7 Sources of Innovation

1.   The unexpected innovation is an innovation from an unexpected success, failure, or outside event.  The founder of GoPro cameras started racing school after he had already build a small company selling straps for surfers to wear their camera on their arm while surfing, and simple digital video cameras.  The racing school offered to rent him a mounted camera for $100 and he said no, opting to mount one of his wrist cameras to the car’s roll bar.  At that moment, he realized he could build camera mounts for all sorts of purposes, and used this innovation to build GoPro into the $250 million company it is today.

2.   Innovation from incongruity is an innovation that arises from something that doesn’t match with an expected way of thinking.  When most investments are made, most of the focus is on the expected return on investment, and not as much on what exactly the investment will be used for.  Socially responsible investing, however, is a form of investing that considers both the return on investment as well as the social responsibility of the investment.  Investments must be ethical, moral, green, and overall good for society.  This is contrary to the common view of solely looking to invest in the best bang for your buck.

3.      Innovation from process need is an innovation to a process that does not necessarily affect the final product, but may offer that product more efficiently or cheaper.  One of the oldest but most influential examples of process need is the invention of the assembly line by Ford Motor Company in the early 1900’s.  This innovation allowed the FMC to hire much less skilled workers, as each worker only needed to learn one process rather than having to know how to build the entire car.  It also allowed them to build cars much more efficiently and cheaper allowing them to drive the price down to a level that was much more affordable for the general population.

4.   An innovation can come in the form of an unexpected change in industry structure.  One industry that has drastically changed in recent history due to the internet is the newspaper industry.  Before the internet, newspapers had two revenue streams; paper advertisements, and customer subscriptions.  With the internet, however, newspaper companies are finding paper sales declining rapidly, and with that a huge drop off in paper advertisers.  The industry as a whole has begun to shift its revenue streams to sell online advertising and offering their newspapers online.  With a mix of paid online subscriptions and click through advertising, newspapers have shifted their entire revenue streams due to an unexpected change in industry structure.

5.   Innovation can come from a change in outside demographics. An online based company called usbtypewriter.com recently started selling vintage looking, large, clunky typewriters that can be used as a computer’s keyboard.  The inspiration came from aging middle-aged people who were looking for products that could remind them of their youth.

6.   Innovation can come from a change in outside perception, mood, or meaning.  In 2004, Pfizer saw a growing trend in the need for personal sanitation for day-to-day activities.  They used this inspiration to purchase the rights to distribute Purell in the consumer market so that the general population would have quick and easy access to instant hand sanitizer.  Since then, it has been hard to find a building or public area anywhere that does not have some sort of instant hand sanitizing station.

7.   Innovation can come from new outside knowledge, such as a new technology available to the public. When Burt Rutan successfully launched SpaceShipOne for the second time and captured the X Prize, he proved a new commercial technology that could successfully take passengers to space.  Richard Branson saw this achievement as an innovation to build the world’s first commercial spaceline.  He went on to found Virgin Galactic and is currently selling seats for trips to space that will be offered as soon as Burt Rutan is finished building a fleet of SpaceShipTwos.