Three Types Of Innovation. Here’s How To Manage Them
“Dreamers are mocked as impractical. The truth is they are the most practical, as their innovations lead to progress and a better way of life for all of us.” ― Robin S. Sharma
With a view of generating revenue immediately from new products, a firm should customize the process of product development for different kinds of innovations. For a company the biggest challenges aren’t in coming up with big ideas but in the organizational and management issues that these new ideas bring along.
No matter what a company is dealing in, companies strive to create innovative products and services adequately and accurately.
“Chance favors the connected mind.” ― Steven Johnson
For an individual to to bring new ideas to market, create more realistic testing and growth expectations and better manage their innovation pipelines, it is important to identify the types of innovations, needs and the correct approach to nurture and grow the type of innovation.
THE THREE TYPES OF INNOVATIONS
To prolong their stay in the market, companies need to come up with sustaining products and services. Sustaining innovations in products or services help any organization raise the bar enough to stay in the game. These innovations can sometimes be thought of as modification of an already existing product.
To significantly up the level of game within an existing category a company should come up with remarkable offerings. The product should be such that seeing it, customers couldn’t help but want it–over time making it the best-selling product.
“Progress is made by lazy men looking for easier ways to do things.” ― Robert A. Heinlein
When we think about an innovation, many of us have some sort of ideas in our mind. Such breakthrough ideas are called disruptive innovations because they disrupt the current market behavior, rendering existing solutions old-school, transforming values, and bringing previously marginal customers and companies into the center of attention.
The Social media could be considered a disruptive innovation within sports. More specifically, the social media has radically changed the way that news in sports circulates nowadays. Social media has created a new market for sports that was not around before in the sense that players and fans have instant access to information related to sports.
“In a world of change, the learners shall inherit the earth, while the learned shall find themselves perfectly suited for a world that no longer exists.” ― Eric Hoffer
To help explain the difference between these three types of innovations, let’s look at the coffee industry. Maxwell House came up with a dark roast version of coffee, it introduced a sustaining innovation. A new flavour was only a variation on their existing products.
A breakout innovation was General Foods’ line of International Coffees, which added connoisseur of fine flavors to the instant coffee category and elevated the at-home coffee experience. And Starbucks has obviously been a disruptive innovation, turning coffee into a destination experience worth paying a lot more for.
“Innovation is the specific instrument of entrepreneurship…the act that endows resources with a new capacity to create wealth.” ― Peter F. Drucker
In a given category, disruptive innovations come first and are then followed by a series of progressive innovations, with sporadic breakout hits interspersed. Eventually, the market is disrupted once again, starting the cycle anew.
Although disruptive innovations have the potential to yield the greatest benefit to a company, it is not necessary that it will lead to immediate market success. Because disruptive offerings differ significantly from the existing products, they often require time to gain market acceptance.
“You have to take your own bold approach, and if you do you will be rewarded with success. Or calamitous failure. That can happen too.” ― Steven Moffat
Analysis of revenue and consumer buying patterns:
- Sustaining: Immediately moderate, then tapering off.
- Breakout: Rapidly strong, then quickly dropping to a lower level.
- Disruptive: Longer gestation period leading to exponential growth.
For disruptive undertakings, success typically requires different development processes,
different approval and funding mechanisms, and different performance expectations. At
times, work on a disruptive innovation gets stalled in a system that is optimized for the creation of sustaining offerings. For the success of a project a company should tailormade their approach depending on the goals.
“Innovation is an evolutionary process, so it’s not necessary to be radical all the time.” ― Marc Jacobs
To support the ultimate goal of generating immediate revenue, companies should classify each of its new product concepts within the framework of sustaining, breakout, or disruptive. This allows a company to manage risk and reward at a portfolio level.
Categorizing innovations using this framework is an effective way to ensure that target outcomes are in line with the expectations. Companies are able to focus their innovation efforts by clearly stating that they are prioritizing the development of breakout products and consciously minimizing the exploration of disruptive opportunities.
“Do not get obsolete like an old technology, keep innovating yourself.” ― Sukant Ratnakara