What are the Different Types of Innovation?

Let’s begin with the idea that not all innovations are the same ‘type’ of innovation. Some feel like small steps, others like great leaps. Some innovations are new technologies, others are new processes or practices.

Different innovations need different opportunities to develop; you might not need to come up with a brand new idea if you are working to develop a change in how things are already done. In this case, how you make your ‘luck’ and ‘opportunities’ will be very different than if you are creating a brand new product.

So, before you start trying to make things happen, it’s good to ask: how can we distinguish different types of innovation?

Four Types of Innovation

The Organisation for Economic Co-operation and Development (OECD) defines Innovation as

“The implementation of a new or significantly improved product (good or service).” (OECD 2009)

In its Oslo Manual for measuring worldwide innovation, the OECD highlights four different forms of innovation:

• A Product Innovation is a new product or service with significant new or improved features.
• A Process Innovation is a new or improved production or delivery method.
• A Marketing Innovation includes changes to positioning, pricing and packaging.
• Organisational Innovations are changes to how a company or organisation does things that lead to gains or efficiency.

The OECD Innovation Strategy (OECD, 2015) explains these four forms of innovation in the following way:

Product Innovations

Product Innovations are typically a new product or service. This might be radical, incremental, or even disruptive, and is a new thing.

Process Innovations

Process Innovations are new ways to produce or acquire a thing. The product or service itself might be fundamentally unchanged but by making or selling it in a new way it creates new value to the maker or the buyer, or both. When Amazon started selling books it didn’t invent or (at that point) change what a book was, just that we could buy it online rather than in a physical shop. Amazon has innovated in all kinds of ways since (although some have questioned their practices), but the first element was a process innovation.

Marketing Innovations

Marketing Innovations similarly take existing products and services but promote and sell them to different people and/or in different ways to how it was done previously. Taking a product sold in one country and introducing it to another would be a very simple example.

Organisational Innovations

Organisational Innovations are changes to how a company or organisation does things that lead to gains or efficiency. The adoption of Lean Manufacturing processes in a factory might reduce costly waste, the promotion of greater creative autonomy amongst staff might lead to higher rates of new products. When people talk about innovation, or think about innovators, they often imagine completely new products and services. In reality, most innovation is about smaller evolutions of existing technology.

More Types of Innovation

These four forms aren’t the only way to look at different innovations. We can also categorise them on the way they impact what is already there, for example whether they are incremental or radical, disruptive or sustaining. Let’s take a closer look at these forms of innovation:

Incremental vs Radical Innovation

Incremental innovations are small enhancements or adaptations to a product or service that is already in use. Only small aspects of an existing product or service are changed in order to address a need or problem. Most innovations in household technology are just a little better than the previous version. We make things smaller, quieter, more efficient, more effective or more attractive rather than changing them completely.

Incremental innovations are often easy to sell because people already understand the key principles, but it can be hard to get noticed because they’re effectively ‘more of the same, but a little better’.

Radical innovations

Radical innovations essentially solve problems or address needs either in wholly new ways, or respond to problems and needs we didn’t know we had. Moving from keyboards and phone buttons to interactive touch screens was arguably a radical step. It has been suggested that the Dyson company’s dramatic reinventions of the vacuum cleaner (by eliminating the bag) was a radical step. Radical steps often have dramatic impacts.

Radical innovations are often more eye-catching and create bigger impacts, especially if you can protect your radical new method. They are, however, a bigger change to the accepted model and you may meet unexpected resistance to that change.

Disruptive vs Sustaining Innovation

‘Disruptive Innovation’ is a term coined by US academic Clayton Christensen (see Christensen et al., 2015). This term refers to products, services and organisations that offer simpler, but effective, solutions to problems. These often emerge from new companies, as established competitors have over-priced these simpler solutions by continuing to make them incremental. According to Christensen, ‘Sustaining Innovations’ justify putting prices up on a regular basis.

These new models are disruptive because they can damage existing organisations who fail to adjust to the new competition.

So, innovation can take a lot of forms, from small steps to big leaps and from wholly original new products to changes in process, communication and organisation that can radically reshape the world we live in. Don’t get hung up on innovative ideas having to be wholly new, original and radical. Far more innovation is incremental and no less valuable for it.

Christensen, C. Raynor, M. and McDonald, R. (2015). What Is Disruptive Innovation? Harvard Business Review, published online December 2015

OECD. (2009). Innovation in Firms: A Microeconomic Perspective, OECD Publishing, published online

OECD. (2015). The OECD Innovation Strategy: 2015 revision OECD, published online