Definition of innovation – What is innovation?

Innovation is the process of taking something that already exists and improving it, whether it
is a product, a service or even a process. It can be as simple as making a small change or
as complex as completely overhauling an entire system or creating new marketing with a
new product. But whatever form it takes, innovation always involves creativity and
risk-taking. Innovation can be a key driver of economic growth, and companies that can
innovate systematically tend to be more successful than those that do not.

Types of innovation

1.Product & Product Performance Innovation

Either a new product is developed or the performance of an existing product is improved.
This kind of innovation is very common in the business world.

2.Technology Innovation
New technologies can also be the basis for many other innovations. The best example was
the Internet, which was itself an innovation but also led to other innovations in various fields.

3. Business Model Innovation

Many of the most successful companies in the world managed to innovate their business
model. Using different channels, technologies and new markets can lead to new possible
business models which can create, deliver and capture customer value. Digital ecosystems
are a well-known example of innovation using several technologies and creating a whole
new type of business. Digital Business models pose one of the biggest opportunities for
innovation at the moment.

4. Organisational Innovation
Managing and sharing resources in a new way can also be an innovation. This way it’s
possible to use resources and assets in a completely new way.

5. Process Innovation
Innovation in the processes can improve the efficiency or effectiveness of existing methods.
Possible process innovations involve production, delivery, or customer interaction.

6. Marketing / Sales – New Channel Innovation

New methods to capture and hold attention from customers. Either through the use of
innovative marketing/sales concepts or the use of new channels for customer
acquisition/sales.

7. Network Innovation
By connecting different groups and stakeholders it might be possible to create extra value.
This type of innovation is very common due to the use of ICT services.

8. Customer Engagement / Retention

Innovative concepts that try to increase the engagement of customers and keep the
retention up. The goal is to have innovative models to keep the customers “locked-in” or
engaged.

9.Incremental Innovation
(Existing Technology, Existing Market)

One of the most common forms of innovation that we can observe. It uses existing
technologies within an existing market. The goal is to improve an existing offering by adding
new features, changes in the design, etc.

Example

The best Example for incremental innovation can be seen in the Smartphone market where
the most innovation is only updating the hardware, improving the design, or adding some
additional features/cameras/sensors, etc.

10. Disruptive Innovation

(New Technology, Existing Market)

Disruptive innovation is mostly associated with applying new technologies, processes, or

disruptive business models to existing industries. Sometimes new technologies and
business models seem, especially in the beginning, inferior to the existing solutions but after
some iterations, they surpass the existing models and take over the market due to efficiency
and/or efficacy advantages.

Examples

Amazon used Internet-Technologies to disrupt the existing industry for book-shops. They
had the existing market for books but changed the way it was sold, delivered and
experienced due to the use of disruptive technologies. Another example was the iPhone,
where existing technologies in the market (Phones with buttons, keypads, etc.) were
replaced with touch-interface-centered devices combined with intuitive user interfaces.

11. Architectural Innovation

(Existing Technology, New Market)

Architectural innovation is something we see with tech giants like Amazon, Google, and
many more at the moment. They take their domain expertise, technology, and skills and
apply them to a different market. This way they can open up new markets and expand their
customer base.

Examples

Especially digital ecosystem orchestrators like Amazon and Alibaba use this innovation
strategy to enter new markets. They use existing expertise in building apps, platforms, and
their existing customer base to offer new services and products for different markets. A
recent example for this: Amazon recently entered the medical care field.
12.Radical Innovation
(New Technology, New Market)

Even it is the stereotypical way most people see innovation; it is the rarest form of them all.
Radical innovation involves the creation of technologies, services, and business models that
open up entirely new markets.

Example

The best example of radical innovation was the invention of the aeroplane. This radical new
technology opened up a new form of travel, invented an industry, and a whole new market.