People often associate innovation with technology. They consider high tech businesses as more innovation-heavy than low-tech businesses. It is a gospel that one rarely stops to question. But it is incorrect. There is an art of driving innovation in low technology businesses. But to learn that, you need a different perspective of innovation.
What is High Tech?
What does high tech and low tech mean? Technology is the knowledge or knowhow embedded in a product. The amount of knowledge embedded in a product often determines whether it is a high tech or a low tech product.
Canned soups have a lot of knowledge embedded in them. This knowledge includes knowledge of commodities, preservatives, tastes, and packaging. But the iPhone has a lot more knowledge embedded in it. That knowledge includes microelectronics, data communication, storage and retrieval, communication, and software. As the number of knowledge areas in an iPhone is much greater than in a soup can, it is a high technology product.
The Second Angle to High Tech
There is another angle to high tech and low tech. High tech usually has fast-changing technologies. But, low tech usually has mature and stagnant technologies. The knowledge embedded in soup changes slower than the knowledge embedded in an iPhone does.
The Fatal Flaw in Received Wisdom
So are the received wisdom and common heuristics correct? Are high-tech businesses more innovation-heavy indeed? Is there no place for innovation in your business if you belong to a low-tech industry?
If you believe it, then you have a jaundiced view of the innovation world.
Consider what innovation is? It is the ability to achieve business goals in new and better ways. So a changing knowledge base is a great way to find new ways to achieve your goals.
For the Anglo-Saxon part of the world, the most important business goals are profits, growth, and survival. Innovation help companies achieve these aims.
A changing health tracking technology allows one to add new features in a smart phone. It makes a smart phone even more valuable to consumers. As a result, consumers upgrade to the new phone. This update leads to growth, better profits, and continued survival.
When you view innovation as a path to business goals, you get a bigger view of innovation. From this perspective, you notice that knowledge base in a business goes far beyond technology or product. The knowledge of consumers and markets is another vast knowledge base.
In short, a changing knowledge base in both a product technology and customer knowledge can lead to innovation. You can leverage these changes to achieve your goals in a better way. To learn more about four levels of change in an industry and how to leverage it see the podcast episode on cascading change.
Driving Innovation in Low Technology Businesses
Based on the previous analysis, it is clear that product technology in a traditional low-tech business may not change much. It may not change fast. But, the market and consumer knowledge base continue to evolve.
For example, the Millennials do not view soup in the same way as boomers do. In fact, Millennials are less likely to buy soup, period. Another example of changing consumer knowledge includes how people shop. People are more connected on the digital plane and spend more time shopping online. Due to these changes, big data analytics has been a fast changing knowledge area. This shift is the source of innovation opportunities in low-tech businesses.
Searching for Innovation Opportunities
When markets and consumers change, it leads to new opportunities. This changing landscape allows you to serve your customers and organize your business in better ways. This change is a hotbed for innovation.
New knowledge on trans fats is one such example. It led to changing mindsets and preferences for consumers. As a result, food companies faced new challenges and opportunities. Those that adapted stood to benefit over the non innovators.
If you think of innovation in a product-centric manner, you are missing out a large part of innovation space. While it is a good idea to consider the supply side innovation, it is also important to focus on the demand side. That is where innovation opportunities emerge from changing consumers, industries, and societies. By focusing on changing desires, hopes and pains on the demand side, you can find many innovation opportunities.
Your business is in the midst of a changing knowledge base. This change spans not only your product technologies but also your consumers and markets. This changing knowledge base is the hotbed of many innovation opportunities. This broader perspective of innovation will help you uncover innovation opportunities.
Leveraging consumer base shifts is how a Dollar Shave Club helped many customers fulfill their need for cheaper blades. It is how Cambell soup is looking for health and well-being as new attributes in their products. This is how they will attract millennials. And this is how Amazon is changing how we buy products.
In your value chain, where does your company search for innovation opportunities? Where do you usually not look at for innovation opportunities? What are you missing out by this skewed focus in your innovation efforts?