Types Of Innovation: A Guide for Startup Entrepreneurs

Some of the world’s most recognised companies remain at the top due to incremental innovation. Often legacy brands become mainstays only because they never stop making changes.


Innovation is taking two things that exist and putting them together in a new way. Be it any sector within any industry, innovation is the key to persistent and continuous growth. Innovation is the tool used to avoid stagnancy and improve production and productivity by scaling up and becoming more efficient. There are different types of innovations taken up by different firms and organisations. What works for one organisation may not necessarily work for the other. Let’s explore the various kinds of innovations and you can decide which one fits your enterprise the best.

Why is innovation important?

Around the globe, almost all companies spend tonnes of money on research and development. According to a study by Stanford University, it is estimated that the largest 1000 companies in the world spend $782 billion on research and development. Though R&D is not the only measurement of innovation, it still gives us a clear view of how important innovation has become in the current status quo. Over the years, it has been noticed that labour productivity has been declining gradually. This puts extra pressure on organisations to invest more in R&D and come up with better technology and ideas to keep up the same level of output despite the decreasing
productivity.

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Recently, radical innovations have been taking place in the fields of artificial intelligence, 3D printing and the Internet of Things which will transform the way the world functions shortly. 

What are the different types of innovation?

We often feel innovations are scientific and disruptive. However, that is not the case every time. The following types of innovation will help you understand this better.

● Radical Innovation

Radical innovation is a rare form of innovation that takes place once in many years. When we talk about innovation, our mind always runs to new industries and revolutionary technologies like vaccinations, MRI scans, computer technology, etc. Such innovations do not occur every day. It is something that takes years to happen and requires a lot of effort and research work. When radical innovations occur, the world takes a great leap forward and then there is no going back. A prime example of such innovations would be smartphone technology.

Examples of Radical Innovation

The industrial revolution gave us hundreds of examples of radical innovations in terms of machinery used for the mass production of various goods from clothes to books to medicines. Recently, radical innovations have been taking place in the fields of artificial intelligence, 3D printing and the Internet of Things which will transform the way the world functions shortly. Smartphones, as mentioned before, are the best example of radical innovation. Being a compact device that allows us to communicate with people, watch videos on the screen, listen to music, shop goods with a click, search the web page with instantaneous replies, smartphones have changed the way of life radically.

● Architectural Innovation

Architectural innovation is also known as ‘recombinative’ innovation. Its very essence is to draw an approach, technology or methodology from one field and bring it to another. It is to bring already existing things and putting them together on one platform. Architectural innovation is found almost everywhere. Nearly 40% of the patents registered over the past 150 years fall under the ambit of architectural innovation and this percentage just keeps growing every year. This innovation helps in increasing new customers as long as the new market is receptive. The risk involved in architectural innovation is usually less as the technology is reliant.

Examples of Architectural Innovation

One of the best examples of architectural innovation is Uber. There was nothing unique or new about sharing rides, geolocation or freelance cab and auto drivers. However, once they were put together, they became a large market disrupter in the taxicab
industry and changed the entire taxi landscape across countries.

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  • Incremental Innovation

Most of the innovations you come across are incremental. Incremental innovation occurs when a chain of small and otherwise not so significant improvements turn into a large-scale organisational change. It utilizes your existing technology and increases the value to the customer within your existing market. It is the most accessible form of innovation and can be performed within small budgets without any large teams or reorientation of the business strategies.

Examples of Incremental Innovation

Some of the world’s most recognised companies remain at the top due to incremental innovation. Often legacy brands become mainstays only because they never stop making changes. For instance, let’s look at Amazon. The reason why they are at the top of the world’s leading businesses is that they keep perfecting their services. They keep experimenting with their web interface, resulting in daily optimisation of the user experience.

● Disruptive Innovation

Disruptive innovation is also known as stealth innovation which involves applying new technology or processes to your company’s current market. You can either create a new market or enter an existing market and change how consumers interact with it. The newer technology is usually inferior, harder to use, more expensive and has fewer features which are why it is stealthy. Only after a lot of trial and error, it surpasses the old technology and disrupts all existing  companies. The existing companies are usually not able to compete with the new tech and many of the shutdown post disruption.

Examples of Disruptive Innovation

Apple’s iPhone disrupted the entire mobile phone market. Before the disruption, most phones relied on buttons, keypads or scroll wheels for user input. The iPhone came up after years of technological movement with touch screens, a simple user interface and several third-party applications.

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Some of the world’s most recognised companies remain at the top due to incremental innovation. Often legacy brands become mainstays only because they never stop making changes.

  • Business Model Innovations

Profit Model

Profit model innovations aim to bring existing offers in new ways. They usually are disruptive innovations when it comes to traditional customer relationships and require an in-depth knowledge of customers and their needs.

Network Model

Network innovations become important when supply and value chains become more complex and interconnected especially post globalisation. It creates new ways of taking advantage of the processes or technologies of other companies.

Structure Model

Structural innovations look into an organisation’s internal assets and how they can be put to use to create new value. Value can be created by improving internal software and processes such that it improves efficiency and productivity by amalgamating talent and equipment. Managerial innovations also fall into this category with changes in work culture and work process to attract a better quality of talent.

Process Model

Process innovations involve changing the way you go about your business forming the core competencies of the business. They help you stand out from the crowd and stand tall against rivals. These innovations also have a long-lasting impact on efficiency, employee engagement and empowerment.

● Product Innovations 

Brand

Branding innovations help a company distinguish itself in a competitive market and reach a larger consumer base with unique selling points, especially through advertisement and employee engagement.

Product Performance

Product performance innovations are done by expanding on a product’s features, improving quality or creating something unique such that it adds value to the product line.

Service

Service-related innovations aim to improve attraction towards your product or service, by making it easier to use, improving customer experience, fixing common problems, etc. Service innovations may not seem important as compared to the product but they
can make your brand stand out.

Product System

The product system innovations usually include complementary products and services that can add value to the primary product. These are products that can be sold together or integrated into the primary product, often services are a popular option.

Channel

Channel innovations focus on how you deliver your offering to consumers. For example, recently, E-commerce turned out to be a channel innovation that made shopping much more convenient and hassle-free. These innovations focus on how consumers get what they want in an easy, safe and faster way.

Customer Engagement

Building long-lasting relationships with your customers will need a thorough knowledge of your consumer base to form a connection with them. This builds trust and confidence in your company or brand.

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Conclusion

The above classification of innovations is just a few amongst the many that exist. However, there is no set rule that your innovations must fall into these categories or that you can only innovate in one of the above ways. Innovations are subjective, they can be spread across these categories or stick to one. As long as they add real value to your product or service and improve productivity, innovations are always a blessing.

Your organisation may need different innovations as compared to some other company. Innovations vary across industries, sectors and company goals and targets. What works for you may not work for someone else. When you conduct your research and development and trial orders, make sure you go with what benefits your company the most and helps you stand out from the crowd. Make sure your approach ends up effective and does not create mayhem in the workplace. With the world rapidly becoming more productive and competitive, innovation has become a necessity and priority. See what fits your business the best and get going.

Smruthi Krishnan
Smruthi Krishnan
Smruthi interviews and writes on inspiring entrepreneurs and the success stories of start-ups. She is currently pursuing Economics major from Delhi University.

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