Innovation. A word that moves the world. Literally. Because without innovations, there would be neither progress nor change. Big, drastic changes in the world would not have been possible without innovation. The industrialization needed the invention of the steam engine, digital transformation the internet. Humans always strive for further improvement and change. With this, mankind is the origin of innovation.
But what is innovation? What exactly does this word mean? One definition of innovation that we think is one of the best comes from Jürgen Hauschildt (2016):
“Innovations are qualitatively new products or processes, which differ “noticeably” – however that is to be determined – compared to a comparison state.”
For us, innovation means change, reform, introduction of something new and often the realization of a novel, advanced solution to a specific problem.
There seems to be a fair amount of meanings for this one word. Even science seems to be disunited on this: These are the two opposing sides:
- Innovation is a novelty or renewal of an object or a course of action
- Innovation is change and application, which means innovation must first be invented, but introduced, used and applied too
This is precisely where the crucial difference between innovation and invention lies. Especially in English-speaking countries, “innovation” and “invention” are often used interchangeably. However, looking more closely at the meanings, it becomes clear that an invention can only be the basis for innovation. Inventions begin with an idea and the development of a prototype. For an innovation to emerge, the prototype must become a product that is brought to the market and used.
What are the different types of innovation?
Without innovation, no company can survive longer then a few years. Just because a corporation is big, does not mean it is undisruptable.
In addition to the object of innovation, it is also useful to distinguish for which scope an innovation. Additionally, product, service and business model innovations can be divided by their market impact. These two attributes can be used to differentiate the following types of innovations:
- Performance innovations are new ideas for a already well-known market. Often an improvement of the existing offer is made possible by new technologies.
- Application innovations open up a new market for an already existing idea. New and additional customers can now use an existing offer.
- Incremental innovations are advancements/ the optimization of existing products, services or business models. The adjustments often serve to reduce costs, optimize customer benefit or reposition the market.
- Radical innovation means that completely new ideas are translated into never seen before products, services or business models. Their impact on hole markets can be extreme.
- Sustaining innovations help companies defend their own market position and remain competitive. Any innovation that enhances a supply is therefore a sustaining innovation, whether radical or incremental.
- Disruptive innovations are those that shape new markets or disrupt established ones. Frequently, disruptive innovations are possible through new technologies. The car for example was a disruptive innovation regarding transportation 100 years ago. Whether an innovation is disruptive often depends on the perspective. While the electric car is a radical but sustainable innovation for the automotive industry, it can be disruptive to the petrol industry, because their product is no longer needed.
- Agile innovation means implementing ideas through collaboration and iterative prototype circles/ loops. With the adaptability of agile innovation processes, innovations can be brought to market faster and implemented more seamlessly.
In addition, the trigger for an innovation can be distinguished. So what triggered the innovation? Two main possibilities: Market-pull, where innovations are initiated by customer request, and technology-push, where new technologies enable new applications or products which then are marketed accordingly.
How can innovation processes be implemented in a company?
Agile innovation management is key to innovation success. This is where the different types of innovation come together. There are differences in the people and resources with which ideas are collected and implemented. In Closed Innovation, organizations only involve internal resources in the innovation process. This can be done in the form of classic idea management or via internal innovation projects and knowledge sharing using innosabi spark. If a company also opens its innovation processes to external partners, this approach is called open innovation. With innosabi software customers (innosabi telescope) or suppliers and research institutes (innosabi orbit) can be involved in the development of new innovations that way. Interested?