What are the 4 types of Innovation & Why it matters? (2023)

In this blog, you’ll get familiar with the four main types of innovation along with more other types & why it matters in the business world. Innovation is part of a Business Organization.

A study by Bern University says, only 15 percent of companies will make it to the 15 years mark whereas only 5 percent will reach up to 50 years mark.

There is no FIXED process of innovation. As the competition changes, technology shifts and the marketplace evolves – companies strive to get better to meet customer needs.

Innovation is a continual & commercial process. its success is dependent on the all in all market response. Markets are described as economics at the macro level.

Whereas at the micro-level it is best described as the success of the value proposition of products & services.

To measure the success of a value proposition one must compare it with a competitor’s value proposition and the beneficial value a consumer receives.

Innovation will be to bring a significant change to the existing product. With this in place, various types of innovations got discovered in the market.

These innovation types are categorized based on their effect on the market, its cost, benefits & value proposition to customers. Though it has different features, a small part of them still laps over.

So, let’s get started with what are the 4 types of innovation first.

What are the 4 types of innovation?

What are the 4 types of Innovation & Why it matters? (1)

  • Basic research

Basic Research aims to improve scientific theories and upgrade the knowledge of the world. It generates the roots for new ideas, principles, and innovations.

Basic research is not immediately brought into existence in the physical world but on white papers. It is the base for future progress and developmental needs.

For eg: The existence of computers lies in the research in pure mathematics, conducted years ago when it’s zero sources for practical application.

It’s a crucial form of innovation that creates a pipeline for new things that are about to enter the market in the future.

Mostly the researches are backed by Universities and Research Development Centers. Large companies have their own team of expert researchers.

Google provides funds to 250 academic research projects & invites 30 top scholars to spend sabbaticals at Google every year.

Thus, indicating the gravitas of the basic research in innovation.

  • Disruptive Innovation

The term disruptive innovation was coined by Clayton Christensen in his book- The Innovator’s Dilemma in 1995. It refers to the creation of the own market network. It compels customers to shift from traditional methods to new methods.

A market gets disrupted when new technology rolls out to replace the old and outdated ones. Disruptor provides an innovative alternative that has the capability to cater to customer needs in a better way.

So, disruptive innovation is generally made by startups. An existing market player will not disrupt the market as it faces limitations because of the business network.

Disruptive innovation has the greatest drawback & that is RISK !!! It’s a big task accompanied by the greatest risks while entering the market.

It’s difficult to estimate the market response & to understand what works and what doesn’t works.It is naturally a tortoise of the market race. It happens slowly & steadily to win in the end and not at once.

(Video) The Innovation Matrix: Four Types of Innovation Explained

To avoid being disrupted or lose out like the rabbit of the story- one has to keep their eyes open to new entrants & innovate new strategies and ideas to survive in the market.

A well-known example of Disruptive innovation is Netflix & Blockbuster.With 6 years Blockbuster was out of business as it failed to pivot its business strategy and hence faces the stiff competition laid by Netflix.

  • Breakthrough Innovation

Aren’t breakthrough & disruptive innovation the same? NO, it’s not. But Yes, it overlaps at a few folds. Amazon started as a breakthrough innovation for ordering books via mail.

It evolved and reshaped itself as an e-commerce firm to become a disruptor. Therefore, breakthrough innovation is an amalgamation of all incremental innovations that push the company beyond the expected level.

  • Sustaining Innovation

Most of the innovations in organizations are sustaining innovations. This innovation aims for organizational sustainability in the market. It implies improving the existing value network to satisfy consumer needs.

So, sustainable innovations are lower in risk and focus on shifting profits to the upper level.

Clayton Christensen remarks – Some sustaining innovations are the incremental year-by-year improvements that all good companies grind out. Other sustaining innovations are breakthrough, leapfrog-beyond-the-competition products. It doesn’t matter how technologically difficult the innovation is, however: The established competitors almost always win the battles of sustaining technology.

Because this strategy entails making a better product that they can sell for higher profit margins to their best customers, the established competitors have powerful motivations to fight sustaining battles. And they have the resources to win.”

Big Companies leverage this strategy as it makes easy & cost-effective pay-offs. Understanding the position of the company and the goals to be achieved can act as a guide in the advancement of business strategies.

These four types of innovation are a version created by Greg Satell, an entrepreneur & innovation expert. Previously many scholars had created their own version types of Innovation.

Clayton Christensen called his categories- Performance Improving, Efficiency, and Market Creation. Here, the first category is synonymous with sustainable innovation whereas the other two come under the same type- Disruptive innovation.

On the other side, the Organization for Economic Co-operation and Development (OECD) defines its categories as Product innovation, Process innovation, Marketing innovation & Organisational innovation.

Along with Satell’s categories, the following three innovations and Doblin’s framework of innovation is widely approved forms of innovation.

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(Video) How to define innovation (Understanding the 'Four Types of Innovation')

Other Innovation Types

  • Architectural Innovation

Architectural Innovation is upgrading the existing technology or structuring of present inventions. This strategy is useful as long as the market is receptive & customers are accepting the architectural change.

The risk is low in this strategy. As it’s easy to go back to the previous product architecture in case it fails in pilot testing. One of the interesting examples is the evolution of bicycles.

The bicycles have evolved from german draisine in 1818- a couple seated Quadracycle(4 wheelers) – high wheel bicycle to safety bicycle in 1984- racer bicycles- mountain bikes & now hybrid and commuter bicycles.

Hence, the architectural innovation gets updated with new skills, ideas & technologies to make the existing product better.

  • Radical Innovation

Radical Innovation is a similar form of innovation to disruptive innovation. It is RARE but in the recent past, its frequency has increased. In this innovation, the preference is always for technological advancement.

It solves big global problems. It gives people what they need and even what they didn’t even know they needed. So, this changes the complete chapter of the economy.

Hence, this innovation brings significant developments in the daily walks of human life. For example- The Internet. It brought radical advancements in the methods of communication, marketing, and media.

  • Incremental Innovation

Incremental Innovation implies increasing value to customers in the existing market with present technology.

There is no deliberate focus on technological upgradation or creating a new market. However, innovation can drive new customers or market unknowingly.

So, one of the recent examples is- Instagram added the new feature of reels for short video communication that gives higher reach and engagement to content creators.

Doblin’s Ten Types of Innovation

The ten types of innovation presented by Doblin are also known as ‘The Doblin Framework”. Doblin is an innovation-focused firm by Deloitte.

With years of research and assessing 2000 business innovations., Doblin observed- An innovation can be categorized into 10 distinct dimensions. So, they bill this as a diagnostic tool for assessing organizational innovations.

It proposes to analyze the competitive business environment and reveal gaps and potential opportunities while introducing something innovative in the market.

Doblin’s 10 dimensions of innovation are categorized into 3 parts- Business Model Innovation, Product Innovation, and Marketing Innovation.

  • Business Model Innovation:

The following types of innovation are focused on the internal activities, working structure, and business system of an enterprise.

  • Profit Model

Profit Model innovation looks up new ways to convert the firm’s value proposition into cash. It let’s firm know what customers need and finds the area for the best pricing strategies.

Moreover, it challenges industries to toss off old presumptions of what to offer, what customer desires, what to price, or how to generate revenue.

  • Network

It involves improving network processes by harnessing technologies, channels & offerings of other companies. It apprises to take advantage of other’s capabilities & service offerings to build networks.

Thus, helping executives in risk-sharing & forming alliances with ventures and even competitors.

  • Structure

It ensures alignment & organization of the company’s talents and assets. It involves value creation by improving the structure of talent resources, research & development, IT, etc.

Thus, setting the bar of high standards and attracting productive and accomplished talents to the organization.

(Video) Different Types of Innovation Explained

  • Process

A Process Innovation involves improving the operations and activities that present the organization’s offerings to customers.

In addition, it can also take the form of a patented approach that offers benefits to the organization & keeps them ahead of the competitors.

  • Product Innovation:

The following innovations are focused on the organization’s center products and services or its collections.

  • Product Performance

It encompasses developing unique features and functionalities of products. It includes all products from recent offerings to already existing products.

Therefore, the secret is to have only value offerings or to be better than a competitor’s offerings.

  • Product System

It includes creating connections between individual products and services to strengthen the offerings.

Thus enhancing the value of the core product by adding complementaries to it. This system delights customers and makes them stay away from competitors.

  • Marketing Innovation:

The following innovations are focused on customer-centric components of an organization and its business system.

  • Service

It implies enhancing the value of organizational offerings. It guides customers to make the best use of the products by revealing their features and functionality in the right way.

Also, it focuses on smoothening and providing a delightful customer experience by fixing up rough patches in the customer journey.

  • Channel

It involves enhancing the mechanism to deliver offerings to customers. The goal is to give customers when they want it, what they want, and how they want it, with minimal to zero barriers.

  • Brand

People get naturally attracted to brand reputation. Brand innovation implies improving branding strategies. Thus, making the offerings an unforgettable & undeniable buying option.

So, brand innovation has the potential to add value, meaning, and intent to organizational offerings.

  • Customer Engagement

It implicates how deeply & profoundly the company connects with its users. It involves crafting new techniques and methods to get meaningful insights about customers. Thus, getting access to unexplored avenues to drive customer satisfaction.

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(Video) Different types of Innovation

Why these 4 types of innovation matter?

The main reason for innovation is: Maintaining relevancy and surviving in the market.

As the World is ever-evolving, there are unexplored spheres that have the potential to drive monetary benefits to an organization.

It is an indispensable factor in surviving longer and withstanding competitors. So, it succors companies to keep competitors at bay, and better fulfill customers’ needs.

Innovation can be as big as introducing new technology and can be as small as upgrading a feature of the product.

It harnesses the power of the humans both internally (employees) and externally (customers) to stay relevant for keeping with the market needs.

Thus introducing new products and services and attenuate market challenges and competition.

Take Away

Given the importance of innovation, the matter of fact is innovation is DIFFICULT. A survey reveals a lack of skills and capabilities is the main hindrance to organizational innovation.

Every type of innovation has different requirements, the key is to determine your approach through extensive review and analyzing the products and services and state of the company.

Once the problem is identified it’s easy for companies to innovate their next changing strategy. So, keeping an eye on market changes will set the company’s growth in the right direction.

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(Video) Understand the 5 Types of Innovation

FAQs

What is innovation and why it matters? ›

Innovation matters for boosting growth and improving living standards and is defined asthe development and commercialization of products and processes that are new to the firm, new to the market, or new to the world.

What are the 4 innovation strategies? ›

Innovation strategies can be classed as proactive, active, reactive and passive (Dodgson et al.

Why types of innovation are important? ›

Innovation and bringing innovation into the market can be challenging, but it's also an advantageous process for businesses. It can lead to increased profits, faster growth, secure a competitive advantage, improved margins, and even sometimes world-changing discoveries.

What are the four 4 dimensions of innovation explain? ›

The four P's of Innovation include paradigm, process, position and product. For millions of years, humans across the globe have been evolving and innovating as they grow.

What are the types of innovation? ›

Essentially, there are three types of innovation: radical, incremental, and disruptive.

Why innovation matters in an organization? ›

Innovation is often necessary for companies to adapt and overcome the challenges of change. It fosters growth: Stagnation can be extremely detrimental to your business. Achieving organizational and economic growth through innovation is key to staying afloat in today's highly competitive world.

Who created the 4 types of innovation? ›

These four types of innovation are a version created by Greg Satell, an entrepreneur & innovation expert. Previously many scholars had created their own version types of Innovation. Clayton Christensen called his categories- Performance Improving, Efficiency, and Market Creation.

What are the four drivers of innovation? ›

According to Clifton, four types of people drive innovation: inventors, entrepreneurs, extreme individual achievers in their fields (such as the arts, entertainment, or sports), and super mentors. "The theory is that where these people settle is where new economic empires will be built," Clifton said.

What type of innovation is the most important? ›

Disruptive innovation is often the most well-known type of innovation. It comes with effective uses of new technology and high-impact results. While disruptive innovation is extremely flashy and grabs headlines, it comes with many nuances and challenges.

What are the most important innovation? ›

Here are our top picks for the most important inventions of all time, along with the science behind the invention and how they came about.
  • The wheel. ...
  • The nail. ...
  • The compass. ...
  • The printing press. ...
  • The internal combustion engine. ...
  • The telephone. ...
  • The light bulb. ...
  • Penicillin.
Dec 22, 2021

What is the most important aspect of innovation? ›

The Four Key Elements of Innovation: Collaboration, Ideation, Implementation and Value Creation. Innovation requires collaboration, ideation, implementation and value creation. Community developers actively engaged in innovation illustrated each of these elements during breakout sessions.

What are the 4 stages of innovation at workplace *? ›

4 Stages of Innovation
  • Ideation – Basic research and conception.
  • Project Selection – The decision to invest.
  • Product Development – Building the product or service.
  • Commercialization – Bringing the product or service to market and adapting it to customer demands.

What are the 5 examples of innovation? ›

The innovations include technological inventions such as wind turbines, photovoltaic cells, concentrated solar power, geothermal energy, ocean wave power and many other emerging innovations.

What are the 5 main sources of innovation? ›

Where Does Innovation Come From? The Seven Sources of Innovation
  • The Unexpected. This is indeed the Eureka moment where something unexpected happens that leads to a new product or service. ...
  • Incongruities. ...
  • Process Needs. ...
  • Industry and Market Structure. ...
  • Demographics. ...
  • Changes in Perception. ...
  • New Knowledge.
Mar 4, 2015

What is business innovation and why is it important? ›

The purpose of the business innovation process is to create value for the organization. That value can come from creating new revenue opportunities or driving more revenue through existing channels; from creating efficiencies that save time, money or both; or from improvements to productivity or performance.

Why is innovation important in business? ›

With technological advances disrupting all industries, companies must innovate in order to stay relevant and not be left behind. In fact, innovative companies are rewarded not only for being ready for the future, but also with top talent and increased consumer demand.

What are the principles of innovation? ›

The 5 Innovation Principles
  • Innovation Principle #1: Communication. ...
  • Innovation Principle #2: Courage. ...
  • Innovation Principle #3: Curiosity. ...
  • Innovation Principle #4: Creativity. ...
  • Innovation Principle #5: Speed.

Which innovation is the most popular and widely used? ›

Product innovation is probably the most common form of innovation and it refers to improvements in performance characteristics and attributes of the product.

What are 4 of the most important inventions? ›

They are the compass, gunpowder, papermaking and printing. China held the world's leading position in many fields in the study of nature from the 1st century BC to the 15th century AD, with the four great inventions having the greatest global significance.

What are 3 benefits of innovation? ›

Some of the key practical benefits of innovation are:
  • improved productivity.
  • reduced costs.
  • increased competitiveness.
  • improved brand recognition and value.
  • new partnerships and relationships.
  • increased turnover and improved profitability.

What are good innovation examples? ›

Below are 10 examples of innovations that are turning problems into progress.
  • A bag that slow cooks food. (Photo: WIPO) ...
  • Bottle light bulbs. (Photo: Liter of Light) ...
  • Energy-producing roads. ...
  • 1 dollar microscope. ...
  • Medical drones. ...
  • Mobile water safety check. ...
  • Solar rechargeable hearing aids. ...
  • Wearable breast cancer detector.

What are the key drivers of innovation? ›

The drivers of innovations are customers, product and service. The first step on your path toward innovation should be deciding where to focus your efforts.
...
There are 3 types of customer innovation:
  • Customer-driven innovation.
  • Customer-centred innovation.
  • Customer-focused innovation.
May 6, 2021

What are the three most important objectives of innovation? ›

Creating new ideas for products and services. Performing better than competitors. Improving innovation process. Dominating the market.

What is innovation in simple words? ›

Simply put, innovation is about successfully implementing a new idea and creating value for your customers and stakeholders. Innovation starts with a new idea. It could be a plan for an improved product or service; it could be an updated method for running your operations; it could also be a new business model.

What is innovation best answer? ›

Innovation is the process of translating discoveries and ideas into technologies, processes, products and services and bringing these to market so that they can benefit society. As such, it is vital for consumers, citizens and companies of all types and investors in all sectors.

What is the main point of innovation? ›

The purpose of innovation is to create business value. Value can be defined in many ways, such as incremental improvements to existing products, the creation of entirely new products and services, or reducing cost.

What is innovation & the benefit of it? ›

Innovation enables problem-solving and provides creative insight that allows you to look at things from a different perspective, regardless of whether you are developing a new product, refreshing strategy or finding an original way to stay ahead of the competition.

What is a good innovation? ›

One of the most important characteristics of an innovative idea is that it solves a problem. True innovation adds real value to those who use it. In other words, an innovative idea helps improve people's lives.

How do you answer innovation interview questions? ›

Focus on what you did, although that doesn't mean the example shouldn't be team-based. Just highlight how you led the team and worked well with others. If possible, use an example that shows how you had a positive effect.

What are examples of innovation in the workplace? ›

Common innovative examples at work
  • creating a new digital platform that streamlines your company's online processes or functions.
  • encouraging collaboration between your company and another complementary company.
  • designing a product that puts sustainability at the forefront of your company's actions.
Nov 30, 2021

What is the most important step in innovation? ›

An important part is establishing the specifications of any given idea. Commercialization is the stage that involves the change of focus developments to persuasion. After the idea is clarified and a business plan is developed, it will be ready for diffusion and implementation.

What are the 3 basic principles of innovation? ›

The 5 Principles of Sustaining Innovation
  • First: Innovation starts when people convert problems to ideas. ...
  • Second: Innovation also needs a system. ...
  • The third principle: Passion is the fuel, and pain is the hidden ingredient.

How does innovation improve productivity? ›

The more innovative a company is, the more it can drive productivity. In turn, this increased productivity allows the workforce to be more creative and innovative. On and on the cycle goes as the company grows. Innovation is crucial for SMEs who need to do more with less.

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