Innovation is now a top priority for the majority of business leaders. All organizations need to build an innovative infrastructure including tools, systems, people, culture, and processes to be competitive in the modern marketplace. At the highest level, it can be defined as making something new that creates value. However, it’s essential to understand various innovative approaches to determine which ones will provide the most value.
The 4 Types of Innovation
Because the environment and the needs of your customers are constantly changing, you need to be able to improve different areas of your business to solve emerging problems and to keep creating new value for your customers. Low-market impact ideas are easier to implement, with compounding effects over time. High-market impact ideas tend to be difficult, costly, and risky to develop but arrive with high potential value.
Thus, knowing what types of innovations there are for an organization to pursue can help you discover the ones that are most suitable for your business.
1. Disruptive Innovation
Disruptive innovations are those that involve making bolder changes that carry more risk but also the possibility of more lucrative returns. It is a theory that refers to a concept, product, or service that creates a new value network either by entering an existing market or by creating a completely new market.
It comes with effective uses of new technology and high-impact results. There are quite a few examples of disruptive innovation, one of the more prominent being Apple’s iPhone disruption of the mobile phone market. Prior to the iPhone, most popular phones relied on buttons, keypads, or scroll wheels for user input.
2. Incremental Innovation
This approach involves making consistent improvements to an existing product or service over time. Most innovations are incremental, gradual and continuous improvements in the existing concepts, products or services in the existing market. Examples include adding new features to existing products or services or even removing features (value through simplification). By continuously improving products, services, and business operations, organizations can reduce stagnation and consistently grow market share.
3. Sustaining Innovation
Sustaining innovation is the opposite of disruptive innovation as it exists in the current market and instead of creating new value networks, it improves and grows the existing ones by satisfying the needs of a customer. Sustaining innovation is the best way to protect an organization’s position in a market. Incremental innovation focuses on small improvements to existing products and services to increase value or customer satisfaction. Sustaining innovation focuses on larger changes to gain or maintain a market-leader position.
4. Radical Innovation
Radical innovation typically utilizes a technological breakthrough that transforms industries and creates new markets. It gives birth to new industries (or swallows existing ones) and involves creating revolutionary technology. This type of innovation completely changes how an organization interacts with the marketplace. 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.
By implementing all four, a company ensures short-term success by optimizing its current products and differentiating them from competitors while also protecting long-term sustainability. Innovation applied properly can be a strategy for both present and future success.
If your innovation strategy is struggling or failing, consider whether it’s because you’ve locked yourself into a single approach. There are always new problems to solve; learn to apply the solution that best fits your current problem.