Innovation and its types

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Praveen S (21MB048)
Ramanan M (21MB058)
Santhana Bharathi K (21MB065)
Selva Sethu Siddarth G (21MB071)
Sudharsan S (21MB078)
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Innovation
The Process of translating an idea or invention into a good or
service that creates value or for which the customers will pay. Innovation
involves deliberate application of information, imagination and initiative in
deriving greater or different values from resources, and includes all processes
by which new ideas are generated and converted into useful products.
Types of Innovation
Innovations are broadly classified into Four types and they are as follows,
1. Radical Innovation
2. Incremental Innovation
3. Disruptive Innovation
4. Sustaining Innovation

Radical Innovation
Radical innovation focuses on long-term impact and may involve displacing
current products, altering the relationship between customers and suppliers, and
creating completely new product categories.
Examples:
Ø Netflix
Ø Apple iPhone
Ø John Deere
Characteristics of Radical Innovation
None of these companies created their product or service “just because.”
To be a true leader in your field, you must have an eye on the future, and
innovate with that future in mind.  All three of the examples above share certain
traits that are invaluable to radical innovation:

• Use of existing technology

The technology may not have been used in the way they were using it,
but they took tech that worked and developed a new use for it.

• Tap an unmet need

In some cases, customers don’t realize they don’t have what they need
until they finally do have it. John Deere’s tractor sensors helped farmers track
their crops; Netflix helped movie-lovers relax at home; Apple helped people
communicate.
• Worked towards a future goal
Netflix wanted to change the way people viewed entertainment. John
Deere wanted farmers to have more control over their crops. Apple wanted
hand-held computers to be a reality.

Incremental Innovation
Incremental innovation is among the most common types of
innovation due to its low risks. Although it may seem to take time,
over time, the results are impressive. Incremental innovation utilizes
the already existing technology such as designs and features to
increase the value of customers.
Almost all firms use this type of innovation at some point in their
business life. This is the light that adding or removing features from
products and services can significantly improve the client’s
experience.

Example:
Gillette has improved its client’s base by adding multiple features to
its razors. For instance, after developing the shaving razor, they
realized that they needed something long lasting and introduced
battery-powered Gillette. The latter has a rubber hand to give the user
a grip, and a sense of control. Through the simple features they have
added, customers are enjoying their products more than ever before.

Disruptive Innovation
This is one of the most interesting innovation type. It is also referred to as
stealth innovation; it involves introducing new technology or products to your
market. Disruptive innovation began a long time ago and had been advancing
over the years. For example in the historical world, democracy disrupted
monarchy, and email services disrupted the postal service.

Disruptive innovation is carried out by small firms which introduce

products/technologies with major providers in the market. In most cases, the
products are inferior, costly and not as effective as other services from the
market.
 As the new companies venture into the market, they target the neglected
group of the incumbent’s consumers. The latter may be a group that cannot
afford their services or whose needs are overlooked at the expense of others.
Disrupters take long before it replaces the incumbent. The main rules of stealth
innovation are to play with odds and not directly attack the incumbent.

Sustaining Innovation
Sustaining innovation is the opposite of disruptive innovation as it exists
in the current market and instead of creating new value networks, it improves
and grows the existing ones by satisfying the needs of a customer.
Example
Example of sustaining innovation is Pfizer, the world’s biggest
pharmaceutical company by revenues. Hoque notes the company’s ongoing
success with blockbuster medicines and vaccines with household names, such
as Zithromax, Lipitor. The company was founded in 1849 as a manufacturer of
fine chemicals, and a year later, it discovered Terramycin (oxytetracylcine),
launching the company’s successful and ongoing expansion into a research-
based pharmaceutical company. It augmented its research by building its
brands, pipeline and profile through major acquisitions.