10 types of Innovation for the Earth Observation Industry
We all crave to work in an innovative environment. No person, company, industry or country wants to be labelled as lacking innovation. Frequently, when people learn that I work in the space industry, they are thrilled because I work in such an innovative environment. The truth is, sometimes we do push the limits with regards to technology, but most of the times, we are hyper-conservative, and that also requires a fair dose of innovation.
A while ago, Tom Segert wrote a great article on why innovation is primarily absent in the #OldSpace industry. Tom argues that the pricing model (cost-plus) of agencies results in #spacedonewrong and kills innovation. That may be true, but there is so much more to innovation that I find it hard to blame it only on a pricing model. In this article, I am looking at the various innovation types and applying them to the EO industry.
The Basics of Innovation
The word innovation is one of the most overused and misused words globally, across all the sectors, from banking to space. You find it in the mission and the value statements of so many companies. The fact is, it is losing its meaning because many are misjudging innovation with being inventive or creative.
The definition of innovation is simple:
Innovation is the process of transforming an idea into a viable new offering.
There are three words in this definition that requires a bit of explanation:
- VIABLE: The innovation must have the ability to stand on its own feet; it needs to deliver a return. A new offering that can’t deliver a return or value in one or the other form (note, the return doesn’t need to be monetary) is not very innovative.
- NEW: Your product or service does not need to be new or novel, but the way you present it to the market needs to be fresh.
- OFFERING: Most people think of innovation as tangible solutions or services. Innovation goes beyond this. It can also be the way you present your brand and interact with your clients.
Innovation requires identifying the problems that matter and moving through them systematically to deliver elegant solutions.
- IDENTIFYING: Providing EO services depends far more on the downstream challenges you solve than knowing how to build, launch and operate payloads and satellites.
- MATTER: Look at the biggest bottlenecks in the EO industry. Try to solve them first. The challenges that matter could be from new instruments to how you distribute data. Leave the apparent stuff for those performing incremental improvements.
- TO DELIVER: When you read Seth Godin’s latest book, you learn that shipping is everything. The innovation process does not stop until your Earth Observation service is in the hands of your target market.
- ELEGANT: According to Leonardo da Vinci Simplicity is the ultimate sophistication. By making Earth Observation more complex or adding layers of effort won’t help. The question is, how can you break barriers.
Again, in Seth Godin’s words, the words above carry generosity, intent, risk, and intimacy.
Ten Types of Innovation to apply in the Earth Observation Industry
Doblin, a global innovation firm that helps leading organizations find human-centred solutions to business problems, popularised The Ten Types of Innovation Framework.
Configuration innovation focusses on the innermost workings of an enterprise and its business systems.
Profit Model - How you make money
Business model innovation is one of the most prominent parts where you can innovate. Due to historical reasons, the space industry struggles the most with this part of the innovation chain.
Most industries get trapped in a historical way of doing business and making money. This is no different for the space sector. Challenging the linear way of doing business, moving from one large contract to the other, and breaking the dependence on governments can be a great way to align your innovation and incentives.
The profit model part of the innovation spectrum has multiple ways to address the way you make money. You could either position yourself as the premium provider, become the cost leader (with high margins) or follow a risk-sharing model when providing upstream products or services.
In the downstream part of the value chain, subscription-based or freemium models are an option. On the other hand, if you sell across the value chain, you can always bundle various traditional standalone offerings into a single transaction. In this way, you become a one-stop-shop. That said, in a niche environment, it is always good to receive a large part of your payments before building the offering.
The trick is to spot the correct profit model for your market and situation. Some questions you can ask yourself:
- How can I differentiate my profit model from my competitors to make it more attractive to my customers?
- Can I change my offering from a product to service?
- How do my margins compare to my competitors? What is the situation with my variable and fixed costs?
- Are there differences between who pays for my offering and who’s using it?
Network – How you connect with others to create value
The space environment is a complex environment from a domain expertise perspective as it spans across various sectors, horizontal and vertically. And all of these sectors are dependent on each other. No organization can do it on its own, and you have to position yourself to take advantage of others’ processes, technologies, offerings, channels and brands.
When developing offerings in the Earth Observation domain, you need to understand how you can capitalize on your strengths and harness others’ capabilities and assets. The upstream, midstream, and downstream parts of the value chain can’t operate in silos. For the benefit of the end-user, they need to work together seamlessly.
This approach is known as the network economy. With the right partners, a tremendous amount of value can be created for all the value chain partners while differentiating yourself from competitors. This is usually done through complementary partnering, forming alliances and collaboration for mutual benefit. An option is also to join forces with a competitor, better known as coopetition.
There are various ways to spot network innovation opportunities to build external relationships, partnerships, consortia and affiliations:
- How can I collaborate with others along the value chain to shift from business as usual?
- Can you enable other players by lending them your channels, processes, brand or unique assets?
- Can you form unusual partnerships with organizations unrelated to your current business?
- Can you leverage your relationship with your suppliers?
Structure – How you organize and align your talent and assets
Earth Observation offerings’ success relies predominantly on its internal assets due to the domain complexity and niche areas. These assets include everything from talent, intellectual property, incentives, management structure, domain expertise, and equipment configuration.
By configuring your organization’s internal structure, you can gain a significant advantage over your competitor, and it may have a direct impact on your culture. Structural innovation is all about organizing talent and assets and not using it; that falls under process innovation.
Examples of possible structural innovation in the space industry are to align employees incentive systems to achieve common goals, structure the organization to be responsive and nimble, integrate information technology to support the whole product life-cycle management process, manage the flow of information to reduce redundancies and reduce costs by standardizing assets and infrastructure.
Possible questions to ask to identify and position structural innovation:
- How do you align infrastructure with internal processes?
- Are decisions made close to the customer or up the management chain?
- Is the company known for attracting top talent?
- Are employees incentivized, motivated and aligned behind a common goal?
Process – How you use superior methods to do your work
In the space industry, and especially earth observation, processes are the engine room of the organization. It defines nearly everything done. For many, internal processes are also synonym with “business as usual” and, in most cases, very similar within the industry.
However, internal processes may not be that prominent but are tough to copy as hidden for the competitor. Many consider the internal processes as their “special sauce”. Most importantly, innovation in internal processes can improve cost savings and improve your ability to create new products and scale production.
One can achieve cost reduction through the standardization of processes, while predictive analytics can assist in design, price and guarantee the offerings accordingly. Due to the relatively low volume, on-demand production can reduce inventory, while lean production can reduce waste and cost in your manufacturing process. These are all well-established processes in the automotive industry but not that well developed in the space sector.
You can identify potential processes innovations by asking:
- What is the company’s unique skills in delivering products or services?
- Does the company own intellectual property with regards to specific methodologies?
- How does the company’s production costs compare to those of competitors or the industry norm?
- How well will the company’s internal processes react to external or industry changes?
- Is there specific analytics in place to predict outcomes and outputs?
Innovation in your company’s offerings focuses on an enterprise’s core product or service, or a collection of its products and services.
Product Performance – distinguishing features and functionality
In the space and Earth Observation industry, product performance dominates the conversations. Some may even go as far and say that this is the only significant innovation area or the sum of all innovation.
In Earth Observation, resolution is everything. Resolution covers spatial, spectral, radiometric and temporal resolution. Over the last 10 years, innovation addressing the drive towards higher resolution received the most attention. Some may call it the GSD race.
However, product performance innovation is the easiest for competitors to copy, and it is more the exception than the rule to deliver a long-term competitive advantage. Still, it can drive growth, and top innovators are always in the process to improve their offerings.
Product performance innovation is also valid for the service part of the Earth Observation industry. One can achieve this by considering changes in the service’s features and functions or delivering quality competitors can’t match. Sustaining performance innovation companies providing Earth Observation services can look at combing existing features across the value chain or simplifying the performance by reducing complexity. However, by adding or removing features and functions, one must still address specific market needs.
One can identify Product Performance innovation by asking the following questions:
- Are the company’s products superior and dominant within the market?
- Or, on the other side of the spectrum, are the company’s products more straightforward and easier to use?
- Do the company’s products have unique features and functionalities that address specific needs and challenges within the market?
Product System – complementary products and services
Standalone products are not very attractive within the Earth Observation ecosystem, or, for that matter, for most businesses today. Products and services are generally bundled with other complementary products and services to create a robust and scalable system. The goal is to create a system that is “bigger” than the sum of the individual units.
When thinking about Products and Services, one must think of the whole ecosystem. Within the Earth Observation value chain, one must think of the upstream, midstream and downstream systems. It helps to keep interoperability, modularity, integration and other ways to create valuable connections in mind.
In the Earth Observation sector, you should think beyond the bundling of products towards providing complementary services in a modular and integrated approach. In practice, one can also think of creating platforms or frameworks that ease product or service adoption.
Product System innovation can be identified by asking the following questions:
- Does the company produce or offer multiple products that connect in unique ways?
- Is the company partnering with other players along the value chain?
Today, how the customer experiences your company becomes crucial. There are various ways to innovate the customer-facing elements of an enterprise and its business system.
Service – How you support and amplify the value of your offering
The space industry is notoriously bad at delivering exceptional customer services. Historically this sector was driven by large organization interacting with government agencies; therefore, red-tape was at the order of the day. However, the NewSpace industry, with a commercial focus, is addressing the customer journey shortcomings.
Service innovation focusses on making products easier to procure and use. At its core, it should take the effort of doing business within the Earth Observation sector away. Examples of service innovation include trying before you buy, maintenance plans, guarantees or warranties, product training services or providing a holistic experience across an offering’s life-cycle.
Most Earth Observation companies understand the value of exceptional services, but there are still use obstacles to make the experience as smooth as possible.
One can identify possible Service innovation improvements by asking the following questions:
- Do the customers rave about the company’s services?
- Are there any processes in place to measure customer satisfaction?
- Are processes in place to educate and assist your customers to use your products and services?
Channel – How you deliver your offering to customers and users
In its simplest form, the channel is how you get your offering in your customer’s hands, or rather how you connect with your customer and where they can find your offering.
Traditionally the Earth Observation sector relied on physical interaction with clients, and customers needed to jump through a couple of loops to do business. Today, this is changing fast to virtual interactions and e-commerce platforms. Skilled innovators won’t rely on a single channel to reach customers but multiple complementary channels. The goal is to minimize friction and maximize delight. In many cases, one needs to be sensitive to old habits, especially in the space industry.
Some examples of channel innovations are the ability to expand into different channels, connect directly with customers, accessing non-traditional channels, use indirect of 3rd party resellers, or place your offering in situations where customers are likely to want to access them.
Questions to ask to identify possible channel innovations:
- How different are the ways that you deliver your offering to clients from others within the industry?
- Do you offer a memorable interaction?
- How many different channels do you use, or are you only relying on a single but trusted channel?
- Do you partner with any other company along the value chain to sell your offerings?
Brand – How you represent your offerings and business
Brand innovation helps your customers and user always identify you and prefer to be associated with your company. More importantly, it creates perceived value. In essence, brand innovation helps customers to recognize, remember and prefer your offering.
The goal is to communicate a promise and the value proposition of the offerings to the customer. This promise forms part of an integrated communication strategy through various mediums and touchpoints. Brand innovation can elevate a product or service into a sought after offering.
If your product or company is new or not well-known, co-branding or brand leveraging can be used to create or “lend” credibility. Another way is to create a brand extension by launching new products under an existing umbrella brand. In the Earth Observation industry, your company values can show that you stand for something bigger and more significant. This sector also lends itself to component branding, where you brand an internal component, like an algorithm, to make the final offering appear more valuable.
You can identify Brand innovation by asking the following questions:
- Does the company have a distinct identity relative to competitors?
- Are the company’s customers able to identify their values with the company?
- Do other partners use the company’s brand?
- Does the company use its brand to foster connectivity across the ecosystem?
Customer Engagement – How you foster compelling interaction
Customer engagement innovation is all about creating meaningful connections with your customers. The crucial part is to go beyond your customers’ functional needs and understand their desires and aspirations. Engagement innovation elevates the whole experience of the customer with your organization.
Increasingly, we see these innovations moving away from broadcasting to your audience and flooding them with information to focused permission marketing. In this case, the communication is targeted at specific customers that want to hear from your company.
In particular, the Earth Observation industry can use technology to engage with and deliver incredible complex information in a simplified way.
Engagement innovation can overlap with brand and service innovation, and that is okay, but try to focus on the point of interaction. Giving you a couple of examples; remove the burden of repetitive tasks, reduce complexity, help customers obtain knowledge and skills within your domain, make them feel part of a group, and humanize your offerings.
Questions to ask to identify Customer Engagement innovation:
- Does the company simplify complex concepts and make them easy to master?
- Do the company’s offerings take on an identity and life of its own?
- Does an offering become an integral part of a customer’s life, and do they talk about it?
- Do you use technology to engage with customers?
The Ford Example
Within the satellite industry, and specific the Earth Observation industry, we are all waiting for the Henry Ford moment, where satellites are mass-produced on a production line. The fact is, Ford did not only innovate on how he produced cars but used all the various types of innovation to his advantage.
Henry Ford demanded a 50% upfront payment, unlike other manufacturers at the time. He spearheaded vertical integration by controlling the entire supply chain. Ford introduced payment double the minimum wage and reduced the working hours. Most notably, he created the moving assembly line. The Model T’s design was simplified to reduce cost and allow anyone to repair it. Modification kits were sold with the car to help owners transform it into a utility vehicle. Furthermore, Ford built a network of local independent dealers to make their cars available in every city. In the early days, Ford also used motion pictures to promote the company’s vehicles.
Today, the space, satellite and Earth Observation industry can learn from Henry Ford and look further than product performance innovation. Feel free to engage with Simera Sense and experience first hand how we are implementing the various types of innovation.