4 Key Components of Innovation – What You’re not Taught in Business School

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Have you ever wondered how some companies are really super successful and seem to be able to relentlessly reinvent themselves and continually improve to leave their competitors in the dust? From the outside looking in, there doesn’t really seem to be too much that is remarkable about them or what they’re doing.

However, the reality is these companies tend to be great at a few things that enable them to constantly innovate to a position where they have a serious competitive advantage and few competitors. It is the following four key skills that they’ve honed:

  1. Elevation;
  2. Productive Paranoia;
  3. Transposition; and
  4. Mess Finding. 


In clearly defining and understanding your purpose the first consideration is elevation. That is, how to elevate your purpose. If a business is not able to elevate then it is absolutely limiting its ability to innovate and adapt to change. This is really about finding the higher perspective of what the business is truly doing and utilising this view to survey the landscape for new, exciting and unexplored opportunities.

Some examples of businesses with an elevated purpose that have created new opportunities will help to provide context and understanding. Firstly, Google isn’t in the business of providing a search engine. Rather its elevated purpose is to organise the world’s information and make this accessible.

Taken from this perspective it is easy to see how Google has launched Google Travel as an online travel agency, moved into the smartphone market and are offering financial services. Likewise, Harley Davidson is not in the business of motorcycles. They’re actually in the business of enabling the experience of freedom.

From this perspective, it’s easy to see how they’ve created new revenue streams from clothing labels and cafes. Both companies epitomise elevation of purpose and have created a clear competitive advantage for themselves and enhanced their ability to innovate far beyond their competitors. 

Once you elevate your purpose and truly understand what you do, the opportunity for innovation and growth is almost limitless. In addition, you are no longer bound to the confines of the industry in which you currently operate.

This provides the ability to be industry agnostic. It also opens up the space for competitive advantage as you will be operating in a space with few competitors but boundless opportunity.

Productive Paranoia

Essentially paranoia is a thought process that is typically heavily influenced by fear and a perceived threat. However, this is paralytic paranoia that can culminate in a level of irrationality and may prevent one from looking at things objectively.

In relation to businesses, this manifests in thought processes such as beliefs that threats and disruptors which could fundamentally disrupt the business are discounted as low or non-existent. Especially in large businesses where the general consensus is they are too big to fail. This perpetuates the myth that past success is an indicator of future success.

This simply isn’t true and the history books are littered with multiple examples where there has been a reluctance to accept change is a reality and the consequence has been spectacular failure. This is due to being unwilling to take such threats seriously and implement back-up plans in the event those threats eventuate.

A classic case in point is Blockbuster. Ultimately, their unwillingness to accept change was coming, in the form of rivals such as Netflix, and to change their business model led to their downfall. 

This type of paranoia and fear is the antithesis of Productive Paranoia. In regard to Productive Paranoia, we are talking about proactively looking at what is on the horizon that could potentially impact or disrupt your business as well as hypothesizing about threats that are not yet visible. Then utilising this understanding in a productive way.

By actively and consistently practising Productive Paranoia, a business can start to unlock the opportunities presented by the winds of change that are fuelling such potential threats and disruptors to then generate strategies to hedge their bets in the event that any of those changes materialise.

It is essentially about being willing and courageous enough to accept that change is the only constant, there will be a need to constantly reinvent to ensure ongoing success and proactively planning to ensure this can occur. That is, it provides businesses an opportunity to develop Plan A, Plan B, Plan C, etc. Essentially, this is about building the well before you need the water.


To transpose means to transfer or transport. This could be changing the relative sequence or position of things as well as taking something and applying it to something else. This is the exact intent of Transposition, which is a method for finding inspiration for innovation that reflects a businesses true elevated purpose.

It is essentially about how you can take, borrow or learn from innovation or business models in other industries or in businesses within your own industry and then apply those to your business as inspiration. 

Transposition allows businesses to find new methodologies that can be borrowed and applied to its own way of innovating. It is based on observing what is being done, then taking this and superimposing the main thing from what is observed into what it is your business is doing.

Whether a business engages in transposition is a reflection of their level of curiosity to actually do this coupled with an ability to do this. It also needs to be done through the lens of the businesses elevated purpose. 

Mess Finding

Mess finding is really about identifying what problems or unmet needs exist that are yet to be fixed, and figuring out how to fix them. However, it is important to remember any product innovation that is designed to fix the problem needs to provide enough value to inspire customers to use it.

This is the whole premise of Utility Theory. If a product offers little value or utility, it is not going to be used. In addition, consideration also needs to be given to the number of potential customers that are affected by the mess, as this determines the size of the market available. 

The good news is that messes exist everywhere, in every market, in every industry so there are lots of opportunities available. Messes range from the trivial and insignificant to those that are hugely important. Mess Finding is vitally important as it enables a business to innovate in an arena where there is already a market.

Once the key mess, or messes, have been identified and understood, it is time to look at how the business could solve these messes. This presents a massive opportunity for elevation if done well.

Businesses that dedicate little time to identifying key messes and truly understanding them, are doing themselves a huge disservice. This is because where there is a mess, there is a market opportunity, and where there is a market opportunity, the ability to generate revenue exists. 


It is these four skills, which when considered separately almost seem too simple, that enable great businesses to continually innovate, change and thrive especially when they are used in combination with each other.

These skills provide an opportunity to identify how what the business does, that is its elevated purpose, can be applied to different messes irrespective of industry through considering how alternate innovation models could be transposed to solve the messes and how key trends or disruptors can also be utilised.

This is incredibly powerful as it allows a business to create resonant products outside its core industry and opens up boundless opportunities. These skills are the essence of a business that is powered by change and are essential building blocks in designing your business for perpetual success. 

Key takeaways:

  1. Our ability to innovate is directly proportional to our ability to elevate.
  2. Taking a productively paranoid view of potential disruptors enables us to better understand what these are and how we can either use them to our advantage or mitigate the impact they may have.
  3. Transposing other business or innovation models onto our business enables us to identify new and innovative ways in which we can do what we do to create competitive advantage. 
  4. Where there’s a mess, there’s a market. Messes represent new opportunities so it pays to master finding messes to solve.
Jonathan MacDonald has been assisting businesses for 30 years. He is an in-demand global keynote speaker and trusted private advisor to companies such as IKEA, Apple, Google, Amazon, Sony and Unilever. He is also a Sunday Times best-selling author. Jonathan is passionate about helping businesses and professionals succeed and adding value to them. For this reason he has recently launched his latest company, Powered By Change Solutions, which is a digital business enhancement platform based on his best-selling book, Powered By Change, so that all business owners, executives and professionals can utilise the platform at minimal cost to design their business or life for perpetual success. Find out more at www.poweredbychange.com


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