Innovation Explained: Your Guidebook to Defining the Various Types of Innovation
Updated: March 11, 2022
Changing the Thinking Behind What Innovation Really Means
When you think of the word “innovation,” what do you think of? Is it a new technology? A new trend? Does it involve detailed or technical engineering? Is it a new product? Is it a new service? Does it completely change how we think or act and go about our day?
Contrary to what some people think, innovation isn’t just about building new technologies. It isn’t only about creating a new product or service either.
Innovating comes in many forms, but we often confuse innovating with inventing.
So, what’s the real difference between innovation and invention?
Innovation vs. Invention: What’s the Difference?
Unfortunately, innovation and invention are overlapped. It’s easy to assume that an invention is an innovation, but that’s not always the case. In fact, not every invention becomes an innovation.
Invention is defined as building a new idea, whereas innovation is making a significant contribution to the public. (Source: Business Insider)
Inventions are new ideas put into practice or tangible form, while innovations cause a change of behaviour in how we do something. So, just because you have an invention doesn’t mean it’s innovative.
For innovation to be successful, it needs to change how we do things. Innovation involves more than just building something. It consists in getting people to use the invention too.
Take the parachute, for example.
Credits go to Leonardo DaVinci for inventing the parachute back in the early 1600s, but the parachute wasn’t officially used on a large scale until the invention of the airplane and the start of the First World War. (Source: ThoughtCo)
The parachute was an invention, but it had to wait until the early 20th Century to become an innovation – over 300 years later.
Innovation doesn’t need to be connected to an invention. Whether creating a marketplace or adding a new product feature, both are classified as innovations.
Types of Innovation
Innovation comes in all shapes and sizes. Remember, innovation isn’t only about building new technologies. Numerous types of innovation drive our society and economy forward, and many don’t involve creating an idea from scratch. Thousands of innovations start with a product that already exists.
In 1990, Harvard Business School Professor Rebecca Henderson and Dean Kim Clark created the Henderson-Clark Innovation Model. Designed to highlight the distinction between a product’s or service’s components and architecture, the Henderson-Clark model introduced four types of innovation:
- Architectural Innovation
- Incremental Innovation
- Radical Innovation
- Disruptive Innovation
Each type of innovation highlights different routes to innovating. Some are big and bold, completely changing the way an industry functions, while others often go unnoticed, positively impacting a business’s revenues and societal gain.
Architectural innovation happens when existing products are redesigned to service a new market. Some redesigns are basic, like making a product smaller, while others are more complex. When a company redesigns components to improve the overall product or service, they are innovating. An architectural innovation changes the product or service without changing the purpose. (Source: JSTOR.org)
Architectural innovation is a more accessible form of innovation for businesses and innovators to achieve, and it’s been proven to be a powerful business model. This innovation makes the product or service significantly better without changing the core value.
Architectural Innovation Examples
Multiple architectural innovations have been created to benefit society. Here are just some examples of architectural innovation:
The Desktop Photocopier
Before desktop photocopiers, stand-alone copiers were the only available option. Stand-alone photocopiers stood high and took up lots of space. Because of this, stand-alone copiers only benefited large corporations. Desktop photocopiers were innovative to the public simply because they were smaller, saving small/medium-sized businesses space. The desktop photocopier made it easier to use and applicable to a broader market without changing the product’s core value. (Source: PROCTO)
Before laptops, desktop computers were the only option. The invention of the laptop provided portability, allowing users to have a computer on the go. Although not wholly practical for users requiring more extensive personal computing power, laptops have dominated the computer market becoming standard for office workers and individual users alike.
Global Positioning Systems (GPS) on Smartphones
Before the smartphone, a GPS was often a big clunky brick that you’d have to install onto the inside of your car’s windshield or was built into the vehicle. The GPS was designed specifically for vehicles and started as an expensive luxury item for drivers who didn’t want to use maps or printing directions before a road trip.
Today, GPSs are standard apps on almost all smartphones. By downloading an app like Google Maps, nearly anybody with a smartphone now has a global positioning system, whether walking, biking, or driving.
These examples of architectural innovations don’t change the primary components of the product or service. They adjust the design to provide innovative benefits.
Incremental or Sustaining Innovation
Unlike architectural innovation, incremental innovation (also called sustaining innovation) improves and upgrades existing products or services for existing markets over an extended timeframe. These improvements increase the product or service’s competitiveness by providing a more efficient or productive model than in the past. (Source: RSNA)
Incremental innovation is the most common type of innovation that businesses and firms use to compete in the marketplace. However, because incremental innovation isn’t fancy, it’s often overlooked. Incremental innovation looks boring – only tweaking a product or service occasionally. Still, it is one of the simplest forms of innovation to produce with lower risk. Adding value to a well-known and purchased product or service often goes a long way in sales if the main benefit isn’t completely changed.
In most industries, incremental innovation isn’t optional. It’s a necessity. Businesses in competitive marketplaces are continually adding new functions or features to their products/services because if they don’t, they’ll die.
It’s common to see added features yearly, but sometimes it takes longer or shorter depending on the business and the marketplace it’s competing in.
Incremental Innovation / Sustaining Innovation Examples
Examples of incremental innovation are everywhere. Anytime an upgrade to a previous product or service is introduced, it’s incremental innovation.
Here are two examples to clarify:
iPhones are a prime example of incremental innovation. At least every year (if not more), Apple releases a new iPhone model upgrading the previous year’s phone. By adding new features and specs, such as a larger (or smaller) screen, updated camera, or fingerprint recognition, iPhones are continually improving on the product they have, remaining competitive and innovative.
Fitbits are another example of incremental innovation. Created in 2007, the Fitbit device allows users to track their health by wearing a wristband that records personal data such as steps taken, heart rate, and overall sleep. Since its creation, the Fitbit has seen numerous upgrades and added health data to track – all forms of incremental innovation.
Radical innovation creates an entirely new product, service, or system and provides it to a new market.
Radical innovation, along with disruptive innovation (more on that later), is what most think of when they envision innovation. It’s a high-risk, high-reward situation for businesses, as changing how a system works doesn’t happen overnight. It takes years and sometimes decades to change how a whole marketplace functions.
Radical innovation often replaces current products or services with brand new product or service categories – creating an entirely new market (Source: Design Council).
It’s also not surprising to see backlash coming from companies losing business or the customers who are too used to what they have.
Radical Innovation Examples
Officially launching in 1998, Google is a well-known example of radical innovation.
With the widespread use of the internet just beginning and the steady creation of thousands of websites, the internet needed a directory to help users search what they were looking for online, and that’s just what Google does best. Compared to other online search directories like Yahoo, Google’s PageRank algorithm and simplistic design made Google’s search engine the most popular (Source: Search Engine People).
Search engines were brand new at the time, and as the internet took over, Google’s search engine eventually replaced traditional directory methods such as phone books like Yellow Pages.
In short, Blockchain technology is a data structure that records transactions between multiple computers. The blocks of data created are interconnected, forming a chain of records not controlled by a single authority and open to any blockchain member.
Once information is stored, the blockchain secures each transaction with a virtual signature to prove its authenticity. The data is then stored, making it tamper-proof, and can’t be changed. This ensures higher security, transparency, and decentralization for users and company operations.
Blockchain is an entirely new technology that can be used in any industry, making it a radical innovation for virtually any business as digital transactions can be inserted into the blockchain.
Many industries use blockchain technology, such as banking, finance, and telecom. The cybersecurity industry is also beginning to use blockchain as well.
Discover how organizations use blockchain for cybersecurity in our article: The Benefits and Vulnerabilities of Blockchain Security
Disruptive innovation takes up the last section of the Henderson-Clark model, referring to a process that creates new customer value by entering an existing market with a new product or service.
Harvard professor Clayton Christensen created the idea behind disruptive innovation, describing it in the Harvard Business Review and in his book called The Innovator’s Dilemma (Source: HBR).
Created from scratch, disruptive innovations start as niche processes, products, or services only wanted by a small number of customers within the marketplace. They do not appeal to the mainstream market – at least not yet. However, over a long period, the disruptive innovation catches up to its competitors and flips the market upside down on them, becoming the favoured product or service instead.
Unlike radical innovations, disruptive innovations are the underdogs of the market. They start looking weak and powerless but turn the fight for market domination to their advantage over a more extended period.
But how is this possible? How does a small startup revolutionize the marketplace when stacked up against market leaders and all their resources?
According to the theory, market leaders don’t focus on massive changes with loads of risk. Instead, they focus more on small minimal product or service enhancements over more extended periods (see Incremental Innovation above).
This opportunity gives smaller firms the advantage to flip the market in their favour by creating an alternative solution for the marketplace’s problems. Slowly, the market leaders lose customers to the small innovator until eventually the market leader copies the innovation – but often, it’s too late at that point.
Disruptive Innovation Examples
Netflix is a go-to example for disruptive innovation. Created in 1997, Netflix was a rent-by-mail DVD service where users could order movies to rent online then receive them in the mail to watch. It wasn’t until 2007 when Netflix introduced their online movie streaming service. Streaming changed the way viewers could watch videos (Source: Interesting Engineering). Netflix caused a massive shift in the movie renting industry, causing giant companies like Blockbuster and Movie Gallery to go out of business. Today, only one Blockbuster is left (Source: Business Insider).
Showing that a product, service, idea, or company can be innovative in various ways, Fitbit returns. Fitbit doesn’t focus solely on incremental innovation. When the company first started, the original Fitbit was a step tracker that you’d clip onto the side of your belt.
However, when Fitbit launched its wristband type tracker (the Fitbit Flex), it became a disruptive innovation, entering the health tracking market with an innovative product and changing how users tracked their health. The Fitbit Flex made it easier to track your health data and allowed users to track other health information such as heart rates and sleep cycles (Source: Dummies). Today, the majority of health trackers have turned into smartwatches.
Fitbit’s app and food database are also disruptive innovations themselves. With the ability to track all your health metrics in one place, Fitbit made it much easier to get a better sense of your overall health. Its food database also made tracking how many calories and macronutrients a person needs in a day much more manageable.
More Innovation: The Ten Types of Innovation from Doblin
Ready for more innovation?
Published in 2013, Doblin’s Ten Types of Innovation Framework offers different types of innovation than the ones previously mentioned (Source: Doblin). These types of innovation aren’t just about creating new products or services. Doblin’s framework shows innovation can happen almost anywhere within a business.
All ten innovation types are separated into three different categories including:
- Configuration – Focused on how the enterprise and its business system(s) work internally
- Offering – The actual product or services being offered
- Experience – How the enterprise and its business system(s) function from the customer’s external point of view
And each of the ten different types includes:
- Profit Model
- Product Performance
- Product System
- Customer Engagement
Profit Model – How Enterprises Make Money
Profit model innovation means finding new ways to make money with the resources you have.
Amazon Web Services (AWS) is a prime example of an innovative profit model.
Amazon is known as the go-to online retail store, so if you’re not familiar with the cloud computing market, it may be surprising to hear they offer web services too. In 2006, AWS officially launched, but the idea came around in 2003 with two engineers at Amazon. Trying to scale their technical infrastructure to keep up with Amazon’s fast growth, Benjamin Black and Chris Pinkman abstracted and decoupled Amazon’s web infrastructure applications, making them easier to manage. Afterwards, both engineers realized they could sell the infrastructure as a service and build a new profit model for Amazon (Source: Network World). Jeff Bezos greenlighted the idea, and almost 20 years later, AWS is the primary profit driver for Amazon today (Source: Investopedia).
Network – Creating Value through Connections
Network innovations allow different organizations to take advantage of each other’s resources. Each firm uses its strengths for both parties to benefit. The risk in network innovations is diluted when creating a new idea.
CENGN Academy – our very own course offerings and our partnership with the University of Ottawa is an example of network innovation. By partnering with uOttawa, we’ve brought our courses into their engineering program and professionals through uOttawa’s Professional Development Institute. This symbiotic relationship allows uOttawa to provide advanced courseware to their clients while CENGN Academy gains a more extensive customer base.
Need help increasing your tech skillset?
Structure – Organization and Aligning Talent and Assets
Structure innovation focuses on organizing company assets to create value. Assets could include talent, equipment, and other resources.
Shopify –The idea of working from home is a significant movement in 2021. Shopify’s decision to allow employees to choose whether to work from home after the pandemic gives Shopify a strategic advantage in attracting and retaining talent (Source: Shopify).
Process – Using Signature or Superior Methods to Work
Process innovations are the implementation of operations that improve the business’s main offerings.
Six Sigma – the set of techniques and tools for improving manufacturing quality (Source: Motorola University) is process innovation. Engineer Bill Smith created Six Sigma while working for Motorola in 1986. The six-sigma ideology is statistically proven to have a 99.99966% quality manufacturing rate. Using the model, expected defects and errors in the manufacturing process are less than 1% (Source: ISIXSIGMA).
Product Performance – Building Different Features and Functionalities
This type of innovation focuses on the core benefits, features, and quality of a business’s offerings. Product Performance innovations could include brand new products or upgrades to existing products over the years. Unfortunately, product performance innovation often takes up all the credit for innovation. According to Doblin, it’s also the easiest to copy out of the ten innovations.
All the architectural, incremental, radical, and disruptive innovations mentioned in this article are examples of product performance innovations.
Product System – Creating Products that Work Together
Product System innovation focuses on how multiple products or services work together to create value. These systems help provide new benefits to customers and protect the business from competitors.
Google – Google Home, Google Phones, and Chromebooks are examples of a product system. Multiple benefits and features are offered to customers who fully deck out their homes with Google items. Having various Google Homes in your house, a Google cell phone, and a Chromebook makes it easier to schedule events, set reminders, organize information, and more.
Without the combination, it can become challenging to have three different systems working correctly together.
Imagine having an Amazon Alexa, an iPhone 13, and a Chromebook?
It becomes much more difficult to integrate everything properly.
Service – Supporting and Increasing the Value of Offerings
Service innovations benefit customers by making products easier to try, enjoy, and use while making simple customer journeys.
Car Dealerships – Car dealerships show multiple forms of service innovations. After speaking with a sales associate at the dealership, they’ll allow you to take the car for a spin. Allowing you to go for a drive reduces the amount of anxiety you may have before making the purchase. Now you know how good the car runs, it may entice you to buy even more.
Another primary example of a service innovation that car dealerships use is leases and loans.
You may not have $70,000 saved up to buy that car you want, so the dealership leases the vehicle to you instead. They’ll also be happy to set up a loan payment plan, so you get the car you want. This action makes it easier for you to attain the vehicle you wish – a service offering that enhances the overall value of your purchase.
Channel – How Offerings are Being Delivered to Customers
Channel innovations are how businesses get their products to customers. Whether through an online store, department store, or specialty shop, it’s all about getting the product to the customer.
Dollar Shave Club is a straightforward example of channel innovation. Dollar Shave Club’s online channel has become a go-to spot for purchasing and subscribing to razor blade deliveries on a weekly or monthly basis – a channel innovation that has been around since 2011 (Source: Dollar Shave Club).
Brand – How Offerings are Being Represented
Brand innovation ensures a business’s offerings are easily recognizable and preferred over other competitors in the marketplace. Promising brand innovation is represented at all customer touchpoints. These could include advertising, websites, retail stores, or employee conduct.
Although overrepresented, Apple is a Brand Innovation. Promising simplicity, creativity, and an intuitive design, Apple’s promises are seen throughout all customer touchpoints, highlighting their products’ value and uniqueness in such a competitive marketplace.
Customer Engagement – Building Irresistible Interactions with Customers
A business needs to know its customers’ goals and aspirations for customer engagement innovation to succeed. Using it’s customers’ goals and aspirations, customer engagement innovation builds creative ideas to connect meaning between the customer to enhance customer experience.
Hubspot – a Content Management System for marketers, showcases customer engagement innovation. Knowing their customers want to excel at different forms of marketing, instead of focusing only on their software solution, Hubspot offers free online courses to become better workers in their field and excel at their careers.
The 10 Types of Innovation Main Point
Doblin’s innovation framework doesn’t always start and end at the product. Innovation happens at all touchpoints in a business. Whether internal, product-focused or external, innovation can occur almost anywhere within a company.
Removing the Tunnel Visioned Mindset on Innovation
Innovation isn’t simple and doesn’t solely focus on building new technologies. Invention isn’t innovation, and just because you or your company made a brand-new technology doesn’t mean it’s innovative.
Innovation only happens when the masses value an idea, and as we’ve seen, it doesn’t have to be a product or service either. Creating new products is only one way to innovate, and it’s often the easiest to copy.
Don’t allow a tunnel-visioned mindset of innovation to lead you astray. Focusing only on creating an innovative product causes us to miss out on other business opportunities the marketplace asks for.
If we’re truly going to grow Canada’s economy and drive “innovation,” Canadian startups, entrepreneurs, engineers, product developers, and CEOs need to think beyond only products.
Innovations are defined in many ways, and if we don’t pay attention, somebody else will.
Interested in learning how Next Generation Networking (NGN) technologies will help drive innovation?
CENGN launched a national study to better understand the Canadian NGN ecosystem and its needs. The International Data Corporation (IDC), a world-renowned global market intelligence firm, was commissioned to complete this study.