TYPES OF

INNOVATION
4 Types of Innovation
Incremental Innovation
 Incremental Innovation is the most common form of innovation. It
utilizes your existing technology and increases value to the customer
(features, design changes, etc.) within your existing market.  Almost all
companies engage in incremental innovation in one form or another.
 Examples include adding new features to existing products or services
or even removing features (value through simplification).   Even small
updates to user experience can add value.
Disruptive Innovation
 Disruptive innovation, also known as stealth innovation, involves applying new technology
or processes to your company’s current market.  
 It is stealthy in nature since newer tech will often be inferior to existing market technology.  
This newer technology is often more expensive, has fewer features, is harder to use, and is
not as aesthetically pleasing.  
 It is only after a few iterations that the newer tech surpasses the old and disrupts all existing
companies.  By then, it might be too late for the established companies to quickly compete
with the newer technology.
 Disruptive innovations mostly originate in the low-end segment, in less attractive segments.
However, as the maturity of technology and products increases, they are gradually attacking
the mass market and thus replacing existing services.
Architectural Innovation
 Architectural innovation is simply taking the lessons, skills and overall
technology and applying them within a different market.  
 This innovation is amazing at increasing new customers as long as the new
market is receptive.  
 Most of the time, the risk involved in architectural innovation is low due to
the reliance and reintroduction of proven technology.  
 Though most of the time it requires tweaking to match the requirements of
the new market.
Radical innovation
 Radical innovation is what we think of mostly when considering innovation.   It gives
birth to new industries (or swallows existing ones) and involves creating revolutionary
technology.   
 The airplane, for example, was not the first mode of transportation, but it is
revolutionary as it allowed commercialized air travel to develop and prosper.
 The four different types of innovation mentioned here – Incremental, Disruptive,
Architectural and Radical – help illustrate the various ways that companies can
innovate.  There are more ways to innovate than these four.   The important thing is to
find the type(s) that suit your company and turn those into success.
 Other Types of Innovation
 Product innovation
 Product innovation is probably the most common form of
innovation and it refers to improvements in performance
characteristics and attributes of the product. It can also use
components that differ from previously manufactured products.
 Product innovations are always tangible, can involve radically
new technologies or can be built based on combining existing
technologies in a new way, although they don’t necessarily have
to involve any technology at all.
 A product innovation can be a completely new product that has never been seen before,
such as the fidget spinner, or it can be an improved version of an existing product, such as
wireless headphones.

 It can also be a new feature to an existing product, such as a dynamic turn indicator in a
car or foot massaging shoe insoles that leverage magnetic technology.

 There are some evident drivers of product innovation, such as changes in customer
requirements, need to increase the life cycle of the product, urge to tap new markets or
segments, or simply to enhance the look-and-feel and the convenience of using the
product.

 Product innovation is a great way to improve quality and product reliability to either gain
competitive edge or sustain your position in the market. In addition, it can help reduce
processing and manufacturing costs.
 Service innovation
Service innovation refers to a new or significantly improved service concept, product or process in a
new or existing market. It can be for example a new customer interaction or distribution channel, a
system that improves the delivery process or new solutions in the customer interface.
 Uber is an example of a service innovation company that has created
further growth outside its core business.
 With UberEATS, it has used its strengths and unique capabilities,
such as its brand to enter into adjacent markets.
 The fact that they’re already in peoples’ phones and that they’re
already organizing transportation has helped them to extend their line
of offerings and provide their customers with new value.
 Process innovation
A process combines the skills, technologies and structures that are used to produce products or
provide services.

Process innovation generally refers to the implementation of a new or significantly improved

production or delivery method. It may also be indirectly related to the company’s products and
services, for example in the form of support function processes in HR or finance.

Process innovation can be done by applying new technology or improved method to a process
and is often done to save time, money, or to serve customers better. It often involves new
techniques, equipment, or software, and can often require a cultural or structural change as
well.
 In process innovation, the final product is usually not changed, but the method of
bringing out the product is improved.

 An example of a process innovation is automated replenishment ordering for retail

stores. Previously, an employee had to manually go through all the products one by
one to see how much should be ordered. This is not only extremely time consuming
but easily leads to over- or under-stocking, depending on whether the estimate is
conservative or not.

 A more modern way is to use statistical models to calculate a significantly more

accurate forecast. If automated orders are created by a system, you can simply let
staff double check the pre-calculated order proposals, for example in case the order
happens to exceed a certain threshold value. This can not only save you a lot of time
and money but having better stock levels also improves your ability to serve
customers.
 Technological innovation
 Technology as a source of innovation can be
identified as a critical success factor for increased
market competitiveness.

 Technological innovation involves new or

improved technology, such as new type of
machinery or alteration of some form of
technology into a product, processes or service
delivery methods.

 When talking about incorporating technology into

a production process, for example, it enables
automation which results in higher production
rates, lower cost per unit of output, and enables
more efficient use of materials – reducing
variability and resulting in more consistent
product quality.
 SONOS, for example, has created advanced technology to provide a wireless multi-
room music experience. They initially meant to choose Linux as the technology
platform, but no audio drivers existed at the time, so they had to build it themselves.

 When it comes to technological service innovation, McDonald’s has taken a holistic

digital approach to create engaging customer experiences. Their main strategic
objective has been to use technology to improve the in-restaurant experience and to
create the next generation of drive-throughs and delivery.

 They’ve already said goodbye to cashiers and replaced them with self-ordering
kiosks. They also provide you with an application you can use to order and pay for
your meal before picking it up to avoid the line.
Business model innovation
 In all its simplicity, the business model is how a company functions and earns
money. It consists of core values and resources, strategy, core channels and
target customers, to name a few.

 Business model innovation is a fundamental change in how a company

delivers value to its customers or captures it from the market. In practice, it
often happens through the development of new pricing mechanisms, revenue
streams or distribution channels but isn’t limited to them.
Marketing innovation
 For an innovation to be successful, people need to be able to find it and then benefit from it. The
main purpose of a marketing innovation is to open up new markets or increase market share.
 The ability to connect with your customers is key and there is always room to improve
relationships and customer engagement. Because of the constantly evolving technology and
customer preferences, new marketing innovations are needed to promote both new and existing
products and services.
 Coming up with innovative marketing practices enables you to enhance those customer
relationships in ways they might not even expect. L’Oréal cosmetics company, for example, has
developed its Makeup Genius App to reach a wider customer group and to elevate their
engagement with the brand.
Architectural innovation
 Architectural innovation is a concept introduced by Harvard Business School professor Rebecca
Henderson and dean Kim Clark back in 1990.
 Architectural innovation is described as the reconfiguration of existing product technologies that
creates an improvement in the ways in which components, some of which are not necessarily
innovative together, are combined.
Social innovation
 Social innovations are new practices or technological inventions that aim to meet social needs in
a better way than the existing solutions. These types of innovative solutions can be provided or
funded either by public or commercial entities.

 There are many reasons why social innovations are important, such as to improve working
conditions, provide more education, develop the community or make the population healthier.
Thus, it can be said that social innovations are necessary for extending and strengthening civil
society.