Expand Your Innovation Horizons

Another good example is the no-frills airline business. Ryanair (a low-cost European airline) has a higher market cap that most European national carriers. Why? Because no-frills airlines like Ryanair have re-invented flying for millions of people -- not through glitzy product or service innovations but via operational innovation.

Similarly, Wal-Mart isn’t the sexiest retailer from a traditional innovation point of view but they are creative thinkers where it counts. Wal-Mart’s ‘cross-docking’ system (where goods are transferred directly from supplier trucks to store delivery trucks) has been fundamental to logistical efficiency -- which in turn allows the company to deliver low prices to customers. It’s not glamorous but it works.

So what’s the take-away here? First, companies must think more radically while simultaneously maintaining an incremental innovation course. Easier said than done of course but there is no easy route to any place worth going.

Second, companies need to focus more on process innovation. This is not innovation process (which they also need) but re-thinking how a market or business currently works and how value could be delivered differently in the future. In other words, companies need to think less about new products and more about how they are delivered via new businesses and new business models.

A final example: Day Jet is a new U.S.-based business that allows business travellers to fly direct to regional airports in six-seater micro-jets. This means that travellers can bypass time-consuming connections at big airports and avoid unwanted overnight stays in small towns and cities. This is a really nice idea, although in theory any airline could buy some micro-jets and do exactly the same. What makes Day Jet innovative is its business model: The company has no fixed routes and no fixed prices. Instead the business aggregates demand ‘on the fly,’ linking small groups of people that want to go to the same place at roughly the same time. Routes and pricing will fluctuate in real time as demands ebbs and flows and customers will be offered a series of different prices depending on how flexible they are willing to be (give a little, save a lot). What’s really clever about this idea is how the business model blends some trends -- like mass customisation, dynamic pricing, and social networks to create a product that is extremely difficult to copy.