10 Types of Innovation II: Organizational Innovation

As we explained in the previous post on innovation, the expert Larry Keeley states that there are 10 types of innovation, organized into categories of structure, offer and experience.

In this post, we will develop the first category of the 10 types of innovation: innovation related to the organization, with the way in which the project is structured and its internal functioning.

Within the structure of the company, several types of innovation can occur:

• Innovation in the business model. Innovation focuses on how profits are generated; the revenue model and cost structure of the company. Innovative business models can be challenging for the industry and become disruptive.

At the moment, thanks to the latest technological advances, disruptive business models are being created that are causing real earthquakes in markets that seemed stable such as hotels, transport or insurance.

One of the greatest examples of disruption in business models are those belonging to the so-called “Platform Economy” (also called, although with differences, collaborative economy, P2P, gig-economy). They are business models based on platforms or apps that operate on demand and that, normally, digitize an activity that was previously analogue.

Uber is one of the biggest representatives of this trend of new business models, an application that provides an on-demand transportation network through a mobile application.

• Innovation in partner or customer networks, communities and alliances to build sustainable value.

There are companies that focus part of their innovation effort on achieving strategic alliances that expand and improve their strategic position in the market. A great example of innovation in networks is Starbucks, which has established alliances with bookstores (to position its coffee shops within them), with PepsiCo to bottle and market its drinks outside its establishments, as well as with supermarkets and airlines.

• Innovation in the organisational structure. The transformation of the organization of workers and/or work teams is essential to ensure the success and efficiency of projects.

The latest innovation in this area is flat structures; organisational structures with little or no level of management intervention between staff and managers. The idea is that well-trained workers will be more productive when they are more directly involved in decision-making, and not closely supervised by many layers of management.

One of the first organizations to have this structure like this was IDEO, an industrial design company based in California, which is the paradigm in these new models of organizational structure.

• Process innovation. It is necessary to innovate in internal procedures and methods to streamline and make operations more flexible and make a company’s daily work efficient.

At this time, digital transformation (digitizing work methodology and production processes) is one of the great sources of innovation in companies around the world. Today, digitalization processes are not a matter of innovation, but of survival.

Discover the innovation in the offer in the following post.