When most people think of innovation, they picture flashy new technologies or breakthrough products. However, in reality, innovation extends far beyond what you sell. The most successful companies treat innovation as a system, one that can impact every part of the business, from how they operate to how they serve customers and generate revenue.
Here’s the problem: Companies with narrow innovation thinking systematically erode their competitive advantage. They end up looking identical to their competitors, chasing the same customers with similar offerings using undifferentiated processes.
Innovation can be a powerful lever to:
- Increase profitability
- Differentiate from competitors
- Elevate customer loyalty
- Future-proof operations
The innovation radar displays the 12 dimensions of business innovation, anchored by the offerings a company creates, the customers it serves, the processes it employs, and the points of presence it uses to take its offerings to market.
Innovation isn’t limited to R&D or tech teams; it can happen across 12 distinct business dimensions, each offering unique opportunities to create substantial customer value:
The 12 Innovation Dimensions
1. Offerings — What You Create
This is the traditional innovation most people think of: new products and services. Procter & Gamble’s Crest SpinBrush became the world’s best-selling electric toothbrush by 2002, not through technological superiority, but through smart design choices, disposable batteries, simple operation, and a $5 price point versus expensive competitors.
2. Platform — Your Building Blocks
Platform innovation exploits the “power of commonality” using modular components across multiple offerings. Nissan resurrected its automotive fortunes by using essentially the same 3.5-liter V6 engine across its Altima, Maxima, Infiniti series, Quest minivan, and 350Z sports car. Clever modifications produce 245-300 horsepower variations while maintaining massive efficiency advantages.
3. Solutions — Integrated Problem-Solving
Solutions combine products, services, and information to solve complete customer problems. Deere & Company created an end-to-end farming solution combining mobile computers, GPS tracking, and software to help farmers improve sowing, tilling, harvesting, and business management simultaneously.
4. Customers — Who You Serve
Customer innovation means discovering new segments or unmet needs. Virgin Mobile USA entered the saturated cellular market by focusing exclusively on under-30 consumers with simplified pricing, no contracts, entertainment features, and brand irreverence. Within three years, they captured millions of subscribers in a “mature” market.
5. Customer Experience — How Customers Interact
This dimension considers everything customers see, hear, feel, and experience across all touchpoints. Starbucks didn’t win with better coffee; they created “the third place” — a communal meeting space between home and work where people could unwind and connect. That experience justified $4 lattes.
6. Value Capture — How You Get Paid
Value capture innovation discovers new revenue streams and pricing models. Google became a multibillion-dollar giant not because it had the best search engine, but because it pioneered “paid search”, vendors paying to match consumers with relevant offerings as a byproduct of free searches.
7. Processes — How You Operate
Process innovation redesigns internal operations for efficiency, quality, or speed. Indian IT services firms like Wipro and Infosys created enormous value by perfecting remote business process delivery, decomposing work into constituent elements that cross-functional teams across multiple countries could execute through well-defined protocols.
8. Organization — How You Structure
Organizational innovation rethinks company structure, partnerships, and roles. Thomson Financial transformed by organizing around customer segments instead of products, enabling them to align operational capabilities with customer needs and create integrated solutions like Thomson ONE.
9. Supply Chain — How You Source and Deliver
Supply chain innovation changes information flow, structure, or collaboration. Spanish retailer Zara revolutionized fashion by making counterintuitive choices: keeping half their production in-house near markets, making small lots of many designs, and shipping on hangers. Result? A 15-day design-to-retail cycle and full-price merchandise sales.
10. Presence — Where You Sell
Presence innovation creates new distribution channels or uses existing ones creatively. When Titan Industries entered the Indian watch market, traditional channels were controlled by competitors. Their solution? Sell watches through kiosks in jewelry, appliance, and electronics stores while building a nationwide service network.
11. Networking — How You Connect
Network innovation enhances connections between company, products, and customers to increase offering value. Mexican concrete giant CEMEX installed GPS systems, satellite communication, and Internet portals in their delivery network, reducing delivery windows from three hours to 20 minutes while improving fleet utilization.
12. Brand — How You Communicate Promise
Brand innovation leverages identity into new domains. EasyGroup’s “easy” brand promises good value and simplicity across dozens of industries: easyJet, easyCar, easyInternetcafé, easyMoney, easyCinema, easyHotel, and easyWatch.
The System Thinking Advantage
The most powerful innovations attack multiple dimensions simultaneously. Apple’s iPod wasn’t just a product; it was an elegant solution combining offerings (iPod device), platform (iTunes ecosystem), supply chain (content partnerships), presence (portability), networking (computer connectivity), value capture (pay-per-song), customer experience (seamless integration), and brand extension.
Here’s what separates winners from followers: When you identify and pursue neglected innovation dimensions, you change the basis of competition entirely. Competitors can’t respond overnight because each dimension requires different capabilities that take time to develop.
Enterprise Rent-A-Car placed locations in neighborhoods where people lived and worked rather than at airports. This dual innovation across customers (local renters vs. travelers) and presence (neighborhood vs. airport) left Hertz and Avis struggling to respond for years.
Your Innovation Action Plan
- Map your current innovation focus — Most companies innovate by inertia or industry convention.
- Identify neglected dimensions — Where isn’t your industry innovating?
- Choose high-impact focus areas — Successful strategies concentrate on a few key dimensions, rather than a shotgun approach.
- Build required capabilities — Each dimension needs different skills and resources.
- Plan portfolio approach — Innovations in one dimension often require changes in the others.
Bottom line: Innovation isn’t just about doing new things, it’s about doing things differently in ways that create substantial customer value. Stop limiting innovation to your product development team. The biggest opportunities might be hiding in how you structure your organization, design your customer experience, or capture value from your offerings.
Which dimension will you innovate on first?
