Innovation is a catch-all phrase that describes several different types of approaches and actions that drive change, new approaches and new discoveries. Understanding the differences among these types of innovation and how they apply to business can help business leaders chart a different path.
What are the main types of innovation? Author Greg Satell, writing in a recent Harvard Business Review article, frames the answer with some interesting context.
“Every innovation strategy fails eventually because innovation is, at its core, about solving problems – and there are as many ways to innovate as there are types of problems to solve,” Satell wrote. “There is no one true ‘path’ to innovation.”
Yet organizations, Satell argues, act like there is one singular route. By using one approach to innovation, they eventually become locked into solving certain types of problems. Eventually, that myopic view catches up with those organizations.
Satell argues that businesses need to approach innovation as a chest containing different types of tools for different types of problems. A sound business strategy relies on having a diverse portfolio of strategies.
Four Innovation Approaches for Business Strategy
Here is a closer look at four types of innovation.
- Sustaining Innovation. The most common approach, sustaining innovation seeks to improve existing functionality in existing spaces or markets. In this space, we have a clear understanding of the problems that need solutions and we are working to improve a situation. Common strategies to use in this space are strategic roadmaps, R&D, design thinking and acquiring resources or skills.
- Breakthrough Innovation. In breakthrough innovation, new skills are applied to a clearly defined problem that is highly difficult to solve. Open innovation, such as the DARPA competitions used to create new military solutions, are a good example of work in this space. Lockheed Martin’s Skunk Works, where teams are given a high level of autonomy and little bureaucracy, is another good example.
- Disruptive Innovation. Methodical, tried-and-true improvement models based on seeking customer feedback and steady continuous improvement are the antitheses of disruptive innovation. Dramatic changes in technology, competitive shifts, and consumer preferences are the impetus for companies to create completely new business models that disrupt, in some cases, whole industries. Think of Airbnb and Uber as two well-known examples.
- Basic Research. World-class, cutting-edge research, either in a corporate incubator and visiting scholar programs, university partnerships, or massive investments in a core, rigorous science, is not to be outdone. Basic research continues to be the cornerstone of both traditional giants like IBM and newer visionary companies like Alphabet (Google’s parent company).
Technological innovation is driving disruptive innovation, in which companies create new business models.
Avoiding the Death Spiral
Accenture coined the phrase “the Innovation Death Spiral,” in a 2011 study that argued for three innovation types: incremental (analogous to Satell’s sustaining), platform (focused on growing market share by compelling customers to switch allegiance), or breakthrough (market-changing new products).
The death spiral comes when companies put all their eggs in the incremental basket. Avoiding the spiral requires companies to:
- Appoint top-level ownership and accountability for innovation.
- Choose an innovation strategy connected to corporate strategy.
- Select the must-wins.
- Improve processes to decrease time-to-market.
- Be efficient.
- Measure and improve.
The need for innovation will never go away. However, an understanding of the available approaches and tools will help make innovation effective and profitable.