TYPES OF INNOVATION
1. Product Innovation
Definition: Creating new or significantly improved products or services.
Purpose: Meet changing customer needs or stand out in the market.
Key Aspects:
• Focus on features, functionality, and user experience.
• Can include tangible goods (e.g., smartphones) or services (e.g., Netflix’s
streaming model).
Examples:
• Apple’s iPhone revolutionizing mobile phones.
2. Process Innovation
Definition: Improving the way products or services are created or delivered.
Purpose: Make operations faster, cheaper, or more efficient.
Key Aspects:
• Enhances efficiency, speed, or cost-effectiveness.
• Often internal and less visible to customers but highly impactful.
Examples:
• Toyota’s lean manufacturing techniques.
3. Business Model Innovation
Definition: Changing the way a company creates, delivers, and captures value.
Purpose: Stay competitive or create a new market.
Key Aspects:
• Involves innovation in revenue models, value propositions, and customer
engagement.
• Can disrupt entire industries.
Examples:
• Netflix moving from DVD rental to subscription-based streaming.
4. Organizational Innovation
Definition: New ways of organizing internal structures or workplace culture.
Purpose: Improve teamwork, flexibility, or employee satisfaction.
Key Aspects:
• Focuses on HR practices, decision-making, and collaboration.
• Often supports other types of innovation.
Examples:
• Google’s 20% time policy encouraging employee-driven projects..
5. Marketing Innovation
Definition: Novel ways to promote and sell products/services.
Purpose: Attract more customers or create stronger brand loyalty.
Key Aspects:
• Changes in packaging, pricing, promotion, or placement.
• Focuses on customer needs and behavior.
Examples:
• Coca-Cola’s personalized “Share a Coke” campaign.
6. Incremental Innovation
Definition: Gradual improvements on existing products, services, or processes.
Purpose: Gradually enhance products or processes.
Key Aspects:
• Low risk, steady enhancement.
• Maintains competitiveness.
Examples:
• New versions of smartphones with better cameras.
7. Radical (Disruptive) Innovation
Definition: Fundamental breakthroughs that create new markets or disrupt
existing ones.
Purpose: Transform the market.
Key Aspects:
• High risk, high reward.
• Often involves new technologies or paradigms.
Examples:
• Blockchain technology enabling decentralized finance.
8. Open Innovation
Definition: Using external and internal ideas and paths to market innovation.
Purpose: Tap into external knowledge and creativity.
Key Aspects:
• Collaboration with other organizations, startups, or customers.
• Leverages broader knowledge sources.
Examples:
• Procter & Gamble’s “Connect + Develop” initiative.
• Hackathons inviting public to co-create solutions.
9. Social Innovation
Definition: Innovative solutions to social or environmental problems.
Purpose: Improve society or the environment.
Key Aspects:
• Aims to improve well-being and quality of life.
• Often non-profit or hybrid models.
Examples:
• Microfinancing platforms like Kiva.
• Solar-powered lights for off-grid communities.
10. Technological Innovation
Definition: Development and application of new technologies.
Purpose: Lead in innovation and stay ahead of trends.
Key Aspects:
• Often drives or supports other types of innovation.
• Can involve hardware, software, biotech, etc.
Examples:
• CRISPR gene editing technology.
• 5G mobile networks enhancing connectivity.
PROCESS OF INNOVATION / INNOVATION LIFE CYCLE
1. Idea Generation
• Objective: Discover or brainstorm new ideas.
• Methods: Brainstorming sessions, market research, user feedback, trend
analysis, hackathons.
• Output: A pool of raw, creative concepts.
2. Idea Screening
• Objective: Evaluate and filter ideas based on feasibility, market potential,
and alignment with goals.
• Methods: SWOT analysis, feasibility studies, cost-benefit analysis.
• Output: A shortlist of viable ideas worth developing.
3. Concept Development
• Objective: Flesh out selected ideas into workable concepts.
• Methods: Prototyping, use case development, customer journey mapping.
• Output: Clear innovation concepts or early-stage prototypes.
4. Business Analysis
• Objective: Assess the commercial viability of the concept.
• Methods: Market analysis, ROI projections, risk assessments.
• Output: A detailed business case or pitch.
5. Product Development (or Implementation)
• Objective: Build and test the actual product or solution.
• Methods: Agile development, MVP (Minimum Viable Product), iterative
testing.
• Output: A working version ready for user testing or market entry.
6. Testing & Validation
• Objective: Test the innovation in a real-world or simulated environment.
• Methods: Beta testing, pilot programs, A/B testing, customer feedback.
• Output: Validated solution with refined features based on user input.
7. Commercialization
• Objective: Launch the innovation into the market.
• Methods: Marketing campaigns, sales strategies, distribution planning.
• Output: A market-ready product or service.
8. Diffusion & Scaling
• Objective: Expand the reach and impact of the innovation.
• Methods: Licensing, partnerships, international expansion, operational
scaling.
• Output: Widespread adoption and growth.
9. Sustaining & Improving
• Objective: Keep the innovation relevant and effective over time.
• Methods: Continuous improvement, feedback loops, innovation cycles.
• Output: Long-term value and adaptability.
FACTORS AFFECTING INNOVATION
Internal Factors Affecting Innovation
1. Organizational Culture
• An organisational culture that encourages creativity, risk-taking, and
experimentation fosters innovation.
• If organisational provides supportive leadership and openness to new
ideas are critical.
2. Leadership and Vision
• Strong leadership that promotes innovation and provides a clear strategic
vision motivates teams to pursue new ideas.
3. Resources and Capabilities
• Access to financial resources, skilled employees, and modern technology
allows for experimentation and development.
• Training and development help build innovation capacity.
4. Structure and Processes
• Flexible organizational structures (e.g., less hierarchy, cross-functional
teams) promote collaboration and faster decision-making.
• Agile and streamlined processes help bring ideas to market more quickly.
5. Employee Motivation and Involvement
• Engaged and empowered employees are more likely to contribute
innovative ideas.
• Recognition and rewards for innovation boost morale.
6. Knowledge Management
• Effective knowledge sharing and learning from past projects promote
continuous innovation.
External Factors Affecting Innovation
1. Market Demand
• High customer expectations and evolving needs drive companies to
innovate to stay competitive.
2. Technological Advancements
• Rapid developments in technology create opportunities for innovation and
force companies to adapt or fall behind.
3. Competition
• Competitive pressure motivates firms to differentiate themselves through
innovation.
4. Regulatory Environment
• Government policies, intellectual property laws, and regulations can either
support or restrict innovation.
5. Economic Conditions
• A strong economy encourages investment in innovation, while downturns
may constrain resources.
6. Globalization
• Exposure to international markets and collaboration with global partners
can stimulate innovation.
7. Customer Feedback and Engagement
• Direct input from users helps refine products and generate new ideas.
8. Access to External Networks
• Collaboration with universities, research institutions, and industry
partners can spur innovation through shared knowledge and resources.
