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Create Sustainable Success with the 4 Types of Innovation

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All organizations need to build an innovative infrastructure—including tools, systems, people, culture, and process—to be competitive in the modern marketplace.

The rapid rate of technological innovation and competitiveness in our global economy is best exemplified by this staggering fact: only 52 companies remain on the Fortune 500 list (a list of the 500 biggest companies by annual revenue) since its inception in 1955. Comparing the 40 years from 1955 to 1994, with the following two decades, we can see the rate at which new companies have joined has nearly doubled.

Still, many organizations struggle to derive effective results from innovation efforts. Teams burn through resources, and leaders watch other organizations increase their competitive advantage by unlocking innovation within their industry or new markets. When innovation efforts are recognized as failures, it can be challenging to build organizational momentum to reinvest in future endeavors.

Building an innovative culture requires much more than technology. It involves creating a workspace that spurs ongoing engagement and action. Putting these pieces in place and nurturing them helps innovation thrive continually.

Capturing Varying Types of Innovation

At the highest level, innovation can be defined as making something new that creates value. However, it’s essential to understand the variety of innovation approaches to determine which ones will provide the most value.

Here’s a look at the different ways innovation can take shape, how those definitions lead to different outcomes, and why certain methodologies may be more effective than others.

The 4 Types of Innovation

Technology newness describes whether an innovation is based on emerging or well-proven technologies. Low-market impact ideas are easier to implement, with compounding effects over time. High-market impact ideas tend to be difficult, costly, and risky to develop but arrive with high potential value.

1. Disruptive Innovation

Disruptive innovation is often the most well-known type of innovation. It comes with effective uses of new technology and high-impact results. While disruptive innovation is extremely flashy and grabs headlines, it comes with many nuances and challenges. The most common organizations exhibiting the characteristics of disruptive innovation are startups targeting overlooked segments in the market to deliver an offering that is more affordable, convenient, or simpler than the established players can.

2. Incremental Innovation

Incremental innovation constitutes a gradual, continuous improvement of existing products and services. While the least flashy of any of the categories, it offers the most evident value to an established bottom line. By continuously improving products, services, and business operations, organizations can reduce stagnation and consistently grow market share.

3. Sustaining Innovation

Sustaining innovation is the best way to protect an organization’s position in a market. Incremental innovation focuses on small improvements to existing products and services to increase value or customer satisfaction. Sustaining innovation focuses on larger changes to gain or maintain a market-leader position. This category is focused on creating new features or services that differentiate a product from all of its competitors.

4. Radical Innovation

Radical innovation typically utilizes a technological breakthrough that transforms industries and creates new markets. This type of innovation completely changes how an organization interacts with the marketplace. The success of the underlying technological shift to drive this type of innovation is often related to the firm’s organizational behaviors and capabilities that create the right conditions for new ideas to be successfully commercialized in the first place.

The Benefits of Utilizing All Types of Innovation

Each of these categories has value, and a system that combines all four creates robust and effective innovation while uncovering blind spots to potential market or consumer shifts.

Without incremental innovation, products and services can fall behind. Customer experience and retention both suffer. Without sustaining innovation, a company has to work harder to reach market leader status and gain a majority market share. And without radical or disruptive innovation, a company misses out on massive potential value while risking being disrupted by new methods or technologies.

By implementing all four, a company ensures short-term success by optimizing its current products and differentiating them from competitors while also protecting long-term sustainability. Innovation applied properly can be a strategy for both present and future success.

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Ryan Ottinger

Ryan Ottinger

Innovation Consultant

Ryan is an Innovation Consultant with an interdisciplinary career background. Graduating from Stanford University with a degree in Symbolic Systems, his coursework included computer science, UX design, and research and statistics.

Before joining Fresh, Ryan worked as a full-stack developer. While at Microsoft, he contributed to the Microsoft Whiteboard product.

Ryan loves talking to people about new technologies, philosophical debates, and gaming. He’s a PC enthusiast and also enjoys discussing hardware, software, or design.