Technological Innovation vs . Business Model Innovation While we tend to consider technology the mother of innovation , it is actually only one aspect in a complex matrix of innovative approaches . Technological innovation refers primarily to a change in the materials and methods used to make or distribute a product or service . While a discovery in the science behind a brand will lead to development of new products and services , the company ’ s business model may not change at all . In that case , its structure , methods , distribution , and customer base would all stay the same . Alternatively , if a brand were to use existing technology but change its business structure to deliver a product or service in a new way to a new customer , that would be considered a business model innovation .
Four Strategic Approaches to Innovation Using these two overarching categories , recent research in the area of innovation has produced a simpler way to understand the various approaches . Based on the degree to which an innovation involves a change in technology versus the degree to which it involves a change in business strategy , there are four distinct approaches . Let ’ s take a look :
� ROUTINE INNOVATION Many times , routine innovation is the default setting for companies , because it is the simplest , quickest , and least risky approach . Using current technology and an existing business model , routine innovation essentially generates better versions of existing products and services to the same or similar customers . Example : The Apple ® iPhone ® 6s is released with new features .
� DISRUPTIVE INNOVATION Disruptive innovation is about delivering the same product or service in a revolutionary way , turning your business model on its ear . Although the approach employs existing technologies , it operates within a completely new business paradigm . Example : Uber ® uses existing mobile technology to transform traditional taxi services .
� RADICAL INNOVATION Companies that harness scientific and technological discoveries to develop new products are using a radical innovation approach . Operating under an existing business model , the company will seek out cutting-edge technologies to provide added value or products to its current offering . Example : Bristol-Myers Squibb now manufactures cancer products using biotechnology .
� ARCHITECTURAL INNOVATION Using both new technology and an entirely new business model , the architectural innovation approach is the extreme opposite of routine innovation . In this most transformative approach , companies are overhauled in every aspect . Example : Kodak ® transformed its print photography business model to align with the new technology of digital photography .
CASE STUDIES
Reinventing the Drugstore In a sweeping effort to differentiate itself from others in the retail pharmacy world , CVS ® is emerging as a healthcare improvement center rather than a prescription fulfillment operation . Its sweeping changes illustrate how innovative thinking can apply to any business .
CVS was at one time indiscernible from its competition — another faceless pharmacy where consumers shopped for toiletries and greeting cards while waiting for prescriptions to be filled . But the national retail giant set out to change that and today the corporation is being lauded for its innovation . A look at six of the brand ’ s major changes shows how innovation has played a part in its growth :
ÎIN Î 2014 , CVS DISCONTINUED THE SALE OF TOBACCO PRODUCTS IN ALL OF ITS STORES , CAUSING A DIP IN PROFITS IN 2015 . There is no plan to reverse course and the company has received positive reviews in its decision to adhere to healthcare objectives . Takeaway : Don ’ t be afraid to do something daring and unexpected . Be firm in what your organization stands for and be willing to adjust accordingly . You may see positive results to your bottom line .
ÎCVS Î EXPANDED ITS MINUTECLINICS ® TO OVER 1000 CLINICS IN 33 STATES . The walk-in centers have clinical affiliation with some of the largest hospital systems in the country and provide routine healthcare services to millions . Takeaway : Be smart about the way you expand into an overly competitive marketplace . While MinuteClinics ® provide routine services , CVS stays clear of medical services with higher profit margins . As a result , hospitals welcome MinuteClinics ® in their communities .
ÎAS Î A DIRECT RESULT OF CONSUMER INPUT , CVS BEGAN INTRODUCING HEALTHIER REFRIGERATED FOODS AND FRESH PRODUCE IN 500 OF ITS STORES . Takeaway : Align yourself firmly with your image , and expand services to both complement your primary offering and answer consumer needs .
ÎIN Î JUNE OF LAST YEAR , CVS OPENED A DIGITAL INNO- VATION LAB , WHERE INNOVATORS ARE RAPIDLY DEVEL- OPING MOBILE APPS THAT EMPOWER CUSTOMERS TO MANAGE THEIR OWN HEALTH . Takeaway : Utilize technology to deepen consumer loyalty and strengthen relationships with clients .
ÎCVS Î EXPRESS , A FREE CURBSIDE SERVICE , WILL EXPAND TO MOST STORES IN 2016 . Customers can order non-prescription products via mobile app and employees will deliver the products curbside . Takeaway : Leverage your market advantage to capture part of another market . With Amazon ® and other online retailers providing convenient , hassle-free delivery of vitamins , supplements , and other drugstore items , CVS leveraged this unique pharmacy service to convert customers away .
ÎIN Î THE WORKS AT CVS TODAY IS A SUITE OF VISION AND DENTAL SERVICES TO BE OFFERED IN STORES . Takeaway : Never stop diversifying your core offering . Continue to explore new ways to add value , while adhering to your business goals .
CONNECT INNOVATION SUMMER 2016 // SNB . COM | 17