In the first have of the 20th century, Joseph Schumpeter proposed 5 types of innovation. These were:
- The launch of a new product, or a newly differentiated product offering
- Applying new methods to manufacturing or selling of a product
- Opening a new market
- Acquiring new sources of supply (either raw, or semi-finished)
- New industry structure such as the creation or destruction of a monopoly (although there are now some disputes that this no longer counts as a type of innovation)
This is still one of the most referenced lists for types of innovation. However, there are a few other important ways to classify innovation that are very helpful to an organization looking to manage an innovation program. These include the types of ideas you’ll want, where they come from, who is included in the process and finally what you want to innovate.
Types of Ideas
Ideas fall on a scale that looks like this:
Depending on the type of innovation, the scale will be balanced differently.
Where do ideas come from?
Ideas can come from two sources – internal and external. Internally sourced ideas come from employees within an organization. Externally sourced ideas can come from customers, suppliers or subject matter experts. It’s easier to get value from internally sourced ideas because employees are naturally vested in helping to improve the organization they work at. However, there are notable examples of companies sourcing ideas externally as well.
Who is included in the innovation process?
Microsoft has a small innovation team that works on researching new ideas. Google also uses small teams, but also embraces innovation across the entire organization. Both have pros and cons and different use cases. Who is included will have cultural implications. Ultimately, for a widespread culture of innovation, you’ll likely need to be as inclusive as possible. Which may dictate different processes to manage organization-wide innovation and small team, incubated innovation at the same time.
How long is the innovation process intended to last?
Sometimes innovation needs to occur within a specific timeframe. Continuous innovation isn’t time constrained and allows an organization to seek ideas all the time. A great example of this is Toyota, who implements ideas from employees throughout the year. Read more in this post if you’re wondering about how to balance innovation challenges and continuous innovation.
What do you want to innovate?
This falls into Shumpeter’s list of 5 types of innovation, but you can break this down much further. For example, in this structure, they list 10 different types. We believe that specificity is important and so the more detailed you can be for your organization, the better we believe the results will be. One of the traps of driving innovation is that it becomes easy to focus on too many things. It’s important to focus your efforts and be strategic about what you will differentiate and as a by-product, be specific about what you with not innovate.
Types of Innovation
At SoapBox, when we talk with customers about types of innovation, we look at the all of these dimensions, the type of ideas, where ideas come from, participants, duration of innovation and the subject of innovation altogether. This dictates the right tools and approaches and whether SoapBox will be a good fit or not.
Using some of these dimensions, here’s a breakdown of a few of some of the types of innovation that we see:
Incremental innovation focuses on smaller process or product improvement ideas. These ideas are more common and easier to implement, and the aggregate value through a combination of cost savings and revenue generation. Typically they are sourced internally when referring to process improvement ideas. Sometimes there are instances where ideas are sourced externally from customers for product improvement ideas. These systems are generally a core part of the business and last a long time. Kaizen and SixSigma are very similar to incremental innovation.
Here’s an example of how you can use the dimensions we talked about earlier to categorize incremental innovation:
The most distinguishing feature of Open Innovation is that it is sourced externally by the community or by customers. Many companies use open innovation to create new products but also to help improve their existing products. Typically open innovation programs that are time-bound where the community can submit their idea within a certain period of time. There are ongoing Open Innovations programs, like P&G’s Open Innovation Program where individuals can partner with P&G to bring their idea to life.
Frugal innovation focuses on ideas that make a greater impact with fewer resources, usually around removing parts of complex machinery so that a lower-budget version can be sold to developing countries. The size and impact of an idea in frugal innovation can range but the essential premise is to cut out non-essential parts of more complex products to sell into developing companies. Frugal Innovation, the book, has a great overview and examples of frugal innovation. One example of a result from frugal innovation is Lifestraw, a straw that can make contaminated water drinkable.
Disruptive innovation involves ideas that that could transform society. Examples of this include the Internet and electricity that have changed the way we operate in society. It’s hard to say who or how long it lasts because disruptive innovation has such a large impact on society. Generally they are resource intensive particularly in research and development standpoint and it’s often the type of innovation most people think about when they hear the word innovation. Radical innovation, breakthrough innovation, and transformative innovation are other terms that describe the same type of innovation. Read more in this blog post.
However you decide to build your innovation program, think about the different dimensions to categorize your innovation and whether you have more than one type of innovation you’re building a program around. Here are some questions to help you get started:
- Do I want big ideas or small ideas?
- Who is going to share their ideas? My employees or customers?
- What should the ideas be about?
- How long do I want to run an innovation program for?
Depending on your answers, you’ll need different tools and processes to successfully support your program.