It can sometimes feel like a leap of faith to make large investments in innovation—especially when just an abysmal 4 percent of such investments over the past 15 years have returned their cost of capital, according to Monitor research.
Yet innovating is more important now than ever. Fortunately, analytic tools can provide better decision-making insights, helping executives vastly improve their innovation success rates and ensure their business model investments generate bigger returns. Monitor has developed two critical diagnostic tools which provide these insights: The Ten Types of Innovation® and Economic Value Estimation® (EVE)®.
The Ten Types of Innovation® classifies the innovation activities organizations pursue, allowing them to balance their innovation portfolio and focus on particularly lucrative types of innovation. Pioneering innovation research by Doblin, a member of Monitor Group, shows that while most companies focus on innovations in their offerings—their product performance, product system and services—the biggest opportunities are anchored in innovations that deliver a new business model and customer experience. The second tool, EVE®, is a simple framework pioneered by Monitor’s pricing practice that breaks down the economic value of an offer into its component parts and compares this value to a next-best competitive alternative.
In these video highlights from Monitor’s recent webcast, “Improving Innovation Returns Through Business Model Innovation,” Monitor thought leaders Geoff Tuff, Joe Zale, Brian Quinn and Helen Walters discuss these tools, some practical methods to get going immediately on Business Model Innovation, and ways for executives to pick their innovation winners and shut down the losers.
Often when people think of innovation, the first thing that comes to mind is product innovation. However, there are actually 10 different types of innovation—and the more types you incorporate, the more successful your innovation is likely to be. In this clip, Monitor’s Geoff Tuff introduces Doblin’s Ten Types of Innovation® framework, and explains the significance of business model innovation.
In this clip, Monitor’s Helen Walters introduces the Economic Value Estimation (EVE)® diagnostic tool, and Joseph Zale uses the example of Zipcar to explain how EVE can help executives assess the differential value of their innovation.
Organizations often have a difficult time with change, and this is particularly the case when introducing business model innovation. Monitor’s Brian Quinn explains that business model innovation often requires disrupting a very sensitive function of the business—how it makes money. The risk of failure can also be a significant barrier to business model innovation, as can the fact that building a new business can compete with a company’s existing business.
Monitor’s Brian Quinn provides guidelines for where to start with business model innovation, such as identifying what customers need, want and value; discovering and assessing orthodoxies in your business or industry that can be challenged; and exploring how to reconfigure your assets, processes and networks.
Business model innovation can bring huge changes to an organization. Even though these changes are often for the better, they can still provoke serious resistance in the organization, causing these revolutionary changes to get scaled down into simply incremental changes to the existing business model. Monitor’s Geoff Tuff explains that business leaders can avoid this trap by being dedicated to executing the changes with all of the assets they have on hand, and carving off both resources and space to doing business model innovation in a different way. Monitor’s Brian Quinn adds that the “riskiest, boldest innovations are usually the ones that work.”
Geoff Tuff is a Partner of Monitor Group and a leader of Monitor’s Innovation practice. He works out of the firm’s Cambridge, Massachusetts, headquarters. Since first joining Monitor in 1992, he has worked in a variety of industries including pharmaceuticals, medical devices, consumer products, beverages, information services, financial services, telecommunications, metals, and both commodity and specialty chemicals. For the majority of that time, he has focused on helping companies grow. Throughout his career, he has been instrumental in developing some of Monitor’s core methodologies related to driving profitable top-line growth for clients. He is currently an Account Manager for several of the firm’s leading clients. He can be reached via e-mail at Geoffrey_Tuff AT Monitor DOT com.
Joseph Zale is a Partner and Global Account Manager at Monitor Group, where he co-leads the firm’s North American marketing practice and leads the firm’s global pricing practice. Prior to joining Monitor Group, Joe was a Vice President and Managing Director at Strategic Pricing Group (SPG), which was acquired by Monitor Group in 2005. His work, which focuses on integrating marketing and pricing content and supporting commercial transformation efforts, consists of multiple projects in a diverse set of industries including medical products, data services, basic materials, capital equipment, publishing and printing, and semiconductors. He is the co-author of the fifth edition of The Strategy and Tactics of Pricing, the leading reference on pricing, and has also published articles in the Journal of Professional Pricing. He can be reached via e-mail at Joe_Zale AT Monitor DOT com.
Brian Quinn is an Associate Partner at Doblin, part of Monitor Group. He helps clients define, develop, and launch innovations. His experience in working with clients across a broad array of sectors—ranging from health care to private equity to heavy manufacturing—gives him a deep appreciation for challenging industry orthodoxies and seeking breakthrough change. He has expertise in corporate and business unit strategy, and has led programs in companies ranging from start-ups to Fortune 500 multi-nationals to help them grow successfully. In addition to his work in innovation and strategy, Brian spent four years working as a screenwriter for the L.A. film industry. He is fascinated by the power of narrative as both a didactic model and change agent, helping to frame complex events, bridge perspectives, and illustrate future states. Brian holds an undergraduate degree from Amherst College. He can be reached via e-mail at Brian_Quinn AT Monitor DOT com.
Helen Walters is a New York City-based business and design journalist with experience writing, editing and publishing content across multiple platforms, online and offline. The former editor of innovation and design at Bloomberg BusinessWeek, she is currently a writer, editor and researcher at Doblin, part of Monitor Group. A contributing editor at Creative Review magazine in the United Kingdom, she writes about creativity and design for numerous international publications and is regularly invited to take part in discussions about the business of design at conferences around the world. She is the author of a number of design-related books. She can be reached via e-mail at Helen_Walters AT Monitor DOT com.