84% of executives say innovation is important for business growth, so it should be a priority for all industries. One of the most prominent questions, though, is “Which type of innovation is best?”
Forbes describes corporate innovation as “having out-of-the-box thinking as a strategy within your business”. However, we can break this down into four main types. Understanding different solutions helps develop a stronger and successful strategy, as there is no one correct answer. Here’s all you need to know.
1. Architectural Innovation
Architectural innovation is a big improvement to a product that has a huge impact on the market. It can mean improving on what another company made, but usually it's just improving the organization's products. Opening the creative process to all employees will aid the cause.
Getting ideas from different viewpoints increases your chances of finding ideas that can revolutionize a product or market. This also helps in retaining the important features that led to previous successes. Innovation requires the right strategy, investment, leadership, and stomach for risk. Architectural innovation wholeheartedly embraces these principles.
Looking at the past and coming up with new ideas, ensures that products and markets can offer more value to customers. Consumers want organizations to create new things that work better or cost less than what is already available. When they do, architectural innovation will be a success.
2. Disruptive Innovation
We define disruptive innovation as a new business model or product that aims to disrupt the current market. In the modern landscape, this type of innovation revolves around the use of modern tech. Right now, 60% of entrepreneurs believe that AI is currently the most promising technology from an innovation standpoint. However, it is only one of many examples of disruptive innovation.
Netflix disrupted the movie rental sector by introducing mail and streaming services, causing Blockbuster to regret not adapting. Amazon, which started as an online bookstore and consequently led to the birth of eBooks, is another great example.
Disruptive innovation uses emerging technologies to increase accessibility and affordability for sophisticated products, thus bringing them to larger and more diversified audiences. This type of innovation unlocks huge breakthrough for the company, usually putting it in a position to enjoy sustained benefits.
3. Incremental Innovation
Incremental innovation is a gradual and continuous improvement of existing products. Tech companies, for example, must constantly generate new ideas because of the ever-changing nature of their industry. Therefore, this innovation strategy plays a crucial role in their success. Incremental innovations could include items like software patches or releasing innovations based on client feedback.
While statistically most innovations fail, even the successes require an iterative approach. With incremental innovation, companies are able to make data-driven decisions to stay one step ahead of the game. Crucially, it enables them to ensure that their products reflect evolving changes in the marketplace and consumer expectations.
4. Radical Innovation
Radical innovation occurs when new technology dramatically changes an industry and creates new markets. This type of innovation shares several features with disruptive innovation and is the counterpart to incremental innovation. Many cite the main difference as being that disruptive innovations render existing products obsolete whereas radical innovations tend to challenge the status quo.
A focus on positioning the company as competitive in the long-term, drives radical innovation. Patents acknowledge the hard work and time spent on innovation, often marking the initial stage of implementing groundbreaking ideas. Meanwhile, this type of innovation often alters the relationship between clients and suppliers by displacing other products.
Cloud computing technology is perhaps the most noteworthy example of radical innovation in recent years, changing the way computer users around the world utilize modern tech. It has changed mindsets, habits, and the realm of possibility.
Now that you understand the basics of each innovation type, it should be clear that your strategy will include elements of each one of them, over the years to come. Nonetheless, knowing which deserves your focus at any given moment can be the catalyst for sustained success. No matter what kind of corporate innovation suits your business, tools like our flagship KICKBOX program, help employees deliver great results consistently.