In the context of innovation, the process aspect refers to the complete innovation process—from idea generation, prototyping, a system for project selection, R and D cost control, speed to market, piloting, test methodology, ramp-up mechanism, and risk assessment to analyzing and handling market regulations and management of the complete product life cycle. Typically, the innovation process is linked and adopted depending on the innovation horizon and the company’s mix in the innovation portfolio. This aspect is linked strongly to profit and is both internally and externally focused.
Here, the term “organization” is used to describe the organization’s ability to deliver innovation projects. Capabilities that are especially important to this aspect are engaging and involving people, supporting goal-oriented leadership with a clear vision, and setting a high priority on innovation in all horizons. Idea diffusion within the organization and cross-functional capabilities, together with talent management and reward systems for innovations, are especially important. This aspect is internal and typically drives profit.
Learning is essential to innovation on several levels. Critical capabilities like being opportunistic, involving C-level management, running cross-disciplinary learning, evaluation, and a reward system are essential. Gaining insight from the horizon tree is especially crucial to succeeding in horizons one and two. Well-known large corporations operating in all three horizons and rewarded for their learning efforts include IBM, MindTree, and Verizon. In general, learning is an internal activity and is highly linked to profitability.
Supply development concerns scanning and involving suppliers and partners in order to extend the core business that you are really good at. Typically, today’s organizations go about this by defining new digital solutions, new business models, and new ways of producing and delivering offers to the market through digital trading places. The supply-innovation aspect is internal and strongly linked to profit.
The channel aspect is one of the most important to finding new ways of building the capability to interact with the outside world. It is also one of the hardest to expand and develop, as it is not obvious during the emerging phase. Channel development is about how the offer is consumed, how it is distributed, and its delivery format. But to succeed, new channels cannot just add distribution; they also have to find new ways of consuming the products or services, maybe by adding machine learning or through new technical formats.
The linkages aspect is a broad concept that encompasses building and utilizing so-called “eco-systems” for developing, engaging, and rewarding external parties, benchmarking, reverse-engineering existing solutions, watching and learning about new technology in order to be faster, increasing capacity, and ultimately mitigating risks to keep the speed-to-market rate high. This kind of multifaceted eco-system is one of the most efficient ways of working in parallel in all three horizons, from incremental innovation to radical technology-driven innovations, even with scarce resources. Linkages increase the size of a company’s reachable market and are built upon internal strength in identifying, collaborating, and exchanging innovations with outside parties.
Openness is not about being uncommercial; it is about setting the stage for creating together, learning together, and eventually protecting IP together through patent exchange. The openness aspect typically contributes to growth of the market and is based on internal changes and development of capabilities for opening up and sharing.
The aspect “brand” addresses the activities of generating demand, sharing through telling, and setting the stage for creating so-called diffusion of new innovations. This aspect is also used well by the experience industries, such as resorts, movies, gaming, and the music business. It is used for generating and growing the market and is built upon primarily internal activities and capabilities.