Non-technological Innovation

by Jon on February 24, 2011

Flickr Image by Vermin Inc

Flickr Image by Vermin Inc.

In some recent posts I mentioned that an entrepreneur utilizes innovation to create a business; a few people thought this overemphasized technology.

You can certainly have innovation without technology:

  • Business model innovation: new methods of payment, new ways to package services, new pricing models. Long ago, mortgages were a huge innovation. Book-of-the month clubs were a way to turn book purchasing into subscriptions. The Yellow Pages became a way to monetize telephone directory searches long before there was Google and AdWords. In games, the ideal of selling a game through virtual goods is an innovation that is more about the business model than technology.
  • Marketing innovation: e-commerce, multi-level marketing, infomercials, affiliate programs, search advertising, referral fees, direct mail, telemarketing, social media, radio, television, catalogs–all of these are examples of new forms of marketing. All have certain technology prerequisites, but came about not because of additional technological development–but because business people saw opportunities to create new marketing channels.
  • Distribution channel innovation: wholesalers, retailers, distributorships, franchises, brand licenses, direct sales forces–at one time, even door-to-door salesmen were a type of innovation. New distribution channels can often transform entire industries.
  • Product development innovation: whether the ultimate product is something we think of as a technology, the  process one uses to create it involves the creation of new practices. Is that technology? Some might say so–agile methods, kanbans, offshore development, rapid iterations, waterfall plans, quality assurance–many of these exist inside technology companies, but they began as ways to dramatically improve economics and quality, not the technological output itself.
  • Manufacturing innovation: standardized measurements, mass production, just-in-time manufacturing, quality assurance practices; producing things better, faster and cheaper has often been a way to outcompete the companies who only cared about the gee-whiz elements of their new widget.
  • Supply chain innovation: most people don’t think of Walmart as a technology company, but its mastery of the supply chain is a huge factor in its success–the ability to manage massive sets of information about what, when and where people buy–and coordinating with a huge numbers of suppliers–has been central to Walmart’s dominance.
  • Creative innovation: identifying the things that people like (and eliminating the things they don’t) and then repackaging it as creative content is a way to broaden audiences and create new ones. Take Cirque de Soleil, which reinvented the circus by removing the animal performances, adding music and catering to an upscale audience.
  • Management innovation: new ways of managing people, creating incentives, measuring performance, creating positive cultures, hiring, leadership–all of these are distinctly human, and less about technology. Sometimes the greatest companies are great because of a leader’s innovative management practices.
  • Financial innovation: new ways of financing and funding. This includes things like mortgage securitization (not every innovation is universally good!), floating bonds, venture capital, stock exchanges, banks, equity funds for producing indie films, incentive stock options–these are both recent as well as centuries-old examples of innovation applied to finance.

Some of the best companies are those that focus not on building a new product or technology–but those that apply innovation to other (often ignored) aspects of an industry.

Of course, I’m certain there are many areas of innovation I’ve forgotten. Anyone care to add a few in the comments?

Thank you for reading this article. Please follow me on Twitter to hear more from me on innovation, games and entrepreneurship. If you'd like to learn how games can transform your business, also check out my book, Game On: Energize Your Business with Social Media Games.

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February 24, 2011 at 2:57 pm

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Geoffrey, the SIX STRING cpa™No Gravatar February 24, 2011 at 2:37 pm

As one of the ones who made the comment about one post seeming to be too focused on tech aspect, I have to say I am so glad you wrote this. Folks like yourself who sit in a position of greater influence can share ideas that can benefit, or harm. I think by further elaborating on your post you are doing a great service to people thinking about, engaging in, and refining innovative approaches to building companies, establishing new models to social services, etc.

It certain times, this being one of them, tech innovation seems to get the lion’s share of traditional attention and bandwidth (both media and mental). Tech is not bad but there are so many great innovations that everyone can explore and add to. Right now my life is partially absorbed by a new charity my wife and I started. we are not engaged in anything really innovative at the present but I am spending a lot of time researching and trying to incorporate new innovations that have happened in the social/philanthropic space – new delivery models, new reward and incentives, etc.

I started following you because of your gaming connection(s) [I am a recovering WOW player]. I am very happy to be absorbing some great non-game content as a result.

Thanks, Geoffrey

Antonio Carlos de Freitas EspeletaNo Gravatar September 12, 2011 at 6:33 am

I’d like if social evolutions, like from monarchy to republic, from racist society to a society where the president is black is a very short period of time as examples, could not be treated as innovation.
Evolutions where business is not involved, like religions, social behaviors are not involved? If money has to ve involved, why a comunist society, like USRR were the first to put men outside the planet? And the NASA, that spends a lot of money and the evolution it brings is shared among the firms that are partners is not commented? I’ve never see PEENEMUNDE, the Nazi center of research (precursor of NASA) being mentioned as a technological innovation center anywhere.
My comments are only to mention something that I’m curious about.

Antonio Carlos de Freitas EspeletaNo Gravatar September 12, 2011 at 6:36 am

I think that the initiative to talk about non technological innovation is very good.
Non technological innovation, in any organization, is a way to prepare the enviroment to technological innovations.

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