Business innovation is of top priority for entrepreneurs and CEOs.

But why does a business

need an Innovation model? What's the role of the innovation model?

As you know, Innovation is part of a successful business strategy. Most often, Innovators fail
when they pursue the wrong model for the implementation of innovation. Lacking the
required capabilities can also be the reason for failure.

An innovation modelprovides adetailed framework to identify, advance, and implement

ideas. Thus, focusing on adopting methods to create the needed value.

Roy Rothwell, a British Sociologist is a pioncer in industrial innovation. He made significant

contributions to innovation management.

Rothwell put forward five generations of innovations from the 1950s onwards. His findings
are based on various marketing factors. This includes- inflation, stagflation, economic
recovery, unemployment, etc.

His findings are ternmed as a descriptive innovation model. Itrepresents the different
structuring of the company's innovation process subject to market trends.

Hence, his Innovation Models are beneficial in creating an innovation management strategy
for business.
Let's understand RothwelI's types of Innovation models...

Types of Innovation Models

First-Generation Innovation Model (1G) -
Technology Push
Technology push in the first Innovation model is the result of rapid economic growth from
Phase
1950. Nasa developed this as a management tool in the 1960s. They also termed it as
review-processes'.

The idea was to break down complex processes of space projects. It focused on systemizing
the work and gaining control over activities.
 FIRST GENERATION MODEL- TECHNOLOGY PUS

Market Need Sales

Development Manufacturing

The Phase-review-processes implies consistent monitoring of each phase. Thus forming

a linear sequential process. It focused on pushing technological innovation through extensive
research & development.

It was applied at the stage of product research, its engineering, manufacturing & marketing to
invent a successful product. As the entire focus was on the development of ideas- it ignored
the marketing phase.

The complete emphasis on R&D had the disadvantage of not considering customer feedback
and expectations. Thus, the innovations would often get ignored in the market.
 Second-Generation Innovation Model (2G)
Market Pull
In the 1960s mid, the approach shifted from Technological push to Market pull. The focus
began on responding to market needs. Factors ignored during the first generation are
considered now in the second generation.

It includes- the cost-benefit analysis of each project &systematic allocation of resources.

SECOND GENERATION MODEL- MARKET PUSH

Market Need Development Production MarketinE

The process is similar or sequentially linear but emphasized market needs. Thus reducing the
research time.
As the market needs are dynamic, the projects would last for a short for short period. Hence,
resulting in numerous smallprojects.

. Third-Generation Innovation Model (3G)

Coupling Method.
The third-generation model overcomes the limitations of the previous two linear models. It
gained prominent acceptance during the inflation and stagflation phase of the economy.

State of Art
New
Technology
in science and technology
TECHNO
PUSH

IDEA Marketing COMMERO

GENERATION
Development Manufacturing and Sales PRODUG

MARKET
PULL
Need of society
New
Idea and the marketplace
It tightly combined R&D and Marketing. The innovators coupled technological innovation
with market needs. The model was based on the balanced coupling of Technology Pulland
Market Push.

The core driving factor was reducing the operational costs during the contraction stage of the
economy. So, the process formed a non-linear feedback loop. But the stages in the process
made the model sequential.

Fourth-Generation Innovation Model (4G)

Integrated Model

FOURTH GENERATION INNOVATION MODE

INTEGRATED MODEL
Marketing
R&D

Product Development
Parts Manufacture (supplier)
Manufacture

Joint Group Meetings (Entneer

Marketing
 The fourth-generation model follows an integrated model for the business process. It moved
away from the sequential process to follow the parallel process.

A parallel approach is followed in development, internal company communication, key

suppliers at upwards, and customers downwards.

Fifth-Generation Innovation Model(5G)

Network Model

The network model focused on the effective distribution of network processes. It emphasized
gaining flexibility and increasing the development speed.

The 5G model has integrated network systems to consolidate external and internal factors.
Therefore, the model considers the external inputs of suppliers, customers, competitors,
government, etc.
 FIfth-Generation Innovation ode- Netwworlk Mo
EXTERNAL INPUTS EXTERNAL IN
societal needs Marketing Finance
Competit
competitors and sales
suppliers
"supplier distributo
partnerships CUstomer
distributors
Ustomers Accumulatign of,
strategic allaces
EXTERNAL IN
EXTERNAL INPUTS
competitors Knowledge over time scientific
suppliers technolog
distnbutors developr
Customers suppliers
unversty Engineering and Researchiand Cstomer
GeparUmments 4aniversity
manufacturng develOP epartme

Thus gaining market competitiveness in times of rapid technological changes and shoner
product cycles.

The Integrated and network model intensifies the fact that technological innovation is cross
functional & multi-factor but not sequential.

Sixth-Generation Innovation Model (6G) -

Open Innovation Model
 Internat Licensing Other Firm's
Market
Technology Base
Technology Spin-outs
New
Market

Current
Marke

External
TechnoBogy Base

Technology CVC Product/Business

Inlicensing Investing Acquisition
R

As Chesbrough defines, "Open innovation is the use of purposeful inflows and outflows of
knowledgeto accelerate innovation internally while also expanding the markets for the
external use of innovation."

It looks out for technological advancements by combining internal and exiertal ideas. The
funnel representation shows- Initiating with a large pool of ideas to narrow down later at the
best choice of the idea.

And further implementing the best innovation in the market. So, check oui this blog to get a
detailed understanding of Open Innovation.
The 4 Main Types of
Innovation:
There are various types of Innovation. Most often the characteristics of each innovation type
make them overlap. The following types are the most common and basic forms of innovation.

So here goes the 4 main types of innovation or innovation matrix...

 HIGH

N
THE
MARKETSUSTAININ
A significant improve
on aproduct that ain
sustainthe position i
existing market

EN
 . Incremental lInnovation
current value of the product. It
As the word says, Incremental innovation is increasing the
makes the product a better version than the previous one.

focuses on
So, it can be about improving efficiency while retaining the core features. It
improving the experience of the current customer market.

Disruptive Innovation
Disruptive innovation is amarket disruptor. They blow away the existing market or
industries. This innovative power makes a non-customer into their customer.

It set forth the failure of traditional business models which require a new variation for
survival.

SustainingInnovation
Sustaining innovation is more or less like Incremental innovation. It grows its existing market
while focusing on current customers. They take small steps of innovation to grow their
business.

Radical Innovation
 Radical innovation is similar to Disruptive innovation. This takes an extensive length of time
tomake disruptive changes. Thus making it a rare innovation type.

It brings transfornmations that were previously unknown to the world. Innovations for
example computers, mobile phones, and the internet. So, these innovations have completely
changed the way of communication in the entire world.

InnovationStrategy
An innovation model can adopt any of the Innovation strategies. Innovation strategies
determine the intensity of the innovation process. Here are some of the innovation strategies:

Proactive Innovation Strategy

Proactive innovation is an outcome of rapid technological development and shorter economic
cycles. It focuses on creating a new market niche and customer. They are their competitors.

Therefore, they step into the market intending to create disruption. For eg: Apple.

Active InnovationStrategy
Active Innovation is adefensive strategy against competitors. It'smainly upgrading current
technology to respond to rapid market changes.
 deal in
The innovators drive for medium to low risk. So, the companies invest a good
research and development. For Eg: Microsoft

Reactive Innovation Strategy

evolve the
Reactive Innovation isa wait-and-see approach. They need not proactively seek to
product. They wait to get evidence of the product's success from the market.

So, they duplicate proven market innovation. Instead, they are operationally focused to adapt
to business pressure. Thus, paving their way to survive in the market.

Passive Innovation Strategy

Passive innovators are chillers' of themarket. Theywait for a demand to arise. So, they
don't act until the customers demand changes in current products.

Their core approach is to produce as per customer's reviews and expectations. Whereas a
Proactive innovator searches for hidaen expectations and 1esponds to ie market.

Process of Innovation Model

 The Innovation Modelprocess is the method of bringing an idea or invention into reality as a
great value driver.
product. The innovation modelshould make the process economical and a

process:
In this we will gothrough the steps in the Innovation Model

. Idea Generation
taking
The first step is choosing a concept to develop. At the organizational level, it involves
into account the customer's and employees'opinions. Before considering an idea, answering
the reasonsto develop the idea will give clarity in vision.

Therefore. along with internal advice, opinions of customers, partneIs, and suppliers will give
direction to your Innovation process.

Screening
One can get a bunch ofideas. Will you implement them all? No, That's impossible! Thus,
screening of ideas willhelp to make the right choice of ideas.

So, measuring the benefits andpotential risks of ideas while sereening willdetermine the
Business idea viability.

Experimentation
 approve the
be accepted by customers? Will they
As the right idea is selected. But will it
pricing? Is it suitable for customers?

when you do a pilot test in your

target market. If the
Ailthese questions will be answered
implementationshould be
to0 complex or too early for the current market, the
idea is
dropped.

product
product, one should not lhaste to release the
Even if the target market accepts your
the project will increase the chances
immediately. Instead waiting for the right time to launch
of winning in the market.

Commercialization
the previous battles. Here your focus is to
If you reach here, that means you have survived all
accompanied by a persuasive
increase product awareness. Product awareness should be
approach.

needed this innovation. Thus,

Most often, customers are not even aware that they
customers.
demonstrating its benefis and being specific about its usage will atract

. Implementation
Here the focus is to build the reality of the idea. It includes prouction, opation, logistics,
marketing, selling, and taking consumer feedback.
Hence, building relations with investors, suppliers, customers, government, etc. to implement
the innovation.

Innovation in Business Models

Business Model Innovation is a strategy in itself. As we know, the Business Model is the
framework about how a company creates and delivers the needed value to customers.

Thus, Innovation in Business Model refers to upgrading the business model of the
organization. It can depict changes in revenue srcans,up-gradation of vaiue proposition,
changes in cost structure, etc.

Business Model Innovation aims to drive competitive advanage, vaiue creation,and

profitability.

But which type of Business Model Innovation will drive the results? To answer this, BCG has
developed the foilowing four approaches to case your decision process:

The Reinventor Approach

The reinventor approach is followed curing dhe slow growh of the business. it's the best
choice to go for when the market response is uncertain.
The company should adopt this approach to reinvent its business model. Thus, ensuring
alignment of activities to satisfy customer and market needs.

. The Adapter Approach

The approach is adopted when a business fails to face market challenges. Adapters should
focus their model on persistent experimentation. In addition, this willhelp to find a successful
path while surviving in the market.

The Maverick Approach

As the name says, it follows an independent-minded approach. They select their successful
core business to applythe innovation. Mavericks aim to disrupt the market. So, they seek to
bring revolution in the industry and drive business growth.

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The Adventurer Approach

The approach insistently operates to expand its business territory & capture adjacent markets.
The adventurer's exploration is aspiring for breakthrough growth. So, they have to be careful
in their game of exploring new markets.
 Here are some of the wonderful examples of Business ModelInnovation:

Zara's secret sauce is they produce where the sale is made. They follow the tight supply
chain right from designing to the final production of clothes. Thus, the lead times are shorter
in length and sold-out merchandise gets filled up easily.

IKEA follows an uncomplicated business model. It is owned by a charitable non-profit

organization. Thus enjoying the benefits of reduced taxes & hostile takeover. This is their
magic potion to produce inexpesive furniture.

Airbnb operates with zero inventory. The idea is to connect the world of sellers with the
worldof buyers. So, their focus is on providiug agood user iaterface and improving usability
with new upgrades.

Understanding Diffusion of
Innovation Models
Diffusion refers to a pattern that innovation or product takes to expand in the market. The
pattern understands how the custorers engage with the product right from awareness to final
adoption.

Everet M. Roger coined difierent ie1s iur eacn gioup of adupiers. The foilowiag
categorizations are based on the cihrracteristics of ea ii group.