What are the different types of innovation?
by Solverboard, on 7 Jul 2021 6 min read
There are various frameworks for thinking about types of innovation. We’ve picked out the most popular two, which give you four and ten different ‘types’.
Innovation is about creating value from novelty. How that value is created, and what the novel element might be, are not fixed: this means that innovation can take many forms and types, from innovative products to new services, business models or approaches.
What is defined as innovation within a particular organisation will vary according to the sector and industry in which it operates. It may also be determined by the organisational structure and culture, as well as its strategic business objectives. For this reason, it's often useful to review which types of innovation your organisation is targeting, if only to check that you are not missing other opportunities.
You may be using a common form of innovation – but are there others you should use? There are various frameworks for thinking about innovation types – below, you’ll find all you need to know about the most popular two.
What are the four types of innovation?
One way to look at innovation is to categorise it based on two axes: the newness of the technology it uses, and the impact it has on its market. This creates an innovation matrix that features four innovation types.
1. Architectural or sustaining innovation
Architectural innovation involves taking a product, service or process that has already been developed and used elsewhere and introducing it in a new way or to a new market. Because it has already been developed and has successful business use elsewhere, the risk and resource requirements are both relatively low.
One such example is memory foam: first developed by NASA for crash protection and seat cushioning, and now used in mattresses and other products.
2. Disruptive innovation
Also known as stealth innovation, this concept was first introduced by Harvard Business School professor, Clayton Christensen. Here, smaller companies build up to challenge larger incumbents, who often focus just on certain segments of their customer base, ignoring the needs of others. By targeting these ignored segments with more suitable products – and often at lower prices – smaller companies can gain a foothold in the market, gradually developing to appeal to the incumbent’s main customer base.
This is the approach that Netflix took, initially targeting only customers who didn’t care about needing to watch the latest releases. From there, the brand moved upstream, keeping hold of its initial competitive advantages, but building up their service to appeal to the mainstream.
3. Incremental or routine innovation
Incremental innovation is the most common form of innovation: making incremental improvements to existing products, services and processes, tweaking them to better appeal to customer needs or gain greater mass appeal.
An example of routine innovation is televisions. Those who want a simple 50-inch LED TV will be able to find one for just a few hundred pounds. However, for those who are more serious about viewing quality, a 50-inch OLED TV might be a better choice.
Now, more than ever, businesses can’t afford to have obstacles to innovation. Find out how to overcome some of the most common blockers in our 2020 Innovation Blockers Report.
Incremental innovations may not always make a huge impact, but they can be an easy sell, as they are based on something that is already familiar. However, some customers may want something basic rather than a premium product – and relying solely on incremental innovation may not be wise in case the market shifts completely.
4. Radical innovation
Radical innovation is high risk, but can also be very high reward – when done right. It involves the use of both a new business model and a revolutionary new idea or technology to completely transform a market – or an economy – and potentially even create a brand new industry.
In 2012, for example, longstanding farming equipment firm John Deere began to equip its tractors with sensors, having spotted the potential of big data. By connecting their farming equipment with software, farmers were able to track and monitor the yield of their crops, filling an unmet need within the farming industry and revolutionising the sector.
To help you to find the best ideas, streamline their delivery and measure their value, take a look at what the Solverboard platform can offer.
What are the ten types of innovation?
Innovation consultants Doblin created the Ten Types of Innovation framework to help organisations review and structure their innovation efforts. As they explain, the framework "can be a diagnostic tool to assess how you're approaching innovation internally, it can help you analyse your competitive environment, and it can reveal gaps and potential opportunities for doing something different and upending the market."
Three categories of innovation
Doblin’s ten types of innovation have been split into three categories. These move from those that are the most distant from customers to those that are the most customer-focused. These categories are:
- Configuration types, which focus on how your organisation is set up and structured
- Offering types, which are about what products or services you provide for your customers or stakeholders
- Experience types, which concentrate on how those products or services are delivered.
Configuration types of innovation focus on how your organisation actually works.
- Profit Model – a classic example is Rolls-Royce's Power By The Hour model, invented in 1962. Rather than selling aircraft engines as products with a one-off capital cost, the company sells flying hours at a fixed cost per hour. This allows their customers to avoid the burden of significant capital expenditure, while locking them into a maintenance agreement with Rolls-Royce.
- Network – many organisations are looking at how to use their networks differently to power their innovation efforts. Customer co-creation is a popular network innovation and has been used successfully by Lego, BMW and many others.
- Structure – Organisations are always experimenting with different ways of organising their assets, people and disciplines, for example by centralising or outsourcing certain functions. An innovation currently under scrutiny is moving from employing people to working with self-employed suppliers, as in the case of Deliveroo or Uber.
- Process – Henry Ford's automation of the Model T assembly line is one of the most cited examples of process innovation, but in modern times 'fast fashion' chains such as Zara and Primark have dramatically cut the time from design to clothing being available in-store with innovative approaches to their supply chains.
- Product performance – this is what most people think of as innovation, focusing on new products and services as well as new features for existing ones. Unless it involves some sort of intellectual property protection, this is one of the easiest forms for competitors to copy.
- Product system – By combining products or services into bundles or creating eco-systems around them, organisations can reach new markets or create additional value in existing ones. For example, Colgate originally only sold toothpaste, but has since created an entire product system around dental care, including mouthwash, toothbrushes, and whitening products.
Experience types concentrate on the customer-facing elements of your organisation.
- Service – Without changing the product or service, organisations can change the way they deliver them to create additional value: for example, Enterprise Rent A Car will deliver your hire car to your door, or come to pick you up so you don't need to travel to the Enterprise office.
- Channel – The rise of digital technology has provided some enormous opportunities for channel innovation, especially in the fintech market. First Direct's success was directly linked to it being the first telephone-only bank with no branches, and recently Monzo, Revolut, Nimbl and Osper and the like have revolutionised banking for adults and children, as well as how we buy foreign currency, through channel innovation.
- Brand – Innovating around a brand can be fraught with danger, so Carlsberg's recent campaign admitting that its lager probably wasn't the best in the world was a brave move. However, sharing negative reviews of their beer in a counter-intuitive move gave them the platform to talk about the new recipe.
- Customer Engagement – How you deliver your product or service is one thing, but what about how you connect with potential customers even before you make a sale, or ensure that your post-sales service is up to scratch? A great example of innovation in this area is the use of chatbots to deal with initial enquiries or direct customers to the right information.
Looking to adopt alternative innovation types to the ones you currently use? Then you’ll need a solid innovation management system. Find out more about what Solverboard has to offer.