All different types of innovation in business

Ana Vilar García

Innovation can have many different definitions. Being a broad term that can be applied to different types of businesses and sectors, it is no surprise that defining different types of innovation is confusing too. 

If you’re trying to define different types of innovation, you’ll probably encounter a complex question: According to what? Innovation can be of various types, depending on different factors. Today, we elaborate on different types of innovation according to its object, its impact and its distribution.

The Doblin Innovation Framework: 3 types of innovation regarding the object of the innovation

The Doblin Innovation framework is one of the oldest classifications when it comes to innovation. Doblin Inc. was a Chicago Company founded in 1981, and it is now part of the Innovation Department of Deloitte. This framework defines different types of innovation regarding the objective of it. Even though this model defines 3 main areas, these can apply to additional subfields, resulting in a total 10 different types of innovation

1. Configuration

Innovation applied to configuration focuses on the internal processes of the company and its business. The subcategories of this field are:

1.1. Business model. Innovation in business models or profit models consists on a series of iterations in what you offer as a service, the amount or the way you charge clientes, among others.

1.2. Network. Network innovation can change the way a company collaborates with other external actors, such as other companies, technologies, channels, etc. Networks have become more and more relevant over the years, so they can represent a new way of creating value by connecting with others.

1.3. Structure. Organizing your company's talent and the way they perform can create value for your company as well. Even though this type of innovation often relies on Human Resources, this can also be applied to other intangible assets.

1.4. Processes. Applying innovation in processes involves optimizing or changing the company's methodology, such as activities or operations, in order to perform more efficiently or adapt to changes quickly.

2. Offering

This innovation field has to do with the essential aspects of the product and services offered by the company. This field can refer to:

2.1. Product performance. Innovation applied to product is a common process in all companies, usually being more dramatic in startups. Innovating in product performance includes actions such as developing new products from scratch, iterating a certain product or finding new features that can apply to an existing product. Working on product performance aims to build a competitive advantage by finding that unique value your users are looking for.

2.2. Systems. Applying innovation to systems allows better connection between products and services, and its main benefit is being able to scale quickly and exponentially. Actions regarding system innovation include interoperability, modularity or integrations.

3. Experience

In this area, innovation is executed towards the outside of the company, including the following elements:

3.1. Service. Innovation applied to service ensures that the product lifecycle and the customer journey is efficient and useful. Paying attention to this type of innovation adds value to the customer experience with your company.

3.2. Channel. While ecommerces are the main type of channel for most companies, there are many other channels you can use to deliver your product. Channel innovation can consists on finding new channels, come up with complementary ones or explore immersive experiences for users or clients.

3.3. Brand. Brand innovation has to do with the way your company is represented and with the way users perceive your company. Making changes in this regard affect multiple strategies, such communications, visual identity, advertising, etc.

3.4. Customer service. Lastly, innovating in customer service aims to improve the way your company connects with your customers. The most innovative processes in this regard not only improve this relationship, but also create fulfilling experiences.

3 types of innovation regarding the impact on the company

1. Incremental innovation

Incremental innovation consists of incrementing the improvements of a product, an operation, a tool, etc. in order to reduce costs, improve income or introduce new technologies. 

Being a low-risk action, this is the most common type of innovation. 

2. Disruptive innovation

Disruptive innovation refers to a series of processes that aim to change or iterate a business model in a certain market or even to create a completely new market. This type of innovation implies a high risk, since the company can be cannibalizing its own business or market and the consequences and results of this operation are unknown. 

It is worth mentioning that the term “disruptive” is oftentimes overused, normally to refer to a big change, a radically-different point of view, or simply a creative way of thinking. Nevertheless, in this context, disruptive innovation refers only to a change of a company’s business model or market. 

3. Architectural or lateral innovation

Architectural innovation preserves an existing technology or experience and it takes them to a different market or a different sector. The risk of this process is considered to be medium, since there is a balance between the confidence provided by the expertise, and an uncertainty provided by the lack of knowledge of the new markets.

2 types of innovation, regarding the nature of its distribution

1. Open innovation

Open innovation consists of executing innovative programs not only in the inside of the company, but also cooperating with third parties

Open innovation usually implies partnerships with other companies, collaboration with universities, collaboration with startups, and so on and so forth. 

2. Closed or internal innovation

Contrary to open innovation, closed innovation refers to executing programs only internally, without the collaboration of external partners. 

This type of innovation is often executed by the Innovation Departments, with the collaboration -or not- of the rest of the company, but always in house. Intrapreneurship is also a type of internal innovation, being a way of entrepreneurship in the inside of the company. 

👉 In order to know more about open and closed innovation and their differences, visit our blog 👈

In a nutshell

Innovation is a crucial matter for companies these days, but knowing what type of innovation you need is not always easy. Innovation can be applied to different areas of a business, and can have different impacts on your company’s results. Knowing what types of innovation there are is important before choosing yours. Not sure where to start? Drop us a line and we’ll give you a hand.

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