Types of Innovation: A practical guide
The most academic definition of innovation comes from the Oslo Manual. This document, initiated by the OECD, defines innovation as «the implementation of a new or improved product, service or process, a new marketing method or a new organizational method in business practices, workplace organization or external relations.»
Traditionally, there are two main types of innovation: incremental and disruptive, but there are others.
What are the characteristics of these different types of innovation? How can you recognize them, and choose the type of innovation that’s right for your company?
What are the 5 types of innovation?
Incremental innovation
It’s a new feature added to an existing product or service, which improves it without radically transforming it. It’s a change that doesn’t transform anything but improves what already exists, with very little risk taken. Incremental innovations can involve the evolution of an existing product or the creation of a new product based on an existing product to which a new feature is added.
Examples of incremental innovations include Coca-Cola’s Cherry Coke. The American flavored drinks giant has created a new range of products. The concept is simple: add cherry flavoring to its best-seller.
Other examples of incremental innovation from different sectors are available here.
If you’re about to embark on a corporate innovation program, incremental innovation is certainly the way to go. It delivers concrete results in the short term and is within the reach of all company employees.
Disruptive innovation
It’s a major innovation that profoundly alters a product or service, transforming an existing market by creating new value. Disruptive innovation thus consists in developing a product or service likely to create a new market and a new demand.
Disruptive innovation takes time and requires an iterative, test-and-learn approach. It is not based on market research or needs analysis, but on observation or intuition. The aim is to come up with a new idea that nobody was expecting.
One example of disruptive innovation is Apple’s iPod. This product transformed the way people listened to music, thanks to an integrated environment, a dedicated marketplace, and a new, easy-to-use device.
If you want to involve your employees in this process, intrapreneurship is a good way of getting them into action. Indeed, these programs are structured to address disruptive innovation, with a long-term approach to incubate and bring the idea to market. Their governance model also frees them from the traditional processes that can hold back disruptive projects.
Adjacent innovation
This is a strategy that consists of innovating to extend the life of a service or product. This form of innovation enables an existing offering to be taken to another market for which it was not initially intended.
Adjacent innovation opens up markets and makes it possible to transpose know-how (by adopting it at the margin) into a new environment. This can be the case, for example, when a product designed for the general public is developed in the professional world. Or when, in the same global market, a company expands into a new segment.
An example: Uber, which has taken its VTC services and launched Jump, an electric bike rental service, or Uber Eats, a home-delivery service.
Companies and groups operating in different markets, or sometimes business sectors, can benefit from the plurality of their products and services. Indeed, they are sources of inspiration for R&D and Innovation departments in their quest for adjacent innovation. Setting up innovation management software makes it easier to share ideas between the various departments within the company.
Transformational innovation
It’s a system that contributes to the lasting transformation of a sector of activity through a profound mutation of the existing, the elimination of old models and the creation of new approaches. Innovation of this magnitude is rare, and requires major economic, sociological and consumer changes.
It’s an innovation that takes place over several years, as it requires the gradual adaptation of all players to this new standard.
This was notably the case with the creation of the digital camera, which overturned all existing codes, burying silver and its industry with it.
Radical innovation
This lies on the borderline between invention and innovation. Not only does it radically transform and improve an existing use or habit, but it also generates an entirely new economic system.
Throughout history, radical innovations have led to technological and civilizational breakthroughs, such as those seen after the invention of the printing press, which metamorphosed the transmission of knowledge. Closer to home, we might mention the great medical advances (penicillin, vaccination, sequencing of the human genome) or the creation of the jet plane, which revolutionized transport and military aviation.
CEO & Co-Founder Yumana
