The 4 Types Of Innovation – Advantages For Your Organization And Impact On The Market

Why do we need to continuously look for new ways to do things if the traditional methods work? And what is the drive that makes big companies prioritize innovation, make changes to their vision, and to the products they sell? The answer is simple. Everyone is pursuing growth!

We live in an era of rapid technological progress in addition to continuous changes in market dynamics, and consumer behavior. Those changes have made innovation the only way to stay in the game.

In an interview with John Chamber, Cisco Chairman, he stated that all businesses need to figure out how to change their entire company to accommodate new technologies; otherwise, he clarifies, that 40% of them will not survive ten years from now.

Based on a study by lab25, an innovative company from a consumer’s perspective is a company that comes up with new ideas for their products, listens to customers, and keeps improving their current services. It also states that 83% of customers say that it is essential that the company they buy from is innovative; hence innovation drives consumer decision making.

Types of Innovation

To distinguish between the four types of innovation, we need to understand how well-defined is the problem we’re tackling, and the necessary knowledge domain or field of experience required to find a solution. Based on these two factors, we can identify the type of innovation we need and the means to get there.
In the following part, we are going to explain each innovation type.

Sustaining Innovation

Sustaining innovation is a type of innovation used to solve a well-defined problem that requires a specific skill domain to be solved. This innovation maintains your presence in the market and doesn’t require new technology.

Sustaining innovation means to create, amend, and experiment continuously. Not just to address a particular problem, but also to keep improving your operations, products, and market position.
Sustaining innovation can be managed through traditional R&D, design thinking processes, brainstorming, roadmapping, and acquisitions.

It is worth noting that collaborative models outpaced traditional R&D in sustaining innovation. Based on PWC’s re-inventing innovation publication, companies embrace open innovation by 61%, design thinking by 59%, and co-creating with customers, partners, and suppliers by 55%. Then comes traditional R&D by 34%.
An excellent example of sustaining Innovation is Pfizer, the largest pharmaceutical company by revenues. The company expanded to be a research-based company through innovation acquisitions.

Breakthrough Innovation

Despite the importance of sustaining innovation, it might not be enough to create a significant change that gives you an advantage over your competitors. Alternatively, breakthrough innovation uses new technology and sometimes a new business model to change a product or a process; this change usually results in a shift in the market that would take your competitors quite some time to catch up. Breakthrough innovation is typically related to your core offerings.

Some researchers call it radical innovation since breakthrough innovation does a paradigm shift in seeing the problem; it usually takes an unprecedented direction for solving the problem to the extent that it sometimes fulfills a need that the market never knew existed.
Like anything new, breakthrough innovations usually need some time to be understood and adopted by the market. However, when it does, it starts a series of changes to the market that reshapes the consumer behavior.
Open innovation is a perfect tool for creating breakthrough innovations, as it allows for a wide range of expertise and skill domains to work together on the problem. And usually, it results in the most novel and original solutions for a persistent problem.
An example of breakthrough innovation is Dyson, adopting new technology to create the first bagless vacuum cleaner, which significantly improved their market position.

Disruptive Innovation

The problem in disruptive innovation is not well-defined though the solution lies within the company expertise or skill domain.
In contrast to breakthrough innovation, disruptive innovation disrupts the existing market, significantly changing it by introducing new technology.

The concept of disruptive innovation was introduced by Professor and business consultant, Clayton Christensen, who defines it as an innovation that creates a new value network either by creating a new market or entering an existing market and changing it by eliminating existing players.

Disruptive innovation doesn’t disrupt the market overnight; it usually gets introduced to the market as a minor product without getting much attention from existing players or consumers. However, as non-consumers start adopting this innovation and regular consumers switching to it, a new market is created, fundamentally affecting the existing market and usually replacing it.

One tool to be used for disruptive innovation is innovation labs, where you engage your employees in creative collaboration to work on the problem on a long-term basis. Other tools are VC models or lean launchpads. Also, 15% 20% rule, where you make your employees spend 15-20% of their time creating and experimenting with new projects.

A famous example of disruptive innovation that used a new business model is Netflix, and the change they made on the home entertainment industry, also AirBnB, They disrupted the existing model of DVDs, introducing subscription-based streaming services. And later on, producing content themselves.
Therefore, disruptive innovation does more than just change a product or service; it also innovates a new business model.

Basic Innovation

Basic or incremental innovation is the continuous research effort done when you are not solving a defined problem, and the skill domain of the potential solution isn’t specified.
Basic innovation is as vital as other innovation types since continuous research protects your organization’s ability to innovate. It could also be the starting point of many significant innovations.

The good thing about basic research is that you can plan it based on your organization’s resources; it can take different forms as attending conferences, holding internal seminars, or investing in a lab if you have the resources.
Amazon, for example, established a perfect model for basic innovation on its website interface, with continuously amending, testing, and optimizing its interface on a daily basis.

In conclusion, innovation has become an integral part of company growth and even survival. Fortunately, innovation works in many directions; you can start from inside your company or outside your organizational boundaries. Whichever way you choose, you need to be continuously innovating and experimenting. One way to start is to reach out to solutions that make managing innovation programs simpler, easier, and more streamlined for you.
Feel free to contact us to schedule a demo to talk more about your innovation needs and what we can do to help