20 Types of Innovation You Must Know to Drive Breakthrough Change to Your Industry

Innovation is a much more complicated concept than many people realise. It can be divided into a few broad categories:

• Marketing Innovation;
• Technological Innovation;
• Process Innovation.

However, there are many, many sub-categories of innovation, any or all of which may be important to understanding your organisation’s real position.

We’ll go into some of the most important below.

Market Innovations include both incremental innovations in the marketing process (we’ll address incremental innovation below) and ‘new market innovation’.

New Market innovation

New Market Innovation is a type of disruptive innovation (again, see below) which either taps into a completely new market for a good or service, or so completely disrupts the extant market/value network as to effectively establish a new market structure.

As there are very few truly ‘untapped’ markets in today’s world, most ‘new market’ innovation centres on turning non-consumers of a particular good or service into consumers – creating either a need or the awareness of a need where there was none before.

Incremental Innovation

Incremental Innovation – the majority of the innovation one sees today is ‘incremental’. Existing technologies and processes are used with existing markets, but one or more aspects of the system are changed in a way that hopefully, is more profitable. This might involve adding new features to an existing product, or even removing them. It might involve a change to the UX of your website or changing some aspect of your marketing efforts.

The key feature in incremental innovation is that the basic relationship structure remains unchanged. You are offering ‘the same thing, only better’.

Sustaining Innovation is a type of incremental innovation which essentially keeps an existing brand/customer relationship strong. It seeks not to create new products, processes or markets, but to add value to the existing system.

Typically, competing organisations engage in a kind of ‘arms race’, attempting to match or exceed each other’s sustaining innovations to maintain their market share. This is at the core of the ‘free market model’ taught in school.

Radical Innovation is the exact opposite. Some people unfamiliar with the terminology might think of this as ‘real innovation’. Radical innovations don’t merely introduce new products, they create new industries, or make existing ones unrecognisable.

The first practical steam engine was a radical innovation – it led to the industrial revolution, which changed the way machinery, labour and the basic social structure of the world were handled. The same can be said for the internet. Radical innovation, by definition, changes nearly everything it touches.

Disruptive Innovation is a frequently misused term. It is not the same as radical innovation. It is subversive, but not ‘revolutionary’ in its first instance. It uses existing markets, but introduces a new product or service which is an alternative to many extant products or services.

The iPhone is a good example. A disruptive innovation is usually an awkward fit at first, and it is often dismissed as an underdog. However, if it catches on, it takes over that market, and begins redefining the business environment incrementally around it. And like all of the iPhone’s forgotten precursors, most disruptive innovations flop.

Breakthrough Innovation is another term which is often confused with ‘disruptive innovation’. A breakthrough innovation is generally only disruptive inside the organisation making it. It might make their offering more effective, more marketable, or more profitable in some other way, but it neither redefines the company or the industry.

Airbnb can be seen as a breakthrough innovation – it is a unique way of bringing an existing product – rental guest accommodation – to an existing market. And while it has spawned a host of imitators and competitors, it hasn’t shaken the foundation of the hospitality industry.