Innovation Management (Part One)

Previously in Monthly Dose of Design, we’ve discussed the development process of innovation by using Design Thinking to generate ideas, the Lean Startup to prototype ideas, and Agile to transform prototypes into products.

This month we’re starting a new 12-part series on innovation. We’ll go beyond the development of innovation to explore:

• The four main types of innovation
• The skills and culture required to facilitate them
• The advantages that innovation brings

In the first part of this series, we’ll summarize what innovation is and the four types of innovation. We discuss each one in more depth and how to manage them in the latter part of this series.

 

Market research and innovation

The main reason for innovation in marketing is to maintain relevancy and to succeed in the market by understanding needs. Market research and innovation have always complimented each other. Market research’s role is to explore and understand how people and the environment relate to new products and services. Research in marketing has looked to describe, explain, and predict how consumers and markets will respond to innovation.

By understanding the different types of innovation, market researchers can assist their clients in their innovation processes, and internally improve their own organization.

 

Three facts about innovation:

Below, learn about three important consequences of innovation.

 

1. Innovation can help you outlast your competitors

Innovation is a critical factor in surviving longer and withstanding competitors. This is because you will discover new or better ways to compete in an industry. Therefore, you’ll hold an advantage against your competitors.

 

2. Innovation does not always need to be a big radical change

Often innovation is thought of as a big radical change. However, small improvements can be made to a company’s existing products or services. Low-cost improvements carried out consistently can help further differentiate a company from its competition.

 

3. Innovation utilizes people inside and outside of the company

It’s a common misconception that innovation is based on never-before-seen technology. While technology is one factor often required in the space of innovation, people are often at the core of it. The key is to always evolve and make progress, and people drive that progress. People are needed to be innovative internally to improve the business, and an understanding of consumer behavior is required for any new product or service to succeed.

 

The four types of innovation

The four main types of innovation we will explore in this series are:

• Breakthrough innovation
• Sustaining innovation
• Basic research
• Disruptive innovation

Market researchers can assess the opportunities that exist and consider different approaches that can enable them to create and capture value by classifying innovation into four distinct categories.

 

 

The four distinct categories are divided on a matrix of:

Do we know the problem?

Do we have what we need to solve it?

 

1. Sustaining innovation

Sustaining innovation is improving upon existing products. This area of innovation is most common because the problem is already known and the knowledge or technology needed to solve the problem already exists, and therefore you know what skills are required to solve it. For sustaining innovation, market researchers can utilize Design Thinking to ideate new ideas.

A good example of sustaining innovation is Apple’s iPhone. Year after year Apple releases new iPhones with new incremental upgrades that allows its product to stand above its competitors.

 

2. Breakthrough innovation

Breakthrough innovation takes a product to the next level and changes the way customers use it and how they interact with a company and industry. The problem is often well known but the knowledge or technology to solve it is unknown.

Microsoft is an example of breakthrough innovation. Microsoft changed its business model going from buying products as a one-time purchase to a subscription-based model.

 

3. Disruptive innovation

Disruptive innovation is using ‘out of the box’ thinking to create something completely new that hasn’t been done before, therefore the problem can be unknown, but the knowledge or technology needed to solve the problem already exists.

It allows companies to expand into new markets, separate themselves from the competition, and has the potential to completely change industries.

An example of disruptive innovation is Netflix. Netflix disrupted an entire industry by creating a subscription-based streaming service and producing its own entertainment content.

 

4. Basic research

Basic research is innovation through exploration, where you don’t know the problem and you don’t know the market. But you are exploring areas to dive further into. This type of innovation can be purely academic.

Lots of companies have internal labs dedicated to basic research, for example, IBM. Additionally, some companies collaborate with academic institutions and fund research projects into areas of interest.

 

Next month…

Next month we will dive deeper into sustaining innovation.