Saul Kaplan: It’s the Innovator’s Day

Today is the Day of the Next-Generation Innovator

I am an innovation junkie. It’s a good place to be right now because there’s no more important time for New England to fulfill its promise as a regional innovation hot spot. Our region has the capacity to lead the way out of this economic mess and toward solutions for the big issues of our time, including health care, education, and energy independence. We must play offense.

Here’s some good news: Innovators thrive during turbulent times. In the 2001 recession, Apple Inc. unveiled the first iPod and The Procter & Gamble Co. launched Crest Whitestrips. The bad news is that innovation has become a buzzword. Everything is an innovation and everyone is an innovation expert. We must get below the buzzwords. I have a simple definition: Innovation is a better way to deliver value. I also differentiate invention from innovation. I assert it is not an innovation until it delivers real value to a consumer.

Ideas, inventions and new technologies are the lifeblood for innovation. We must continue to invest in basic and discovery research. It is necessary, but it is not sufficient. We also must improve our ability to get inventions out of the lab and into the real world, where they can solve problems and deliver value.

Business model innovation is the key to realizing the full potential of new technologies. A business model is a network of capabilities and a sustainable financial model to deliver value to target customers. Successful executives are really good at squeezing more value from existing business models. In this context innovation means either revenue growth from new products and services or reducing operating costs with process improvements. For most, innovation is about finding ways to ring the cash register by pedaling the bicycle of today’s business model faster.

Institutionalizing innovation While there’s nothing wrong with an incremental strategy, there is a problem. Business models aren’t lasting as long as they used to, and most CEOs have only had to lead a single business model throughout their career. Going forward, I suspect CEOs will have to change business models several times over a career and establish an ongoing process to explore new business models — even models that might threaten the current one. Organizations must establish R&D for new business models the way they do R&D for new products and services today. Business model innovation needs a discrete focus or it will get marginalized, producing again only incremental change.

In today’s networked world, business model innovation means connecting capabilities across traditional boundaries. Companies, schools and government agencies all must rethink existing business models and all struggle with the capacity to explore and test new ways to deliver value.

Don’t you wonder, as I do, with so much new technology available why we haven’t made more progress? Technology isn’t the barrier to business model innovation. It is humans and the institutions we live in that are stubbornly resistant to change. Everyone loves the idea of innovation, until it has a personal impact. I used to think that we could enable large-scale change and create more innovators by proselytizing. But that doesn’t get you past the buzzwords. I now believe in sorting the world to identify the innovators and finding ways to connect them in purposeful ways.

The best opportunities to create value will be found in the gray areas between silos, sectors, and disciplines. And progress on the big-system issues of our time will require a road map and manageable platforms for systems-level experimentation and change. It doesn’t matter if the customer is a patient, student, citizen, or consumer. R&D for new business models is imperative to remain competitive, harness technology, and deliver more value with fewer resources.

In the months ahead I will share personal observations from around the region in the hopes of catalyzing conversation, connections and action. Join the conversation and pass along your business model innovation stories.

This post originally appeared as the debut “It’s Saul About Innovation” column in Mass High Tech.