Innovation plays a critical role in the strategy of any company. For a new, small company, innovation determines who will survive the brutal formation stages. For a mid-sized company, innovation is necessary to grow. And for a large company, lack of innovation is a sure recipe for extinction. Innovation carries huge risks, however. By definition, innovation has very low predictability on market adoption, and sometimes low predictability on investment costs—both having tropisms in unfavorable, compromising poles for the organization’s survival. It’s not unusual for a company to invest substantially in a direction that never takes hold in the market. A terrific way to control this risk is to innovate with information.
Information innovation is a way to direct the information resources in your company to serve your innovative purposes instead of your operational purposes. Traditionally, information systems are installed to support the operations of the company. You may buy or build a large enterprise resource planning system (i.e. transactional system) to support the basic operations of the company such as order processing and accounts receivable. You may even have a customer relationship marketing information system installed to increase your sales effectiveness. Downstream from your transactional systems you may have business intelligence and data warehousing architecture to support reporting and analytics. If these resources and capabilities are already in place for your company, why not use them build innovative products, services, and relationships?
The key to innovating with information is understanding what valuable information you either have, or you can cultivate, that can be offered to one of your markets. The exact path the innovation takes is a derivative of your strategy, in that it’s aligned with your strategic vision and moves along the path of your driving force (e.g., product-driven or market-driven). For instance, the strategic vision of a market-driven company that focuses on luxury clientele should include breakthrough innovations (products, services, and relationships) that specifically cater to the upscale market. Knowing that vanity is far more important to the luxury market than money, this market-driven company may focus on an innovative information service that decodes their customers genes, and suggests ways—based on genetic profile—to look and feel young. Even better for customer loyalty, instead of positioning it as a service innovation, the company could position it as a relationship innovation (i.e. free of charge to customers).
The impact your innovation has will depend on where your offering falls on the evolutionary path from data to wisdom. As data synthetically evolves to information, then knowledge, then wisdom; the implicit value of the information increases geometrically. So if possible, the innovator striving for breakthrough information products will leverage their proprietary wisdom that has been carefully cultivated and mined within the organization. If the service provided in the above example was a typical genetic profile that some companies already offer today, the value would be nominal. However, if the company did extensive in-house research and analysis that provided very accurate suggestions based on proprietary wisdom that had been cultivated within the company for years, this would be an extremely valuable service or relationship offering.
You may not need to travel very far to form innovative information products, just look at the data you’re already collecting for your operational needs, and see if there’s a value bridge between this data and one of your target markets. For instance, when I was working with Visa on their enterprise data strategy, there was an obvious information leverage point in the mere volume of transactions that they process on a daily basis. If your built-in competitive advantage already involves data, think of ways to mine and cultivate this data into information, knowledge, and wisdom innovations that can be offered to your target markets. Bear in mind, you don’t need to evolve data all the way to wisdom for it to be innovative and marketable. Companies like Experian sell, in some cases, very unrefined data points to their customers for good revenues.
Innovating with information can be a way to create breakthrough products at a reasonable investment. The hard costs of information innovation should be minimal, which leaves only the focus and ingenuity of your resources. By asking the right questions, you may even find some innovative information products, services, and relationships already available in the data being mined for your own operational support. Take some time today to take charge of your future—with the power of information.