New to innovation? Or struggling to keep up with the terms you hear others use? Like any technical discipline or subculture, innovators have their own lexicon and their own slang – and not knowing what something means can be pretty confusing.
So here’s a list of 20 important innovation words, phrases and acronyms we’re often asked about, with a short description to help you grasp what they mean:
Words & Phrases
1. Upstream (Innovation) v Downstream (Product Development)
While upstream innovation focuses on identifying and prioritising new opportunities and finding new product solutions based on the root cause of a problem, downstream development focusses on delivering a product to market effectively. A business needs both – but also must ensure that the two processes remain distinct so that the downstream need to de-risk new projects doesn’t eliminate breakthrough upstream innovation.
2. Core, Incremental, adjacent, or sustaining innovations
A focus on optimizing and improving existing products (as opposed to radical innovation which aims to develop new products), and typically targeted at existing customers and markets. The 70:20:10 model is helpful here to understand what percentage of your innovation resource could be applied to your core business vs adjacent and transformational
3. Breakthrough or radical innovation
Innovation that brings a new and better level of technical performance to a category.
4. Transformational innovation
Innovation which develops breakthroughs or invents things for markets that don’t yet exist. These might deploy new technologies and typically targets new customers or creates new markets.
5. Disruptive innovation
While the term is often used by the layperson interchangeably with transformational innovation, in innovation circles, the phase “disruptive innovation” or “disruptive technology” as defined by Clayton Christensen technically refers to when an incumbent in a market is undercut by a more affordable or accessible offering which subsequently disrupts the market by displacing long-standing, established firms.
6. Horizon 1, 2, 3
The 3 horizons model is a growth strategy framework by McKinsey that you can use to think about the future of your company in terms of time vs value, stretching from maintaining the core business in the immediate future through to completely new market or technical platform innovation in the longer term.
7. Value Proposition
A simple statement of why a customer would choose your product or service. It should clearly outline the benefits for the customer and why your company is best placed to meet their needs. You might also highlight what makes you different from your competitors from a consumer’s perspective. In short, it’s a statement that defines why someone should do business with your brand.
8. Technology Platforms
A platform is a group of technologies that are used as a base upon which other applications, processes or technologies are developed. In software, it is an environment for building and running applications, systems and processes. Utilising scalable, flexible technology, they’re the main base for developing and operating connected products and services.
9. Ecosystems & Connected Products
Ecosystems are the systems or spaces in which connected product users interact with their device. There are four key components: the device itself, the technology platform; the network used to connect them; and the agents (the users, operators and engineers). Often ‘IOT’ is used to describe the network of physical objects that are equipped with technology enabling them to connect to the internet, receive and submit data, and where relevant, be updated, maintained or accessed remotely.
10. Design Thinking
This is a user-focussed method for approaching your business challenge, made up of these steps: understanding and defining the problem, exploring the solutions through ideation, prototyping, testing, implementing and assessment. This sounds easy, but it involves starting at the root of the problem and working both collaboratively and creatively to get to a design solution that works for your business.
11. Triple Bottom Line
The triple bottom line in economics covers ‘Profit, People and Planet’. It explores the theory that companies should focus on (1) financial, (2) social and (3) environmental concerns and in doing so can fully account for the cost of doing business. In innovation terms, can advancements be sustainable long term without looking at all three parts of the triple bottom line?
12. Circular Economy
A circular economy seeks to eliminate waste and the continued use of the earth’s resources unsustainably (Ellen McArthur website). The aim is to rebuild capital, whether this is financial, manufactured, human, social or natural. This ensures enhanced flows of goods and services. The UN’s 17 Sustainable Development Goals are being more widely used within corporate strategies and innovation teams can integrate their plans with this.
13. Growth Mindset
The culture of a company is so important for innovation success. When developing your team, a growth mindset means you believe the talent within your team can improve over time and you invest in training accordingly. Adopting a growth mindset is said to help people be more open to success.
14. NPD – New Product Development
The whole process – from design to delivery – of bringing a new product to market.
15. FEI – Front End Innovation
Front End Innovation is the starting point of any innovation. It’s the concept space where opportunities are identified, and ideas are developed prior to entering the formal product development process.
16. JTBD – Job To Be Done
This is an approach to innovation that focuses on figuring out what your customers are seeking to achieve. By discovering what customers already want to do (this is their core Job to be Done), it can allow you to deliver on these needs in ways that are better, easier, faster or cheaper. Importantly in our own work on disruptive and transformational innovation the JTBD can help you to think about solutions beyond the paradigms of the current market.
17. MVP – Minimum Viable Product
This is an initial version of a new product with just enough features to attract early-adopter customers. User feedback from these customers is invaluable for informing the future development (or not) of the product. The phrase MVP was popularised by Eric Ries in his book “The Lean Start-up”.
18. PAAS – Product as a Service
The onslaught of smart technology has brought with it a big change in the way brands need to relate to their customers. There’s no longer just a single sales point. Instead the ongoing connection offered by the product means entering into a managed relationship with customers. While this can create multiple new opportunities (e.g. marketing, brand loyalty and customer insights), thinking of a product as a service not only requires a mindset change, but often a significant internal shift in how a business operates.
19. GTM – Go to Market
This simply defines a company’s plan of how they are going to take their product or service to market. It’ll focus on how they can deliver their unique value proposition to their customers and achieve competitive advantage.
20. HIPPOs – Highest Paid People’s Opinions
Conventional business approaches have often tended to value the judgement of HIPPOs in making product development decisions – but the growing consumer insight and behavioural data generated by connected products will increasingly allow decisions to be based on reliable hard evidence instead.
Have I missed something, or do you disagree with any of the definitions? Get in touch or add your suggestion in the comments section!