The simplest way to categorize innovation is into two types – incremental and radical. Incremental innovation is an improvement in an existing thing (e.g. product, process or service). Radical innovation is finding an entirely new way of doing something. For example if you had been making spectacles in the 1950s then plastic lenses instead of glass lenses would have been an incremental innovation. Contact lenses or laser eye surgery would have been radical innovations. Some writers include a third category – disruptive innovation, where the entire industry is disrupted (e.g. Uber) but it seems to me that this is just a variant of radical innovation.
Larry Keeley in his excellent book, Ten Types of Innovation, divides all corporate innovations into ten categories. These are:
- Profit model – how you price your product or service and make money. E.g. Gillette innovated with the razor and blades model.
- Network – external relationships and partnerships. E.g. Toshiba collaborated with UPS to repair Toshiba laptops.
- Structure – how you organize your company. E.g. W. L. Gore has a renowned ‘flat lattice’ where teams form without formal structure.
- Process – doing things differently. E.g. Zipcar radically changed the car hire process.
- Product performance – new products or features. E.g. Dyson launched a transparent vacuum cleaner with no bag.
- Product system – how your product connects. E.g. Mozilla used an army of independent developers to create Firefox and its plug-ins.
- Service – additional support and enhancements. E.g. Zappos empowered customer reps to send flowers or order from a competitor.
- Channel – how you get to market. E.g. Amazon’s Whispernet service allows users to order and download a Kindle book in one minute.
- Brand – the promise you make. E.g. Virgin. From Cola to Space travel, all the many Virgin companies share a fun, challenger image.
- Customer Engagement – the client experience. E.g. Blizzard Entertainment’s World of Warcraft gives players a collaborative gaming experience.
Keeley advises that you analyse your current innovation offerings and identify opportunities in other categories. He argues that the most successful companies innovate in several different categories.
It is clear that a firm can innovate in each of its structural functions – e.g. in Sales, Marketing, Operations and HR. So each department can have separate innovation objectives and metrics. In fact since every product, service and process in the business will be made better or replaced at some stage you can argue that there an infinite number of possible innovations and types of innovation. Everything can be innovated.
Perhaps it is more helpful to say that there are two types of innovation – successful and unsuccessful. Successful innovations improve value for the client and the business. Unsuccessful ones do not. It varies by industry but generally the majority of new product launches fail to meet their objectives and that does not include all the ideas that fell by the wayside or did not pass through the gating process. Innovation is a difficult, costly and risky game however many ways you categorize it. Nonetheless, it remains an essential game to play,