Why Elegant Integration is Now the Focus of Innovation

 

Larry Keeley Evolution of Innovation

 

Larry Keeley opened his Transform 2014 presentation, Sometimes things change … by reminding the audience that, in reality, things change all the time. Change is unstoppable.

Keeley, the president and co-founder of innovation consulting firm Doblin, Inc. and author of Ten Types of Innovation: The Discipline of Building Breakthroughs says we're in one of the biggest times of change in the history of our species. The biggest single change in our lifetime is interconnectedness, he says, and innovation is the discipline, science and emerging new set of practices that will allow us to thrive in an interconnected world.

 

 

Why business models matter

It's easy to look backward and see changes, says Keeley, but harder to stand in the present and understand the structure, determinants and shaping forces that cause really big changes right now and impact change in the future. People need to consider the possibility that the business they're in may change so much and so fast that it's almost impossible to see what they're missing. That's what's happening in health care, which he says is in a time of business model warfare. The stakes are enormous.

Innovators must adjust. In the past, innovation has focused on new product ideas, says Keeley, but in the future, innovation needs to address business models, partnering, networking, experiences, channels and brand.

 

Weirder than you think and stranger than we know

Keeley cites several examples of innovative business models that have allowed companies to flourish in a rapidly changing environment:

  • Because of the music industry's transition from vinyl to CDs to music downloads, Keeley has purchased his entire music collection in three different formats.
  • Starbucks reinvented its category with prepaid cards, which resulted in "mountains of cash," and apps (91 people per second download the app) and free WiFi, which, by providing customers with Internet access throughout the day, eliminated morning business spikes.
  • Amazon Prime memberships cost $79, resulting in an initial $11 loss per customer. Studies show, however, that Prime members buy more and "weirder" stuff, resulting in an incremental $78 profit per customer.

Larry Keeley TXFM

Forward-thinking health care models

In health care today, says Keeler, a lot of very smart players are coming in to skim the cream. Their innovative business models are designed around behavioral shift. Examples include Wal-Mart, which has introduced in-house clinics to transform the location of health care delivery. Walgreen and CVS have also learned that the more they stress innovation in health care (such as offering flu shots), the more they can sell.

IBM is tasking its supercomputer, Watson, to help reduce the complexity of health care, in part through a collaboration with Mayo Clinic.

 

Ecosystems matter, too

The value being generated in the world today is focused on ecosystems, not companies, says Keeley. Many of the most valuable modern business platforms today create, operate and optimize ecosystems. Network-based businesses are developing in sports, media, health care, finances and real estate.

To create something amazing today, create it not just acting as your firm alone but in close, orchestrated cooperation with other firms. See that collaboration as normal, necessary and the ideal way to deal with complexity. Innovation is now more about elegant integration than primary invention, says Keeley.

 

 Guest Post written by Miriam Wuensch

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