10 Types of Innovation

10 Types of Innovation

TACTICS OVERVIEW 

Profit Model Innovation 

Premium 

Forced Scarcity 

Switchboard 

Flexible Pricing 

Licensing 

Price at a higher margin 

than competitor, usually 

for a superior product, 

offering, experience, 

service or brand. 

Limit the supply of 

offerings available, by 

quantity, time frame or 

access, to drive up 

demand and/or prices. 

Connect multiple sellers 

with multiple buyers; 

the more buyers and 

sellers to join, the more 

valuables the 

switchboard. 

Vary prices for an 

offering based on 

demand 

Grant permission to 

some other group or 

individual to use your 

offering in a defined 

way for a specified 

payment 

Cost Leadership 

Subscription 

Auction 

Float 

Metered Use 

Keep variable costs low 

and sell high volumes at 

low prices. 

Scaled 

Transactions 

Create predictable cash 

flows by charging 

customers up front (a one 

time or recurring fee) to 

have access to the 

product/ service over 

time. 

Membership 

Allow a market-and its 

users- to set the price 

for goods and services 

User-Defined 

Receive payment prior 

to building the offeringand 

use the cash to earn 

interest prior to making 

margins 

Financing 

Allow customers to pay 

for only what they use 

Bundled Pricing 

Maximise margins by 

pursuing high volume, 

large scale transaction 

when unit costs are 

relatively fixed. 

Charge a time-based 

payment to permit 

access to locations, 

offerings, or services 

that non-member does 

not have. 

Invite customers to set 

a price they wish to pay 

Capture revenue not 

directly from the sale of 

a product, but from a 

structured payment 

plans and after-sale 

interest. 

Sell in a single 

transaction two or more 

items that could be sold 

as standable offerings 

Microtransactions 

Installed Base 

Freemium 

Ad-Supported 

Disaggregate 

Pricing 

Risk Sharing 

Sell many items for as 

little as a dollar- or 

deven only one cent- to 

drive impulse purchases 

at volume. 

Offer a [core] product for 

slim margins (or even a 

loss) to drive demand and 

loyalty; then realise profit 

on additional product and 

services. 

Offer basic services for 

free, while charging a 

premium for advanced 

or special features 

Provide content/ 

services for free to one 

party while selling 

listeners, viewers or 

*eyeballs* to another 

party 

Allow customers to buy 

exactly-and only-what 

they want. 

Waive standard 

fees/costs if certain 

metrics aren‘t achieved, 

but receive outsize 

gains when they are.


Network Innovation 

Merger/ 

Acquisition 

Supply Chain 

Integration 

Competition 

Alliances 

Secondary 

Markets 

Combine two or more 

entities to gain access 

to capabilities and 

assets 

Coordinate and 

integrate information 

and/or processes across 

a company or functions 

of the supply chain. 

Join forces with 

someone who would 

normally be your 

competitor to achieve a 

common goal 

Share risks and 

revenues to jointly 

improve individual 

competitive advantage 

Connect waste streams, 

by-products, or other 

alternative offerings to 

those who want them. 

Consolidation 

Complementary 

Partnering 

Collaboration 

Franchising 

Open 

Innovation 

Acquire multiple 

companies in the same 

market or 

complementary 

markets 

Leverage assets by 

sharing them with 

companies that serve 

similar markets but 

offer different products 

and services. 

Partner with others for 

mutual benefit 

License business 

principles, processes, 

and brand to paying 

partners. 

Obtain access to processes 

or patents from other 

companies to leverage, 

extend, and build on 

expertise and/or do the 

same with internal IP and 

processes


Structure Innovation 

Process Innovation 

Organizational 

Design 

Outsourcing 

Asset 

Standardization 

Flexible 

Manufacturing 

Lean 

Production 

Process 

Standardization 

Make form follow 

function and align 

infrastructure with core 

qualities and business 

processes. 

Assign responsibility for 

deveoping or maintaining 

a system to a vendor. 

Reduce operating costs 

and increase 

connectivity and 

modularity by 

standardizing your 

assets. 

Use a production 

system that can rapidly 

react to changes and 

still operate efficiently. 

Reduce waste and cost 

in your manufacturing 

process and other 

operations 

Use common products, 

processes, procedures, 

and policies to reduce 

complexity, costs and 

errors. 

Icentive 

Systems 

Corporate 

University 

Process 

Automation 

Logistics System 

Localization 

Offer rewards (financial 

or non-financial) to 

provide motivation for a 

particular course of 

action. 

Provide job-specific or 

company-specific 

training for managers. 

Apply tools and 

infrastructure to 

manage routine 

activities in order to 

free up employees. 

Manage the flow of 

goods, information and 

other resources 

between the point of 

origin and the point of 

use. 

Adapt an offering, 

process or experience 

to target a culture or 

region 

IT Integration 

Decentralised 

Management 

Crowdsourcing 

Strategic Design 

Process 

Efficiency 

Integrate technology 

resources and 

applications 

Distribute decisionmaking 

governance 

closer to the customer 

or other key business 

interfaces. 

Outsource repetitive or 

challenging work to a 

large group of semiorganised 

individuals. 

Employ a purposeful 

approach that manifests 

itself consistently across 

offerings, brands, and 

experiences. 

Create or produce more 

while using fewer 

resources- measured in 

materials, energy 

consumption or time 

Competency 

Center 

Knowledge 

Management 

On-Demand 

Production 

Intellectual 

Property 

Cluster resources, 

praactices and expertise 

into support centers that 

increase efficiency and 

effectiveness across the 

broader organization 

Share relevant 

information internally 

to reduce redundancy 

and improve job 

performance. 

Produce items after an 

order has been received 

to avoid carrying costs 

of inventory. 

Protect an idea that has 

commercial value- such 

as a recipe or industrial 

process- with legal tools 

like patents.


Product Performance Innovation 

Product System Innovative 

Superior 

Product 

Develop an offering of 

exceptional design, 

quality and/or 

experience. 

Feature 

Aggregation 

Combine existing 

features found across 

offerings into a single 

offering. 

Conservation 

Design your product so 

that customers can 

reduce their use of 

energy or materials. 

Complements 

Sell additional related or 

ancillary products or 

services to a customer 

Product/Service 

Platforms 

Develop systems that 

connect with other, 

partner product and 

services to create a 

holistic offering. 

Ease of Use 

Added 

Functionality 

Customization 

Extension/ 

Plug-ins 

Integrated 

Offering 

Make your product 

simple, intuitive and 

comfortable to use. 

Add new functionality 

to an existing offering. 

Enable alterring of the 

product or service to 

suit individual 

requirements or 

specifications. 

Allow first- or thirdparty 

additions that add 

functionality. 

Combine otherwise 

discrete components 

into a complete 

experience. 

Engaging 

Functionality 

Performance 

Simplification 

Focus 

Product 

Bundling 

Provide an unexpected 

or newsworthy 

experiential component 

that elevates the 

customer interaction. 

Omit superfluous 

details, features, and 

interactions to reduce 

complexity. 

Design an offering 

specifically for a 

particular audience at 

the expense of others. 

Offer several products 

for sale as one 

combined product. 

Safety 

Environmental 

Sensitivity 

Styling 

Modular 

Systems 

Increase the customer‘s 

level of confidence and 

security. 

Provide offerings that 

do no harm- or 

relatively less harm- to 

the environment. 

Impart a style, fashion 

or image 

Provide a set of 

individual components 

that can be used 

independently, but gain 

utility when combined.


Service Innovation 

Channel Innovation 

Try Before 

You Buy 

Concierge 

Personalised 

Service 

Diversification 

Pop-up 

Presence 

On-Demand 

Let customers test and 

experience an offering 

befrore investing in it. 

Provide premium 

service by taking on 

tasks for which 

customers don‘t have 

time. 

Use the customer‘s own 

information to provide 

perfectly calibated 

service. 

Add and expand into 

new or different 

channels. 

Create a noteworthy 

but temporary 

environment to 

showcase and/or sell 

offerings. 

Deliver goods in realtime 

whenever or 

wherever they are 

desired. 

Guarantee 

Total Exp. 

Management 

User Community/ 

Support Systems 

Flagship Store 

Indirect 

Distribution 

Context Specific 

Remove customer risk 

of lost money or time 

stemming from product 

failure or purchase 

error. 

Provide thoughtful, 

holistic management of 

the consumer 

experience across an 

offering‘s lifecycle. 

Provide a communal 

resource for a 

product/service 

support, use and 

extension 

Create a store to 

showcase quinessential 

brand and product 

attributes. 

Use others as resellers 

who take ownership 

over delivering the 

offering to the final 

user. 

Offer timely access to 

goods that are 

appropriate for a 

specific location, 

occasion, or a situation. 

Loyalty 

Programs 

Supplementary 

Services 

Lease or Loan 

Go Direct 

Multi-level 

Marketing 

Experience 

Center 

Provide benefits and/or 

discounts to frequent 

and high-value 

customers. 

Added Value 

Offer ancillary services 

that fit with your 


Superior 

Service 

Let customers pay over 

time to lower upfront 

costs. 

Self-Service 

Skip traditional retail 

channels and connect 

directly with customers. 

Non-Traditional 

Channels 

Sell bulk or packaged 

goods to an affiliated 

but independent sales 

force that turns around 

and sells it for you. 

Cross-Selling 

Create a space that 

encourages your 

customers to interact with 

your offerings- but 

purchase them through a 

different (and often lowercost] 

channel. 

Include an additional 

service/function as part 

of the base price. 

Provide service(s) of 

higher quality, efficacy, 

or with a better 

experience than any 

competitor. 

Provide users with 

control over activities 

that would otherwise 

require an intermediary 

to complete. 

Employ novel and 

relevant avenues to 

reach customers. 

Place products, services, 

or information that will 

enhance an experience 

in situations where 

customers are likely to 

want to access them.


Brand Innovation 

Customer Engagement Innovation 

Co-Branding 

Component 

Branding 

Process 

Automation 

Mastery 

Whimsy and 

Personality 

Combine brands to 

mutually reinforce key 

attributes or enhance 

the credibility of an 


Brand an integral 

component to make a 

final offering appear 

more valuable 

Remove the burden of 

repetitive tasks from 

the user to simplify life 

and make new 

experiences seem 

magical. 

Help customers to 

obtain great skill or 

deep knowledge of 

some activity or subject. 

Humanise your offering 

with small flourishes of 

on-brand, on-message 

ways of seeming alive. 

Brand Leverage 

Transparency 

Experience 

Simplification 

Autonomy and 

Authority 

Status and 

Recognition 

*Lend* your credibility 

and allow others to use 

your name- thus 

extending your brand‘s 

reach. 

Let customers see into 

your operations and 

participate with your 

brand and offerings. 

Reduce complexity and 

focus on delivering 

specific experiences 

exceptionally well. 

Grant users the power 

to use your offerings to 

shape their own 

experience. 

Offer cues that infer 

meaning, allowing 

users- and those who 

interact with them- to 

develop and nurture 

aspects of their identity. 

Private Label 

Values 

Alignment 

Curation 

Community and 

Belonging 

Provide goods made by 

others under your 

company‘s brand. 

Make your brand stand 

for a big idea or a set of 

values and express 

them consistently in all 

aspects of your 

company. 

Use a distinct point of view 

to separate the proverbial 

wheat from the chaff- and 

in the process create a 

strong identity for yourself 

and your followers. 

Facilitate visceral 

connections to make 

people feel they are 

part of a group or 

movement. 

Brand Extension 

Certification 

Experience 

Enabling 

Personalization 

Offer a new product or 

service under the 

umbrella of an existing 

brand. 

Develop a brand or 

mark that signifies and 

ensures certain 

characteristics in thirdparty 

offerings. 

Extend the realm of 

what‘s possible to offer 

a previiously 

improbable experience. 

After a standard 

offering to allow the 

projection of the 

customer‘s identity.

A long period of competition selling cheap razor 

handles with premium replacement blades, Gillette 

returned to maximise its profits through premium 

razor handles and cheap blades as reverse innovation 

of profit model. 

$1.7 

billion 

Acquisition of The Art of Shaving 

results in the birth of premium 

razor, Gillette Fusion ProGlide, 

selling at minimum $40 a set. 

Gillette Fusion ProGlide enables 

premium brand to be embedded 

alongside the luxury shaving 

brand. 

68.2% 

Market share 

Successfully switches profit model 

through reverse innovation, which 

charges premium for handles and 

cheaper for blades. 

Profit Model Innovation 

How you make money 

© UCSI Consulting Group 2016

Creation of Malaria candidate vaccine Mosquirix in 2015 at a not-for-profit price. 

Advancing the phase II clinical trial for their candidate TB vaccine, developed in partnership 

with Aeras. 

Open Lab has built a portfolio of 51 research projects, supported 64 visiting scientists, and 

resulted in 44 scientific publications and several promising drug discovery leads. 

© UCSI Consulting Group 2016 

Network Innovation 

How you connect with others to create value 

How? 

GlaxoSmithKline 

Glaxosmithkline developed co-innovation relationships that 

uses open innovation to tackle R&D challenges. 

Creation of Patent & Compound Pool 

GSK leads patent pool through contribution of 800 patents for compounds 

or processes, a step followed by Alnylam which added 1,500 patents for 

researchers worldwide to research. 

Impact 

Identification of Alliances & Partners 

Partner with other pharmaceutical firm like Alnylam Pharmaceuticals . 

Source funding and grants from Bill and Melinda Gates foundation. 

Partner with local group such as BIO Ventures for Global Health to maximise 

research effect in local. 

Creation of open innovation ecosystem 

Co-founded WIPO (World International Patent Organisation) Re:Search as a 

platform to share patents for partnerships.



How you use signature or superior methods 

to do your work 

Yearly sales growth 

average of 10% 

2bn 

SHOP NOW Average 

profit a 

year 

Very responsive 

to any change in 

fashion trend, 

with new design 

delivered in 3 

weeks time. 

The locations 

for new stores 

are carefully 

selected to 

ensure a more 

efficient supply 

chain 

management. 

Production 

process, takes 

only 2 - 3 

weeks. 

Deliveries of 

new clothes 

twice a week. 

A Spanish fashion 

house that 

pioneered the fastfashion 

industry.

Ikea developed flatpack 

furniture with 

no variation by 

region or country. 

Its products included 

the same hardware 

and instructions 

regardless of where 

they were 

purchased, thus 

helping to 

streamline the 

company’s internal 

production 

processes. 

Crowdsourcing: 

IKEA work with product developers and specialists to 

design IKEA product. This encourages the synergistic 

effort within the team to come out with more that 9500 

products in IKEA’s home finishing range. 

Process Efficiency: 

Value chain optimisation, 

building long term supplier 

relationship, investing in 

automated production and 

producing large volume. 

Reduced pack size of specific 

furniture by as much as 

50%. 

Reduced specific furniture prices by 2-3% per annum. 

Lean production: 

Developers and designers work with a 

diverse team of technicians, manufacturers 

and specialists right on the factory floor 

during the early stage of production. 

Standardisation: 

Standardised products, 

warehouses, and design in 

every 315 stores across 27 

countries. 

Annual figure of 770million 

visitors to their stories. 


How you use signature or superior methods to do your work 


A web browser that is 

built based on opensource 

concept that 

allows independent 

developers to make 

hundreds of discrete 

plug-ins to the browser. 

Product 

System 

Knowledge sharing forum: 

The developer teams of browsers from 

Google, Microsoft & Mozilla often 

hold meeting, conference to update & 

brainstorm on improvisation, new ideas 

& collaborative initiatives. 

Free for use: 

Firefox maintains its market share as 

free-for-use browser with enhanced 

functionality, with >85% of its revenues 

churned from search partnership model, 

allowing costs to be completely absorbed. 

Open source platform: 

Open source allows features to be added 

onto Firefox at no cost, thus gaining 

browser market share among 

increasingly-demanding browser users 

who look for additional functionality. 

$ 

520 

million 

Firefox 

users 

$1.1 

billion 

contract 

from Yahoo 

$ 

Innovation 

Complimentary Products 

and Services 

Search partnership revenue model: 

Search partnership model allows 

Mozilla to maximise revenues while 

optimizing browser efficiency & brand 

concurrently through partnering with 

internet giant e.g. Google & Yahoo. 

15.1% 

browser 

market share 

15% 


How… 


Product System Innovation 

Complimentary Products and Services 

Microsoft office is bundled 

together as an integrated 

system, rather than 

individual product, which 

became a productivity suite 

that is widely used by 

businesses/individuals 

worldwide. This is on top of 

subscription model that 

helps organisations to 

reduce software-purchase 

costs which is usually oneoff. 

$ 

Subscription model (yearly 

fees with free updates) 

allows consumers to even out 

usage costs while enjoying latest 

version of office. This also provides 

Microsoft with recurring income. 

Bundle individual office 

products into one office suite, 

which promotes convenience and 

seamless experience in one go. 

Product bundling helps customers to 

save costs as an all-in-one package. 

1st 

Microsoft Office continues to 

lead in enterprise software 

segment, which is used in 4/5 

Fortune 500 companies 

25 

% 

$$$ 

Licensing/subscription 

model creates 

recurring revenue 

stream for Microsoft 

New Office 365 overtakes 

Google Apps in Enterprise 

segment with 25.2% 

market share in 2015

Product Performance Innovation How you develop distinguishing features and functionality 

Research & development 

In coming up with My M&M’s, MARS, through its R&D div., explored 

the methods of developing customisation at a lower cost. 

Leverage on e-commerce 

The launch of the customisation was done through a link 

from its main website, to capture the e-commerce trend. 

Feedback mechanism 

MARS uses customer feedback as a guide for 

pricing, customisation options and minimum orders. 

Best 

Selling Candy 

Brand in US in 

2014 

Expanded 

customisation 

into brick & 

mortar retail 

My 

M&M 

Is now its own 

business unit 

In March of 2004, Mars, Inc. launched My M&M’s®, an experiment that would soon 

become a thriving independent business unit called Mars Direct. My M&M’s allows buyers 

to personalise the company’s best-selling M&M chocolate candies with texts or images. 


Channel Innovation 

Support and amplify the value of your offerings 

1994 

Inception of 

Amazon 

2007 

Inception of 

Amazon Kindle Tablet 

2016 

7.9% tablet 

market share 

Provide value added service to 

customer that turns into crossselling 

channel for the 

organisation to generate new 

revenue through sales of e-book 

5.2 million 

Kindle tablets sold in 

4 th quarter of 2015. 

Estimated $265- 

530 million sales 

from e-book per annum. 

+ 

$ 

3G plan allows users to 

access to website and 

purchase book anytime, 

anywhere they want. 

Provide on demand free 3G plan 

to kindle customers for them to 

purchase and download e-book 

in less than 60 seconds. 

Grabs 7.9% of tablet 

market share in 4 th 

quarter of 2015. 

Doubled e-book market 

shares from 7% to 

13% in 2015. 

The on-demand 

Whispernet service 

on the Kindle is a 

closed wireless 

network, a 3G plan 

that is free for Kindle 

customers, which 

allows users to 

purchase and 

download an e-book 

- ready to read in less 

than 60 seconds. 


How Nike uses Channel Innovation in Direct-To-Consumer Strategy 

Impact 

Flagship Store as Channel Innovation 

• Create ‘brand experience’ focused-flagship stores 

that showcase distinct product categories and the 

story behind them. 

• Hire store assistant who is passionate about sports. 

Direct Selling as Channel Innovation 

• Open outlet store that directly captures market 

base while delivering high value to consumers. 

Digital Brand Experience as Channel Innovation 

~68% 

US athletic footwear 

market share 

> 20% 

sales made from Direct- 

To-Consumer Channel 

2 nd 

most followed brand on 

Instagram with 42.9mn 

followers 

Most 

innovative company in 

2013 by Forbes 

• Enable consumers to customise sport shoes online 

with preferred design and name to create brand 

experience. 

Pop Up Presence 

• Create pop up presence in accordance to latest 

international sporting events. 

• Design seasonal products based on latest events to 

create buzz. 

NIKE, Inc. 

fosters a culture 

of invention, which creates 

products, services and experiences 

for today’s athlete while solving problems 

for the next generation. 

It engages in the design, development, marketing, and 

sale of sports and lifestyle footwear, apparel, and equipment, 

accessories and services. In 2015, Nike's global revenue amounted 

to about 30.6 billion U.S. dollars. 


Brand Innovation 

How you represent your offerings and business 


24% 

Initial logo 

awareness 

In 1991, the first 

year of Intel 

Inside campaign, 

sales rose 63% 

The logo is easily 

recognisable due 

to its simplicity. 

Also introduced a 

tune to let users 

know that their PC 

has Intel chips. 

The brand innovation 

increased the 

perceived value of 

any product showing 

the brand over nonmarked 

alternatives. 

Simple logo 

with a familiar 

chime 

How 

Introduced a logo 

that symbolises the 

presence of Intel 

processor inside a 

PC. 

Elaborate 

advertising 

campaign 

How 

Resulting 

logo 

awareness 

91%

Sense of Community and Belonging 

Create Anticipation 

Anticipation is created across region during 

product launching. 

Apple 

Create New Roles 

Apple designed specific vacancy and job 

positions to facilitate and assist users to get 

set up, get trained on Apple products. 

Namely: Genius, Creative and Expert to create 

and deliver amazing learning experience for 

1st time users. 

65% 10% 9% 15% 

Revenue Breakdown in 2016 Q2: Iphone, Mac, Ipad and Other Services 

Customer Engagement 

How you foster compelling interactions 

Free Works Shop 

To educate the users of the diverse tools and 

technology of Apple’s product, Apple offers 

free workshops, Summer camp and Labs for 

Apple users.

10 Types of Innovation

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?