Whenever we need something so badly in the business landscape, innovation is bound to happen. From the slight improvement in the user interface of your app to an entirely new product rollout, everything falls under the same domain. There can be different types of innovation depending on its role in the industry and how it came into existence.
The wheel of innovation types was invented because humans felt the need to maneuver their products easily and quickly. The fire was invented because they thought that it would scare wild animals and help in cooking food.
Why was it so necessary to innovate?
Though they were living a comfortable life, they had a curiosity that could improve their lifestyle. This is why it is critical to innovate in the business landscape.
William Ralph Brody is an American radiologist and academic administrator while talking about the significance of innovation once said-
“What is the calculus of innovation? The calculus of innovation is quite simple: Knowledge drives innovation, innovation drives productivity; productivity drives economic growth.”
When it comes to the types of innovation, there are so many confusions.
People don’t know what the actual types are, as there are several definitions available on different platforms. Let’s first understand the essence of innovation before understanding the types of innovation to get a clearer picture.
Importance of Innovation
The importance of innovation in the business landscape can never be ignored. No business can survive in the market for the longer term if it’s unable to innovate.
We know what happened to Nokia and Kodak. According to the research from the London School of Economics, the organizations that launch new products/services in a year gain a boost of around 17% in their revenue generation.
This is further followed by a 22% boost with every next innovation.
When we go to the finance side of any business, the importance of innovation can be well understood. But innovation is not just crucial for continuous revenue generation but also for the survival of the business.
No customer is going to pick the brand that is not able to solve their problems. The sole purpose of every ideal business is to work on people’s problems and solve them through their product/service. This is only possible through innovation.
Once we are clear about its importance, we should be ready to understand the types of innovation –
What are the Types of Innovation?
Innovation can be categorized differently, and therefore, we get different results from different sources.
One’s categorization might not be similar to someone else’s. Some categorize innovation based on its size and shape, while others may categorize it based on its nature.
Here, we are providing the best explanation of the types of innovation through the innovation matrix. This is the most acknowledged definition; hence let’s have a look –
Innovation Matrix Defining Types of Innovation
Here, innovation has been categorized into 4 different types. The base of this categorization is the market and the technology introduced. This considers the nature of the innovation to get different types of innovation. Following are the types of innovation –
1. Incremental Innovation
This is the most common form of innovation observed in different industries.
As the name suggests, this innovation is incremental, which means improving an already existing concept. The goal here is to increase the value of the product/service already existing in the market.
One of the excellent examples is Apple’s watches – these are improved in every next-generation; hence Apple’s impact in the market increases.
The incremental innovation is short-termed and technical advancements are also low. Most of the incremental innovation is easily accessible and doesn’t require a massive R&D budget. The improvement in the user interface of any website/app is also termed as incremental innovation.
2. Architectural Innovation
Incremental innovation improves the product/service in the same industry, while architectural innovation improves the product/service by using the technology of another industry.
In simpler words – it uses the concept of one field and then applies it to another hence innovating a product/service.
This is the second most popular type of innovation carried out by innovators. According to researches, around 40% of the registered innovations fall in this category.
This is again a short-term innovation, and its impacts on the market are average.
3. Radical Innovation
When you think of innovation, what’s the most common definition that pops up in your head is Radical Innovation.
It’s not an improvement in pre-existing technology; neither takes inspiration from any other industry. It’s pure innovation – an entirely new concept in a completely new market.
This type of innovation brings high-end technology before people and introduces an entirely new market for them. The product/service through radical innovation replaces an existing product/service in the domain.
This type of innovation has the highest impact on the market and occurs in the long-term. It also helps people to make a more significant leap and enhance their lifestyle substantially.
4. Disruptive Innovation
In this type of innovation, a new product/service is introduced into a pre-existing market.
This type of innovation improves the pre-existing features in the market. It provides a better alternative to what’s already present in a market.
This type of innovation takes birth with the changing requirements of the customer. Businesses introduce new products/services to satisfy what customers seek from them.
Disruptive innovation changes the way people interact with an already-existing market. They disrupt the market; hence the innovation is known as disruptive innovation. This type of innovation occurs in the medium-long term and creates a higher impact on the market.
So, these were the 4-types of innovation that are based on the nature of the innovation and how they are carried out.
In addition to these 4 types of innovation, there is another framework suggested by Doblin for describing 10 different types of innovation. The Doblin division of innovation is mainly dedicated to representing the practical perspective of innovation types than a strategic approach.
Let us go through these ten types of innovation as well-
10 Types of Innovation as per Doblin Framework
A. Business Model Innovations
1. Profit Model Innovation
It talks about the packaging of the existing offerings in innovative ways to increase the profits from the same items. Understanding customers’ preferences and innovating as per that are integral parts of this type of innovation.
2. Network Innovation
3. Structure Innovation
It deals with the existing assets of your organization and their innovative use, so their value can be increased. It revolves around improving internal software and processes for the optimized performance of tools and workforce.
4. Process Innovation
This one is again inward-looking innovation that is a key part of the core competencies of a business or organization. It ensures the process improvement of the organization dedicated to optimized efficiency.
B. Product Innovations
5. Product performance
From improving product features to innovating product quality, innovations involved in the improvements of existing products or new products come in this type of innovation.
6. Product system
Different complementary products and services that are associated with the core product of a company also need innovations, and Product System Innovation ensures this.
C. Making Innovations
7. Service Innovations
Service-related innovations are one of the most crucial types of innovations that are dedicated to optimized customer experience. With this kind of innovation, businesses can improve the offering of your services or products and fixing common problems.
8. Channel Innovations
With the help of such types of innovations, you can optimize your ways of delivering your different offerings to your customers. E-commerce sectors predominantly go through this form of innovation. Such innovations are essential for ensuring what delights customers, what they want, and how they prefer getting those things.
9. Brand Innovations
Different types of innovation strategies for optimizing the branding of your company, so it can stand-out from other competitors and alternatives in the market come in the category of brand innovations. Improving customer touchpoints, engagement, advertising, and branding strategies are integral parts of brand innovations.
10. Customer Segment Innovations
Every business wants to optimize its interactions with its target audiences, and Customer Segment Innovations are associated with these strategies. Proper understanding of the customers and channelizing constructive and productive connections with potential and existing customers are integral parts of such types of innovations.
Innovation is important, but more important is the correct innovation.
You must innovate adequately to get the maximum out of your innovative product/service.
Understand what your customers seek from you. Always consult with your team and stakeholders before you step onto the innovation pedal.
Pick the right talent for the development task. Make sure you use the most superior technology for the task. Always monitor the process and make it relevant to the present market condition.
Even the slightest of mistakes can cause harm to your business and its reputation in the market. A correct innovation can take businesses to sky-heights.
Always look for innovation and satisfying your customer’s expectations to survive in the market.
On the concluding note, we hope that the types mentioned above of innovation would have guided you with the innovations that can optimize the performance and outputs of your organization.
In case of any doubts about the types of innovation your business needs for optimizing its favorable outcomes, feel free to share your business details with the M91 team in the comment section below.