For decades, “innovation” has been the automatic response of many entrepreneurs to questions about their growth strategy. It provides them with a way to stand out from the competition and survive in a world in which quality is improving and prices are dropping at a frantic rate. Companies - including SMEs and even one-person companies - which don’t integrate innovation in their mission or values don’t stand a chance. However, what exactly does it mean to innovate and what types of innovation are there? Here are the 9 most common types of innovation.
Innovation: a catch-all concept
In its simplest form, innovation is defined as “the introduction of something new”. In practice, it is often a generic term to designate all sorts of changes and improvements. In other words: the tag is applied not only to new features in products or services, but also to sustainable innovations, organisational innovations, process innovations and marketing innovations. The greatest common denominator is, on the other hand, the need to create a new form of added value.
Innovation is differentiated from research and development (R&D) by the fact that R&D transforms money into knowledge whereas innovation transforms knowledge into commercial opportunities.
The 9 most common forms of innovation
1. Product innovation
This type of innovation generally consists of a more recent (improved) version of an existing product. Refreshing sugar-free beverages, electric cars and the latest iPhone model are examples of this. It’s important to note that product innovations can be disruptive or incremental. Disruptive innovation refers to a totally new product, like an electric car. Incremental innovation consists in improving existing products, for example, the new versions of a smartphone.
2. Innovation in services
This type of innovation provides a way to improve interaction with customers who are increasingly accountable and well-informed. Your customers are changing and likely see alternatives to your company everywhere. As a result, it’s crucial to optimise your services and innovate on a regular basis, for example, by providing chatbots which can learn by themselves, by launching an online shop or by using artificial intelligence to predict customer behaviour.
3. Business model innovation
Sometimes, you also have to take a chance and question your business model. Does your current approach enable you to meet your objectives or have more effective options appeared in the meantime? This is obviously an important decision which cannot be taken lightly. What business models are your competitors using; can you take your cue from successful international models, or is a slight adjustment to your current economic model enough? Our advice: the Business Model Canvas will help you find the answers.
4. Organisational structure innovation
This type of innovation can be useful if you have employees. Remote work, flexible work schedules, redistribution of responsibilities, new internal communication channels, the Agile Method, etc. are examples of the options available to you. After an hour of research on Google, it is more than likely that you will have found many useful innovation tips for your organisational structure.
5. Market innovation
This type of innovation consists in introducing your products or services to new markets, for example, by exporting. With good preparation and a clearly defined export strategy, some foreign markets can be more accessible than you think. Market innovation can, however, also involve other sectors and new users for your original outlet. The disposable nappy, which was “invented” by an airline company then passed on to the retail sector, is a good example.
6. Technological innovation
The fourth industrial revolution is ramping up. New technologies like the Internet of Things (IoT)), 5G, artificial intelligence (IA), virtual reality (VR), blockchain and machine learning are more accessible than ever. As a result, these technology skills are no longer reserved to the few. You can also benefit from them. Don’t have the required skills in-house? Nearly all sector federations and organisations for the middle classes provide training, workshops and support.
7. Sustainable innovation
In cosmopolitan cities like Brussels, sustainability is an omnipresent creator of opportunities. By successfully providing a sustainable dimension to your company, products or services, you will appeal to a growing number of consumers. Whether it’s the efficient use of energy, a circular production chain, or the use of sustainable materials, this innovation will enable you to control your costs.
8. Process innovation
Process innovation is intended to make your company’s processes faster, more efficient, more customer oriented or more profitable to optimise operations. In other words, you innovate the process behind your products or services. Many companies can still become more efficient by opting for digital transformation.
9. Trademark innovation
When consumers think about your company, they automatically associate some values and characteristics with your brand. Are these values and qualities the ones you want to promote? If this isn’t the case, it may be time to reposition yourself. Careful, however: refining your brand is a delicate balancing act. You have to avoid frightening off existing customers.
Open or closed innovation?
Innovation experts often make an additional distinction between open and closed innovation. This primarily involves the way you innovate. Closed innovation means that all of the innovation processes take place within the company. In practice, a specific person or department will be responsible for everything related to innovation. In this case, you will be 100% reliant on the knowledge and know-how of that person or department. With open innovation, you will also involve other players in your innovation goals, such as knowledge centres, suppliers, customers, company employees, and even competitors. In this case you will have access to several channels for the creative content.