Final Editing
beneficiary better jobs-to-be-done make progress scalable offering eco-system resistance lean value-proposition resources skills sustainable value co-creation hinder

The Big Picture…

Ask a hundred innovation consultants, and you’ll get a hundred different definitions of innovation. With universal themes such as creating value, executing ideas, and that just having ideas is not innovation.

And now, I’ll introduce my own. However, I will use a service-dominant logic lens to build a helpful, modern definition.

Innovation is creating and offering a new (to the organisation, market/industry, or world) value proposition:
* that helps the beneficiary make progress better than they can currently
* that improves during, or as a result of, the naturally occurring value co-creation while using
* which is delivered through the scalable and sustainable co-ordination of skills and resources (often across an ecosystem)
* and where resistance (postponement, rejection, or opposition) is minimised

It is time to update our standard definition of innovation to embrace the service-dominant logic lens that we are proposing to use. Luckily, we can start way back in 1934, where Schumpter (1934) saw innovation as:

“new combinations” of new or existing knowledge, resources, equipment etc…subject to attempts at commercialization (Schumpeter, 1934)

A Guide to Schumpter Fagerberg, 2008

And, this appears rather service-based. With its focus on combinations of skills and resources (knowledge, resource, equipment, etc.). But, we have wandered a bit from this path. So let’s look at today’s typical definitions.

Where are we today?

Gallouj and Weinstein found that we have based most of today’s innovation theory on technological innovation within manufacturing companies (see “Innovation in Services“, 1997). Doing that tends to frame the definitions in goods-dominant logic. That is to say, we focus on the firm and value-in-exchange. For example, over at Idea2Value.com, they summarise 15 innovation experts’ definitions. From that, they find 60% include “having or executing the idea” yet only 40% noted value to customer or business.

The typical definition lands with three things:

  • it is a process and an output
  • that creates something new/novel (where something could be product/good/service/process)
  • generates value

Edison, bin Ali and Torkar (2013) studied innovation in the software industry and found 41 separate definitions of innovation. They identified two that stood out as being best, shown in Figure 1.

Figure 1: Two example definitions of innovation

But neither of these feels right from a service-dominant logic lens. In both definitions, we find goods-dominant logic traits. Such as the firm building/embedding value to be later exchanged to a customer.

Let’s see if we can do differently by looking through a service-dominant logic lens.

Evolving the definition

Here, then, is my proposed definition.

Innovation is creating and offering a new (to the organisation, market/industry, or world) value proposition:

  • that helps the beneficiary make progress better than they can currently
  • that improves during, or as a result of, the naturally occurring value co-creation while using
  • which is delivered through the scalable and sustainable co-ordination of skills and resources (often across an ecosystem)
  • and where resistance (postponement, rejection, or opposition) is minimised
Figure 2: Defining innovation in a modern, service-dominant logic way

Let’s unpack this.

Innovation is creating and offering a value proposition…

Let’s start the definition right from the start in a service-dominant logic mindset. A foundational principle of service-dominant logic is that:

Actors cannot deliver value but can participate in the creation and offering of value propositions

Foundational Principle #7 of service-dominant logic

Our new definition should reflect that. So, we can’t say innovation produces something of value. Instead, we can create and offer a new value proposition (goods, services, process, marketing, organisational, and so on).

Next, I will clarify what I mean by ”new”.

…that is new to the organisation, market/industry, or the world

The newness/novelty of an innovation can lead to an interesting debate. Purists might suggest an innovation can only be so if the world has never seen it before. Otherwise, it is merely copying.

I take a different view based on two reasons. First studies of knowledge-intensive business services (such as consultancies) show they can be a source or carrier of innovation. They can create innovations never seen before. In such cases, they act as a source of innovation. But they often work across several industries or markets. In doing so, they can spot opportunities to carry innovations from one market/industry to another.

Secondly, customers are increasingly expecting to do things in your market/industry that they regularly do elsewhere. The spread of QR codes from the travel industry to the entertainment industry, for example. Or tracking their personal packages as they do their commercial ones.

I use Edison, bin Ali and Torkar (2013) definition of novelty as shown in Figure 3 (they use new to the firm, but I’ve changed to new to the organisation).

Figure 3: Novelness / Newness of an innovation

So we have:

Innovation is creating and offering a new (to the organisation, industry/market or world) value proposition.

The Value Proposition helps the beneficiary…

Some actor has to benefit from our value proposition. In the service-dominant logic lens, this is one or more Actors. And we typically refer to them as the beneficiary. These could be a consumer, another organisation, an internal department, etc.

As we co-create value, there is likely more than one beneficiary. For example, the customer and the organisation though it is sometimes helpful to think of one primary beneficiary.

But help them with what?

…Make Progress…

Now we will borrow from job to be done theory. Where the underlying thought is that people don’t buy products or services; they “hire” them to make progress in some aspect of their life. And that is what we want all of our innovations to do. To help the beneficiary make progress.

Figure 4: Our new value proposition (innovation) needs to help the beneficiary make progress better than they currently can

There are a couple of subtleties here. First, beneficiaries can make progress using goods, service, or a combination. This is fine seen through our service-dominant logic lens. We see goods as a distribution mechanism for service. Rather than have a goods-services continuum, we observe a service-service continuum. So there is no need for us to make a distinction between goods or service(s) in our definition.

And secondly, a job to be done can have a combination of functional, emotional and social dimensions.

There is an important caveat.

…better than they can currently

Not only does the innovation need to help the beneficiary make progress. It needs to do so in a way that is better than other options they could hire. Where better can mean many things, such as:

  • quicker
  • cheaper,
  • more conveniently,
  • reduction of perceived risk,
  • removal of hinders,
  • and so one.

If the value proposition is not better in some dimension, then we do not offer a compelling reason for the beneficiary to fire their existing hire and hire yours instead. Remember that the current hire could be ‘do nothing’.

In “Evolving Winning Ideas – using the lean canvas iteratively“, we talk about poor solutions pushing consumers to find new solutions. And that a compelling value proposition pulls consumers towards your offering. Leveraging both push and pull is an excellent approach.

And we have one more thing to remember. It is the beneficiary that always determines if the value proposition is better. Not what the actors offering the value proposition think. In service-dominant logic, we refer to this as the value being uniquely and phenomenologically determined by the beneficiary.

* that helps the beneficiary make progress, better than they can currently

The value proposition improves as a result of co-creation of value

No plan survives contact with the enemy

Common paraphrasing of Field Marshall Helmuth von Molkte original phrase

The value proposition improves as a result of co-creation of value
Actors can only offer value propositions, and beneficiaries determine value. That implies we need to react and enhance our innovation with each contact. This approach also aligns with the job-to-be-done theory of big and little hires. Where “big hire” is when the beneficiary switches to explore your value proposition. And “little hires” are the repeated choice to hire you.

Our definition expands to:

* that can improve during, or after, as a result of, the natural co-creation of value

Which we deliver in a scalable and sustainable way…

We have to be able to scale our offering. If we can’t, then we will fail. And we have to scale in a sustainable way. It is here we can touch on the word profit. But the underlying sense is to not make a loss. The world of capitalism is changing and with it our organisations. However, an organisation that makes a loss is not sustainable.

…often in an ecosystem…

But we rarely deliver a value proposition in isolation. Nearly all offerings involve an ecosystem. We have payment partners, distribution partners, and so on. Ecosystem scalability and sustainability is increasingly important in our own offerings.

* which is delivered through scalable and sustainable coordination of resources and skills (often across an ecosystem)

…that will not be resisted

We know that innovation resistance – where the use of an innovation is postponed, rejected, or even opposed – is a big issue. But amazingly, it is rarely thought of or addressed today. So, to remind ourselves, we add this to our definition.

Figure 5: A recap of innovation resistance hierarchy and the causes

In service-dominant logic, we would talk about changes to institutions. But instead, and to minimise confusion, I stick to more straightforward terms.

Wrapping Up

And so, we arrive at our complete definition:

Innovation is creating and offering a new (to the organisation, market/industry, or world) value proposition:

  • that helps the beneficiary make progress better than they can currently
  • that improves during, or as a result of, the naturally occurring value co-creation while using
  • which is delivered through the scalable and sustainable co-ordination of skills and resources (often across an ecosystem)
  • and where resistance (opposition, rejection, or postponement) is minimised

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