Innovation is an emerging profession that substantially differs from managing a business and is not the same as traditional R&D. The myth around innovation is that “it’s all coming up with brand new products or services”. In reality, the business model that accompanies the product is just as if not more important to its success - something that organizations tend to forget.
In this blog post we will use the Harper case study to show how business model innovation has far greater capacity to create growth than traditional R&D. Martha Matilda Harpers revolutionized the salon industry in the 19th century by truly understanding what customers valued and applying a business model never before seen in that sector.
Innovation and R&D are often mistakenly believed to be one and the same. In reality, while R&D indeed is a part of successful innovation, it is only one of its components. Successful innovation also requires Business R&D - a concept we will explain - and execution. Innovation is not just about novel ideas: executing on those ideas and building a fitting business model around them is just as important.
A great example of that fact is Martha Matilda Harpers, who used the franchising model to revolutionize the hairdressing industry.
Business R&D is made of two components: how you are creating value for your customer (your value proposition) and the kind of business model you use. Harper innovated on both of these components. She understood how to create value for her customer segment - her clients - while also unlocking a new customer segment - the hairdressers wanting to join her franchise. She did so using a simple but effective business model that had never been used in the beauty industry.
Creating customer value
Harper recognizes that women were uncomfortable getting their hair done in public, so she focused on customer service and a serene, pampered environment to remove some stigma around getting one’s hair done outside of the home. She introduced the scientific approach to hair care, focused on customer service and triggered the expansion of the beauty salon market.
Sher grew her hair care services and products business from her initial salon to a network of franchise salons by providing women entrepreneurs a compelling business opportunity. She used the franchising model to scale her business in a way that would empower women. Harper decided the first 100 salons should be opened by poor women, and provided them with start-up loans and training on her hair care method and customer service.
Business model innovation
Harper set up the first franchise system of independently owned beauty salons to scale her hair care business while also empowering working class women. She used her business acumen as a means of social empowerment — providing a business opportunity to pull women out of poverty and turn them into entrepreneurs.
She provided loans to get them started, provided training without asking for a share of profits. Harper grew her network of salons to 500 across the globe at the height of her success in the 1930s. She also created a chain of training schools so she could positively impact the lives of thousands of poor women while growing her own business.
It is unlikely she could have grown as quickly and successfully without the brilliant idea of offering aspiring women entrepreneurs a compelling business opportunity. Harper didn’t come up with a revolutionary new invention, she simply applied an existing business model to the industry she was familiar with. Today, franchising is a proven technique to scale small business ownership to a powerful brand with a large reach.