Do we focus on innovating our business model, implementing new technologies, focusing on the customer, focusing on the product or service?
Today, we need to approach innovation holistically, with a 360-degree view in terms of all possible dimensions through which an organization can innovate. Therefore, business innovation stands for innovation as the creation of substantial new value for customers and the organization by creatively changing one or more dimensions of the business system.
This definition leads to the following three important characterizations:
- Business innovation is about new value, not new things. Innovation is relevant only if it creates value for customers, and therefore for the organization. Thus creating “new things” is neither necessary nor sufficient for business innovation. Customers are the ones, who decide the worth of an innovation by voting with their wallets. It makes no difference how innovative a company thinks it is. What matters is whether customers will pay.
- Business innovation comes in many flavors. Innovation can take place on any dimension of a business system.
- Business innovation is systemic. Successful business innovation requires the careful consideration of all aspects of a business. A great product with a lousy distribution channel will fail just as spectacularly as a terrific new technology that lacks a valuable end-user application.
According to MITSloan Management Review, there are 12 dimensions of business innovation, which can be seen from the picture.