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Types of innovation – the complete overview

To find a good definition of innovation in the company, the focus on the innovation type is highly relevant. It makes a difference whether you want to focus on radical or incremental innovations in the team, for example, depending on the selection of methods and the use of resources.

In this article, I’ll give you an overview of known types of innovation, along with examples of how companies have used different types of innovation to gain a competitive advantage.

Incremental innovation

This is a common form of innovation and refers to a series of small improvements or updates made to an existing product, process or service. The goal of these innovations is to improve performance, productivity or efficiency without changing the basic design or functionality.

Example: The continuous improvement of camera quality in smartphones is a typical incremental innovation. With each new generation of smartphone, camera sensors, image processing and software are improved to provide clearer, more detailed and technically better photos. This is not a completely new technology or product, but incremental improvements to an existing product.

The following methods can help you with incremental innovation projects:

Radical innovations

This type of innovation, on the other hand, represents breakthrough changes, often involving new technologies or ideas, that fundamentally alter existing standards in a field or industry.

Example: The invention of the Internet is an example of a radical innovation. It has fundamentally changed the way people communicate, do business, seek and share information, and many other aspects of life. It was a completely new technology that represented a significant change from the status quo.

Radical innovations are more difficult to plan than incremental innovations, and a different methodological approach is also required here. Helpful here are methods such as:

Disruptive innovations

Disruptive innovations are a special type of radical innovation that displace or change established products, services or business models, often by creating new markets or value networks.

Example: Spotify is a good example of a disruptive innovation. Spotify has fundamentally changed the music industry with its streaming service. Spotify’s idea of offering unlimited access to music for a monthly fee contrasts with the traditional model of music purchasing, where users had to buy individual albums or songs. This change has fundamentally altered the way people access and pay for music and has disrupted the entire market for music distribution and sales.

In addition to these 3 distinctions in change quality, there are a number of other types of innovation. These are also each provided here with an example.

Process innovation

This type of innovation is about how a company does things. Process innovation can take place in any department of a company and often involves the introduction of new technology, equipment or software to make processes more efficient.

Example: Toyota is known for its “lean manufacturing” method, which improves production efficiency by reducing waste at every step of the production process.

If you’re looking to optimize a process with your team, check out the following methods:

Social innovation

Social innovations aim to meet social needs that are not met by existing social structures and market mechanisms. They can focus on areas such as education, health, community welfare and the environment.

Example: The Grameen Bank in Bangladesh has introduced the microfinance model, which enables poor people to access credit and start their own businesses.

Architectural innovation

These are innovations that combine existing technologies or components in new ways to create a new system or product. Of course, there are also great innovations in architecture, such as the Guggenheim Museum in Bilbao, Sagrada Familia in Spain, or the Burj Khalifa in the United Arab Emirates. But since we want to talk in this article about innovations that you can implement in your organization, we will limit ourselves to the definition of terms from the first sentence.

Example: The World Wide Web developed by Tim Berners-Lee at CERN in Switzerland is an outstanding example of an architectural innovation. It linked existing technologies (Internet, hypertext) in a new way and created a platform on which countless other innovations could be built. By the way, here you can find the first website on the World Wide Web.

Ecological innovation

This type of innovation focuses on developing products, services or processes that are environmentally friendly and contribute to sustainable development. If you are interested in this topic, I would like to recommend our article on sustainable innovations.

Example: Vestas from Denmark is a leading global manufacturer of wind turbines and has been instrumental in making wind energy a viable and competitive form of renewable energy.

Open Innovation

This is an approach to innovation in which companies actively seek out external ideas and technologies and open up their own internal innovations for use by others.

Example: Procter & Gamble (P&G) has implemented a very successful open innovation strategy with its“Connect + Develop” program.

Product innovation

A product innovation is a new or improved good or service that is introduced to the market. It may relate to the improvement of technical specifications, components and materials, built-in software, ease of use or other functional features.

Example: James Dyson introduced a well-known product innovation with the launch of his bagless vacuum cleaner.

Many methods are designed to improve products. A good overview is provided by my detailed article on the topic of innovation methods.

Service Innovation / Service Innovation

This type of innovation refers to inventing or improving services. This could include finding new ways to serve customers or making existing services more effective. In service innovations / service innovations, the precise understanding of customer needs is particularly important.

Example: Uber has created an innovative service in the transportation industry by taking an existing service (cab rides) and turning it into a new business model through digital technologies.

Some methods that can help you develop service innovations:

Organizational innovation (organizational innovation)

This is a new organizational method in business practices, in the workplace or in relationships with external companies. This may include the implementation of new methods for distributing responsibilities and decision-making authority, the application of new technologies to work processes, or changes in the company’s external relations.

Example: Google is known for its innovative workplace practices, including time for personal projects and extensive employee benefits. For example, Google has instituted a program where engineers are allowed to spend 20 percent of their work time on projects that interest them personally. This practice has led to the creation of some of Google’s best-known products, including Gmail and Google News.

Here are a few methods to help transform your organization.

Marketing innovation

A marketing innovation is the implementation of a new marketing method that involves significant changes in product design or packaging, product placement, product promotion, or pricing.

Example: Red Bull has created an entirely new product category with its energy drink and is known for its unique and innovative marketing tactics, including extreme sports events and music festivals.

Business model innovation

This type of innovation means inventing or redesigning a company’s business strategy. It may involve a completely new way for a company to generate revenue or a redesign of the value chain.

Example: Airbnb has revolutionized the traditional accommodation rental model with the peer-to-peer rental model.

Some methods and tools to describe and develop business models are:

Strategic innovation

This is a type of innovation that represents a fundamental change in the direction of a company or organization, often in response to changes in the industry or new technologies.

Case in point: Amazon has steadily expanded its original business model as an online bookseller, diversifying into areas such as cloud computing (Amazon Web Services), digital streaming services, and even physical grocery stores (through its acquisition of Whole Foods).

Handwritten by Christian Buchholz