Author: Constantinos Lioukas, Associate Professor - Strategy, EDHEC Business School
19 Dec 2017
Managers who want to grow their company often neglect to look outside their industry for inspiration. Yet, all too often, the innovations that they’re searching for already exist in other sectors.
Looking at these may serve as a source of ideas for enhancing the value of a product or service, exploring unmet customer needs, or devising new ways of making profit. So, how can managers scrutinise other industries to identify opportunities for innovation in their own company?
Here are four simple guidelines to help in this process:
Creating synergistic combinations
Try to identify some elements in the core offering of another industry that can create synergies with that of your own company – so that the combined result has significantly higher value for customers.
A classic example of this type of innovation is Cirque du Soleil. Cirque is a particular type of circus that blends traditional circus performances with elements drawn from theatre. In particular, each Cirque creation resembles a theatre performance in that it has a theme and story line. The key to its success is that some of the traditional elements of the circus (for example, acrobatic acts) become even more exciting for the audience when combined with theatrical elements (an underlying story).
When managers examine the core offerings of other industries, the distinction between products and services should not limit their thinking
Mapping and filling gaps in customer preferences
When looking at the products or services of other industries, it can be useful to map the customer needs that these products or services address – in order to then identify customer needs that are unmet and thus represent opportunities for innovation. For instance, laptops and smartphones differ significantly in their ability to address customers’ needs for functionality and portability.
Laptops excel in functionality – thanks to their bigger, more comfortable screens and keyboards, and their powerful processors – but score poorly in portability compared to smartphones. Apple realised that there was a gap in customer needs in this area. In particular, there was a need for a product more portable than a laptop, but offering better functionality than a smartphone: hence the iPad.
Making services into products – and vice versa
When managers examine the core offerings of other industries, the distinction between products and services should not limit their thinking. This means that if the other industry’s core offering is a service, it could also be useful to consider whether this service can be transformed into a product.
Conversely, if the other industry’s core offering is a product, you might want to consider whether it can also be offered as a service. Hubspot provides a good example of this type of innovation. Following the success of Google’s search engine, other companies started offering consulting services aimed at helping their clients become more visible in Google searches (i.e. search engine optimization). Hubspot developed software that enables companies to do search engine optimization, thus transforming a core offering that others provided as a service into a product.
Innovating in the delivery of the offering
Although the other industry’s core offering is important, so is the way in which the core offering is delivered to customers. For example, the core offerings of the hospital and aviation industries are different – focusing on patient treatment and transport, respectively – making it very difficult to transfer ideas from one industry to the other in the core offering itself. However, the Rotterdam Eye Hospital still found that it could borrow ideas from the aviation industry, in order to innovate in the way it delivered its offering. First, they implemented a central planning and booking system similar to KLM’s, so that physicians were no longer directly involved in planning and booking individual patient visits.
Although the other industry’s core offering is important, so is the way in which the core offering is delivered to customers
They were also inspired by the “black box,” which records all flight crew activities in order to determine the causes of an accident, and started videotaping surgical team activities. The list of aviation innovations introduced into the hospital’s procedures is longer, but the key point is that these innovations did not alter the hospital’s core offering (for instance, eye treatment), but the way in which it was delivered to patients.
Looking outside the boundaries of your industry can yield very powerful and often surprising ideas for innovation. The simple guidelines above will hopefully reduce the chances of missing out on important opportunities during this adventurous and messy innovation journey.
For more details, see the article by Dirk de Korne et al: Diffusing Aviation Innovations in a Hospital in the Netherlands, Joint Commission Journal on Quality and Patient Safety. (August 2010), p339-347.