Types of Innovation – A Simple Guide In Just 4 Points

Introduction

Innovation has become critical for the survival and growth of a business in today’s world. Given the ever-increasing competition and rising complexities, a company’s success largely depends on its ability to innovate. Consequently, the concept of innovation and the types of innovation are widely-discussed topics in corporate circles.

According to an IDC study, innovation will become almost synonymous with disruption by 2022. Further, the report says that 40% of CIOs will be responsible for co-leading innovation in their organizations by then.

From product management to customer experience, innovation is applicable in almost all areas of a business. This blog talks about the various aspects of innovation. It starts with the critical question – what is the definition of innovation and explains the various types of innovation with examples.

1. What is Innovation?
2. Why Innovation Matters?
3. Different Types of Innovation
4. Ten Types of Innovation in Doblin’s model

1) What is Innovation?

Innovation refers to introducing a new idea, process, or product aimed at enhancing business efficiency. In other words, it is the application and development of ideas or concepts to improve existing processes, techniques, or methods.

Netflix, the international video streaming company, is often regarded as one of the best examples of innovation in business. Its innovative business model has completely disrupted the traditional movie rental business. With its different types of innovation strategy, the company has become the largest and leading one in the entertainment industry now.

2) Why Innovation Matters?

Value creation is one of the significant outcomes of the innovation process. Continuous innovation opens up new revenue opportunities and streamlines existing processes. It enables companies to withstand disruption and become a forerunner in introducing new technologies. In a nutshell, innovation has become inevitable for companies to thrive in the competitive landscape.   

3) Different Types of Innovation

Innovation can be disruptive and radical or incremental and sustainable. It can be identified in many different formats and sizes in a business setting. The Innovation Matrix is a commonly-used visual representation to describe the aspects of innovation. According to the Innovation Matrix, the four types of innovation are Architectural Innovation, Radical Innovation, Incremental Innovation, and Disruptive Innovation.

4) Ten Types of Innovation in Doblin’s model

There are multiple types of categorization possible for the concept of innovation. Doblin’s model is one of the majorly accepted innovation frameworks in business circles. This model explains ten types of innovation from a practical perspective rather than giving a strategic overview. Listed below are the various types of innovation with examples, as explained in Doblin’s model. The types of innovation are broadly categorized as:

a)  Configuration – Business Model Innovations

b)  Offering – Product Innovations

c)  Experience – Marketing Innovations

• Business Model Innovations

This type of innovation aims at the workflow of a company and its core systems that form its foundation. 

1] Profit Model Innovation

This refers to innovation in terms of the revenue model. It aims at developing new streams of revenue generation by disrupting the traditional models of business. A typical example of this type of innovation process is Netflix. A deeper understanding of customer needs and expectations is critical to achieving profit model innovation.

2] Network Innovation

Network innovation falls under the category of open innovation. It refers to the company’s approach towards the different stakeholders and the processes behind those partnerships. In simple terms, it talks about taking advantage of other company’s technologies, products, processes, channels, etc. to create more business value. Given the complexities evolving in the supply-chain network, this type of innovation has become increasingly popular now.

3] Structural Innovation

Structural innovation looks at adding value by improving the company’s tasks and processes on a base level. From marketing to the IT department, there would be various tasks that are unnecessary or can be outsourced. Structural innovation deals with identifying such areas and optimizing the available resources and existing processes. Managerial innovation is a branch of structural innovation. Google’s ’20 % time policy’ is a typical example of structural innovation.

4] Process Innovation

The process innovation model looks at improving the processes in the way in which the business is carried out. It aims to enhance business efficiency by reducing production time or introducing cost-effective processes. Toyota, McDonald’s, etc., are typical examples of companies that adapt process innovations and reap its benefits. 

• Product Innovations

This innovation category addresses what the company offers to its customers in terms of service, product, experience, or value.

1] Product Performance Innovation

This type of innovation refers to the different features that add value to the company’s product. It deals with adding innovative features to an existing product or introducing a novel product.  It addresses innovation in a wide range – from the appearance to its efficiency.  The introduction of Gorilla Glass is a typical example of product performance innovation.

2] Product System Innovation

Product system innovation is as important as a product performance innovation. It also deals with what the company offers. However, product system innovation refers to the complimentary offers that add value to its core product. For example, Nike has introduced Nike+, an app that provides seamless access to its various products.

• Experience Innovation

This type of innovation is focused on the kind of experience that the user has while interacting with a company’s product or service. Unlike the other two categories, experience innovation deals with customer experience.

1] Service Innovation

 Customer service is one factor that helps the product to stand out in the market. Service innovation is focused on improving the ‘customer service’ by enhancing the product offering or service. For example, making the product more comfortable to use or promoting an overlooked feature will lead to better customer service.

2] Channel Innovation

This type of innovation addresses the ways by which the product is offered to the customers. It deals with the various channels through which the prospective customers get information about a company’s product or service. The emergence of e-commerce companies has hard-pressed retailers to innovate in this direction.

3] Brand Innovation

It deals with the company’s brand. The significant outcome of brand innovation is that it helps to win over competitors or substitutes. To frame a great brand innovation strategy, the company should consider various aspects, including customer touchpoints, company values, brand positioning, and more.

4] Customer Engagement Innovation

This level of innovation is all about interacting with the customers more efficiently. It enables companies to understand customer expectations and learn what they think about their product or service.  Apple is a classic example of companies that take advantage of customer engagement innovation. 

The Bottomline

In the current business world, most of the successful companies are the best innovators as well. In order to thrive in the current business landscape, organizations should identify areas where they could innovate. It is no longer a luxury but a necessity for organizations. Doblin’s model is one of the numerous innovation frameworks that help businesses to innovate holistically.

Conclusion

Innovation management is not just about managing the idea and its planning but has much more to it. If you have a path-breaking idea, it will need the nourishment of proper management to flourish. So, it becomes paramount to learn the entire innovation management process for successful execution. If you want to make a career as a Creative Leader, Jigsaw Academy’s 5.5-month PG Certificate Program in Design Innovation and Strategy can be of help!

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