Business Model Timeframes and Innovation Types

This analysis of business model timeframes and their relationship to types of innovation stems from an old Harvard Business review article I read a while ago (Darwin and the Demon, HBR 7/04).

As I’ve discussed in the past there are several types of innovation. Some people just can’t seem to get enough innovation and for those people I offer up 7 fantastic types. These types of innovation align with timeframes of a business models lifecycle.

1. Disruptive (Early Market): Apple anyone? The press loves this stuff because it makes waves that force other companies to react quickly and usually it takes rise from technological discontinuities. Early adopters and visionaries are the ones who are first to jump in line.

2. Application (Bowling Alley): Uses existing technology in new ways; The big brother government put GPS systems up in the skies and OnStar took applies them in the consumer space, thus helping me find the closest bakery even in foreign cities. The first pin has fallen, now the adjacent technologies and companies are ready to fall in line.

3. Product (Tornado): May stem from performance increase or cost reductions such as when ARM creates a new superfast mobile processor or Ford updates its latest Fusion line. Consumers are happy, but they sort of expected it. Imagine the marketplace being swept up by the new innovation – welcome to tornado alley.

4. Process (Early Main Street): This aligns closely with Sigma process improvements – a major example in this space is Wal-Mart’s inventory management. Consumers are happy because services and products are enjoyed more easily/cheaply. The first wave of growth has come and customers now expect systematic change over time.

5. Experiential marketing (Mature Main Street): This is really just polishing the surface to improve customer experience. A new GUI on Google’s home page or Facebook’s fancy new timeline feature. One experiential marketing innovation I truly love is in the realm of healthcare (surprise) – red coat greeters at Cleveland Clinic that don’t sit behind desks but are ready and waiting to serve visitors. Growth in the market has stalled and products no longer take center stage in the media.

6. Business model (Mature Main Street): Requires a new take on an existing value proposition such as Apple moving to retail stores or Target moving into the minute clinic space. The market is ready for major changes as leaders in the field have moved on to the next big thing.

7. Structural (End of Life): This type of innovation requires a major shift in response to global forces – I’m curious to see what UHG does in response to healthcare reform. The pipeline looks bright and I imagine great things will come soon. The fault line between what the companies has been selling and what customers demand – the path forward for companies has darkened until they reinvent a new product suite.