today’s problems, are often caught off-guard by bigger ones around the corner.

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Blue Ocean vs. Red Ocean Strategy

The Blue Ocean Strategy, presented by W. Chan Kim and Renée Mauborgne, contrasts sharply with the Red Ocean Strategy:

• Red Ocean are the waters where players battled in existing market spaces, refining existing products and services. Companies compete in existing market spaces and battle over a fixed set of customers, trying to outdo each other on features, price, or both. This intense competition often leads to reduced profit margins. The Red Ocean metaphor symbolizes a market environment where competition is fierce, and the waters are bloody from battling competitors.

• Blue Ocean in contrast, is wide open water where we find uncontested market spaces, making competition irrelevant. By innovating and differentiating, a company can create new demand and have the space to itself, at least for a time creating a “blue ocean”.

Blue ocean has also been called non-disruptive innovation where new markets are created without disrupting an existing one.  

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Disruptive Innovation Model

Coined by Clayton M. Christensen, this model describes how simpler, more affordable products or services can eventually displace established competitors. It offers a lens through which businesses can anticipate and respond to market disruptions.

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‍There are many other associated frameworks or management models often referenced in Innovation strategy such as the stage-gate model widely used in product development.  

Similarly, the practice of design thinking, a human-centered approach to innovation that places an emphasis on the “jobs to be done” of your customers. The theory here is that we “hire” products to do things for us and to produce an outcome.  Understanding the job is critical to improving the product.  

[Side note, search “Understanding the job” on YouTube or “Why did you hire this milkshake?” for a fascinating account by Christensen]

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For all my startups out there, we have the lean startup methodology which is often confused as the entire discipline of innovation, but rather it focuses on one aspect of the innovation - the lifecycle – which is the importance of rapid prototyping and iteration based on customer feedback.  

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Conclusion

While each model offers unique insights and tools none are a one size fits all. Innovation is not a one-time event but rather a discipline that must be embedded within the organization in order to produce consistent value.  

These models and the study of their guiding principles greatly influenced Differly’s “Innovation-as-a-Service" offering.    

Embracing the motto to “Fall in love with the problem, not the solution” since our launch in 2018, we have leveraged elements of these models with each one of our clients, fine tuning our own approach to innovation along the way. We have broken down the process of innovation across 4 key pillars: strategy, portfolio of projects (or road map), the lifecycle (how to test, pilot and bring new ideas to market consistently) and the culture of innovation – how to nurture the behaviours that supports innovation.    

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Take a look and if you see some of these challenges in your organization, reach out for a chat.  I’ll talk innovation all day.  

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Images courtesy our innovative friends at pixostock.com

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