​Driving Innovation Excellence: Frameworks and Strategies for Success

In today's fast-paced and constantly evolving business world, innovation has become an essential element for companies to succeed and remain competitive. While the term "innovation" is often associated with the development of new products or services, it actually encompasses a much broader spectrum.

From technological to marketing and social innovations, businesses can leverage various types of innovations to improve their operations, differentiate themselves from their competitors, and meet the evolving needs of their customers. In this article, we will explore the different types of innovations and how they can benefit businesses in different ways.

​A Guide to Categorizing Types of Innovation

Innovation can be classified as a new product, service, or business model that uses either new or existing technology in a new or existing market. It is worth noting that most innovations belong to multiple categories, and the categories often overlap. Therefore, the categorization is intended to provide a framework for analyzing and understanding innovation.

• Product or Service: The most straightforward way to categorize innovation is to classify it as a product or service. The key distinction between the two is that products are tangible, while services are not.
• Business Model: Another way to categorize innovation is to examine the business model it employs. Innovation can either use a new business model or an existing business model in a new market.
• Technology Innovation: This can utilize either existing or completely new technology. Although innovations are often categorized based on technology newness, it is not a requirement for innovation to involve technology at all.
• Market Innovation: This can also be categorized based on the market it targets and its impact on that market. It can either sustain a position in an existing market, disrupt an existing market, or create a completely new market.​ 

​Innovation Matrix

The Innovation Matrix is a tool that categorizes innovation based on two dimensions: the impact it has on the market and the technology it uses. The four categories of innovation in the Innovation Matrix are as follows:

• Incremental innovation: This type of innovation involves minor improvements to existing products or services in an established market.
• Disruptive innovation: This innovation type disrupts an existing market by introducing a new product or service that is fundamentally different from existing products.
• Architectural innovation: This innovation type utilizes existing technology to create a new market.
• Radical innovation: This type of innovation involves creating a completely new product or service that uses new technology in a new market.

Innovation Matrix

​​Incremental Innovation

Innovation is often a continuous and gradual process of improving existing products, services, or concepts in an existing market. Incremental innovation involves making slight improvements to the previous version of a product or service, without drastically changing its core functionality.

This can include making products smaller, larger, more attractive, or easier to use, while services can be made more convenient, fast, and efficient for users. Incremental innovation is driven by customer needs and feedback, and can attract higher-paying customers. Some of the key characteristics of incremental innovation include:
​

• Does not create new markets but happens in the existing one
• Often doesn’t leverage radically new technology
• Low uncertainty
• Low impact on the market, however, can have a significant impact on the business (If your recurring expenses are $1 billion and you can reduce expenses by 1%, you’ll save $1 million. Making $1m profit can take years and often requires large investments)

​Disruptive Innovation

Disruptive innovation, on the other hand, involves the creation of a new value network by entering an existing market or creating a completely new market. It often creates a new market niche and uses new technology or business models. Disruptive innovation involves high risks and initially yields low profits, but if successful, can make traditional business methods uncompetitive. Disruptive innovation does not happen abruptly but rather requires gradual change and a lot of work before reaching the mainstream, where it can have a significant impact on the market.
 
How Disruption Happens

Disruptive innovations often have lower performance when measured by traditional value metrics at first, but have other aspects that are valued by a small segment of the market. These types of innovations can turn non-customers into customers but may not appeal to the needs and preferences of mainstream customers yet.
 
Challenges of Disruptive Innovation

Established organizations often struggle to adapt to disruptive innovations. They are typically rational when making decisions related to their existing business and fail to adjust to new competition because they are too focused on optimizing their existing offerings or business models that have proven to be successful in the market so far. Once mainstream adoption of disruptive innovation occurs, it may be too late for incumbents to catch up, despite the resources at their disposal.​

Netflix vs. Blockbuster

Netflix is a classic example of a disruptive innovation that uses new technology and a new business model in an existing market, eventually disrupting Blockbuster.

Netflix v Blockbuster

Sustaining Innovation

​
Sustaining innovation refers to the gradual improvement of a product or service, with each iteration making the product slightly better and reducing defects. This type of innovation targets high-end customers who demand better performance and are willing to pay more for an improved version of the product. Alternatively, the improved product may be cheaper, leading to higher volumes and profits.

The iPhone is an example of a sustaining innovation, where newer versions of the phone appeal to the same customer segments and sustain the existing business model in the premium segment of the market. The characteristics of sustaining innovation include a focus on profitable segments, sustaining or improving market position, improving and growing existing value networks, incremental changes, and the risk of being disrupted.

Radical Innovation

Radical innovation is a rare form of innovation that utilizes revolutionary technology to solve global problems and address needs in completely new ways. This type of innovation can even provide solutions to needs and problems that people didn't know they had, transforming the market or the entire economy.

Radical innovation faces significant resistance initially because it is so different from what people are used to. These innovations require a significant amount of time and technological development before they can be adopted by the mainstream. Characteristics of radical innovation include high uncertainty, exploring radically new technology, unprecedented product features, requiring a lot of time and resources, and creating dramatic change that transforms industries.

The Future of Innovation

Although radical innovations are rare, there has been an increasing number of them in recent times. Currently, a new wave of even bigger radical innovations is on the horizon. With the continuous advancement in technology, there is an ever-increasing potential for radical innovation in various industries.

​Innovators should, therefore, be prepared to embrace these changes to stay relevant and competitive. The future of innovation is bright, and we can expect to see more radical innovations that will transform the world we live in. 
​​

The Future of Innovation

Other Types of Innovation

​​Incremental, disruptive, sustaining, and radical innovations are important concepts to describe the technology and impact of innovation. However, innovation is not limited to these categories. A more pragmatic and holistic approach is required to achieve concrete and actionable results. This section will introduce other types of innovation that can unlock new value in different parts of your business.

Doblin’s Ten Types of Innovation

​
Doblin’s Ten Types of Innovation framework is a useful tool for developing viable innovations across all levels of an organization. It is a diagnostic tool that can assess how innovation can be approached internally and which aspects can be improved upon beyond just technological innovation. The framework divides the different types of innovation into three main categories: configuration, offering, and experience, which correspond to business model, product, and marketing in layman terms. It can be used to revisit existing strategies and identify areas for improvement.
​
In addition to Doblin’s framework, there are other types of innovation that can be useful for improving different areas of your business:

• Product innovation
• Service innovation
• Process innovation
• Technological innovation
• Business model innovation
• Marketing innovation
• Architectural innovation
• Social innovation

By understanding and utilizing these different types of innovation, you can identify new opportunities to create value and drive growth in your business.

​Doblin’s Ten Types of Innovation

The types on the left side of the framework are the most internally focused and distant from customers. As you move toward the right side, the types become increasingly apparent and obvious to end users.
 
Tips for Using the Framework Effectively
​
To effectively use the ten types framework for innovation, consider the following tips:

• Understand all ten types: Having a comprehensive understanding of each of the ten types is essential for using the framework effectively. Each type represents a unique opportunity for innovation and should be explored to identify potential areas for improvement.
• De-emphasize reliance on products and technology: While product and technology innovations are crucial, it is essential to de-emphasize reliance on them to drive innovation. Other types of innovation, such as service and process innovation, can offer significant value and should be given equal consideration.
• Think about categories as well as types: In addition to exploring each type, it is essential to think about categories and how they can be configured in new ways. This approach can help create fresh experiences and new platforms that set your innovation apart.
• Use the types that matter most: Conduct a diagnostic to determine which types are most overlooked in your industry and focus on leveraging those types to create an advantage.
• Understand what your users really need: User research can help you identify what is relevant to your customers and identify new areas of opportunity that you may have overlooked.
• Use enough types to make a splash: Using five or more types, integrated with care, is usually enough to reinvent a category and create significant impact.

Product Innovation

Product innovation is a common form of innovation that involves improving the performance characteristics and attributes of a product. It can also involve using components that differ from previously manufactured products. Product innovations can be built using new technologies or by combining existing ones in a new way, though they do not necessarily have to involve technology at all. Product innovation can improve quality and product reliability, giving a competitive edge or helping to sustain market position, while also reducing processing and manufacturing costs. Focus on Product Innovation when:
​

• You witness changes in customer requirements
• Have the urge to tap new markets or segments
• Need to increase the life cycle of the product
• Want to enhance the look-and-feel
• Want to make the product more convenient to use
• Notice defects in product performance  

Service Innovation

​Service innovation involves the creation of a new or significantly improved service concept, product, or process in a new or existing market. It can be a new customer interaction or distribution channel, a system that improves delivery processes, or new solutions in the customer interface. Differentiating a business through service innovation helps respond better to customer needs and expectations, creating more value and generating new revenue streams.
 
A big part of a successful business is the ability to make your customers lives easier and the better you’re able to meet the needs and expectations of the ones you serve, the brighter your future looks like. Service innovation is a great way to:

• Differentiate: How you respond to the needs of your customers plays a significant role in how people perceive your brand. Products and technologies can be easy to copy, which is why you can use service innovation to differentiate your business.
• Deliver more value: Exceptional and consistent customer service, smooth order processing, inventory management and troubleshooting all contribute to value creation and the happiness of a customer.
• Generate more revenue: By focusing on service innovation, you can unlock new business opportunities and find new revenue streams.

 
UberEATS

Uber is an example of a company that has used service innovation to create further growth outside of its core business. UberEATS has used Uber's strengths and unique capabilities to enter adjacent markets, such as restaurant and grocery home delivery businesses. Uber’s unique capabilities enable rapid market entry:
​

• Brand recognition: Uber’s strong and globally recognized brand has enabled them to enter adjacent markets fast.
• Technology infrastructure: Uber has built a multi-sided technology platform that can be used to exchange value with customers, organizations and other entities in adjacent markets.
• Network of couriers: Uber has one of the widest drivers’ networks (around 3 million drivers) across the globe that they can use to deliver adjacent services.

Process Innovation

Process innovation refers to implementing a new or significantly improved production or delivery method, using new technologies or improved methods to save time, money, or better serve customers. It may also involve support function processes in HR or finance. Robotic process automation (RPA), for example, is a type of process innovation that uses software with artificial intelligence and machine learning capabilities to handle high-volume, repeatable tasks that previously required humans. 
​

Process Innovation

​Technology Innovation

Technological innovation is a critical success factor for increased market competitiveness, involving new or improved technology. Incremental innovations improve the existing technology to meet the needs of customers in the existing market, whereas disruptive innovations are game-changers that create a new market. Radical innovations provide solutions that transform the industry, whereas sustaining innovations make gradual improvements to maintain the market position.

Technological innovations can be incremental, disruptive, radical or sustaining as follows:

• Incremental: Toyota - Each new car model is just an improved version of the previous one. Serves the needs of a typical customer in the existing market.
• Disruptive: Apple 1st generation iPhone - Initially disrupted the existing market with its advanced technology, impressive user experience and capability for new use cases.
• Radical: Tesla - Network of self-driving cars - Provides radical technology solutions that are transforming the automobile industry.
• Sustaining: Apple iPhone 14 - Currently making gradual improvements to the products to sustain its position in the market. However, camera technology consists of several technology innovations.

Business Model Innovation

​
Business model innovation involves a fundamental change in how a company delivers or captures value from the market. It includes strategy, resources, capabilities, channels, and values, and often happens through new pricing mechanisms, revenue streams, or distribution channels.

• Strategy: Strategy is the plan for gaining competitive advantage by harnessing the capabilities and resources of the organization, for example marketing, operations, finance and R&D.
• Resources: In this context, we refer to the tangible resources the organization has at its disposal, such as technological and financial resources.
• Capabilities: Capabilities refer to people and the unique skills and knowledge inside your organization, including management skills.
• Channels: Distribution channels are the marketing channels through which you get your product in the hands of your customers.
• Values: Values guide organizational thinking and actions and represent the foundation on which the company is formed.

Business model innovation is a fundamental change in how a company delivers value to its customers or captures it from the market. In practice, it often happens through the development of new pricing mechanisms, revenue streams or distribution channels but isn’t limited to them.

Signs that indicate that your business is at risk of being disrupted:
​

• Saturated market
• Outdated technology
• Undesirable changes in industry conditions
• Unwillingness or inability to keep up with global trends
• Low customer satisfaction

 
iTunes v Spotify

Purchasing music, for example, has transformed twice in the past couple of decades. iTunes is an interesting example of disaggregation business model – a strategy that breaks down or separates something into constituent parts or elements.

Before iTunes started to sell single tracks, you either had to buy the entire album to hear your favorite song or sit by the radio at the right time to be able to record it.

Later, Spotify took the digital music business to a completely different direction with its freemium streaming model by cutting out the middleman and dealing with customers directly online to which Apple now has had to respond with its own Apple Music service.

​Marketing Innovation

Marketing innovation refers to an innovation that brings significant changes to the traditional marketing mix of an industry. Its main objective is to create new markets or increase market share in existing ones. In order for an innovation to be successful, it is essential that people are able to find it and benefit from it. Hence, the ability to connect with customers is crucial and continuous improvement of customer relationships and engagement is necessary.

As technology and customer preferences continue to evolve, new marketing innovations are required to promote both new and existing products and services. Innovative marketing practices can help to enhance customer relationships and exceed their expectations.

L’Oréal

This cosmetics company is a prime example of how technology can be integrated into marketing innovation. The company developed the Makeup Genius App to engage a wider customer group and improve their interaction with the brand.

Such innovative technologies not only enhance customer experience but also provide an opportunity to improve the online shopping experience by suggesting products that match the customer's personal preferences. It is important to note that marketing innovations do not necessarily always require new technology to be successful.

​Architectural Innovation

Architectural innovation, coined by Rebecca Henderson and Kim Clark in 1990, involves the reconfiguration of existing product technologies. The fundamental aspect of architectural innovation is that it changes the relationship between the core components of the product, while the components themselves remain unchanged.

This type of innovation deals with the overall design, system, or the interaction of components. One classic example of architectural innovation is the Sony Walkman, which utilized existing components that were previously used in other products.

Modular Innovation

​Modular innovation, also known as component innovation, is the opposite of architectural innovation. In modular innovations, one or more components of a product are altered while the overall design remains the same. For instance, a clockwork radio that generates its own electricity and operates for extended periods of time uses the architecture of an established radio but has a unique impact because it can be used in areas with power shortages.

​Social Innovation

Social innovations are new practices or technological inventions aimed at satisfying social needs better than existing solutions. Public or commercial entities may provide or finance such innovative solutions. While improvement isn't always the result of innovation, some of the critical social outcomes of social innovation are economic growth, enhanced well-being, improved communication, increased educational access, and environmental sustainability from society's perspective.

Sustainability and environmental problems such as climate change are challenges that necessitate a lot of effort and innovative solutions now and in the future. Often, policies or other methods are insufficient to effect change, at least not quickly enough.

As a result, new, responsible innovative technologies are critical to the long-term survival of our society and nature. Therefore, new green technology solutions, such as eco-friendly vehicles and clean water solutions, will undoubtedly provide numerous benefits in the future.

Overall, understanding the different types of innovation and leveraging them effectively can help businesses create new opportunities, generate more revenue, and gain a competitive edge. By considering each type and exploring new ways to configure them, businesses can make significant strides towards innovation and growth.

Summary

​Innovation is a vital aspect of progress and development, and it has played a significant role in shaping human society throughout history. From simple inventions like the wheel to more complex innovations like the internet, human beings have always strived to improve their lives through innovation. Innovation is not just about creating new products or services; it is also about finding new ways to solve problems, improving processes, and creating value for customers.

Today, innovation continues to be a key driver of economic growth, and businesses that prioritize innovation are more likely to succeed and thrive in a rapidly changing marketplace. However, innovation is not always easy, and it requires creativity, risk-taking, and a willingness to experiment and learn from failure. Companies that foster a culture of innovation and invest in research and development are more likely to stay ahead of the curve and stay competitive in the long run.

In conclusion, innovation is a crucial aspect of human progress, and it will continue to shape our future in countless ways. Whether it's improving healthcare, advancing technology, or creating new forms of entertainment, innovation has the power to transform our world and create new opportunities for growth and prosperity. By embracing innovation and investing in research and development, individuals and organizations can unlock their full potential and make a positive impact on the world around them.