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Product and process innovation Based on the flow of innovation from affluent to mass market, or developing to developed countries, innovation can be categorized as: Radical innovation: Incremental innovation Disruptive innovation Reverse innovation

electronics falls under this category .   Radical innovation: Diffusion of innovation takes place from affluent society to mass society Usually cost of innovation is so high that only high income segment customers could initially afford it All first version of high end products like automobiles.

   Disruptive innovation flows from mass market to affluent market They are actually meant for mass market but due to performance features even afluent society adopts them after few years Takes place in developed countries .

Usually product is more convenient to use compared to those offered by competitors .   Low price compared to current incumbents Market movers from down segment to up segment Just “good enough” performance of the product or service to begin with.

Usually some start up entrepreneur Current incumbents displaced from the market or forcefully pushed to cater to niche segment of the market .  Disruptive innovation generally introduced by new incumbent in the market.

Now vertically integrated steel mills cater only to niche corporate market segment Rather they have been pushed to a niche segment.   Examples: Mini steel mills displacing vertically integrated steel mills. earlier steel demand was taken care off by vertically integrated mills only across all the sectors .

Xerox. in case of Canon vs. was a bulky and cumbersome machine Had to be kept at centralized location Canon: provided “good enough” photocopy quality but was much more convenient to use by layman First adopted by SMEs and then Big corporate     . mainframe vs. minicomputers Xerox: could be operated only by technician. Similarly.

if Tata Nano becomes successful in international markets it would be a case of Reverse innovation .    Reverse innovation: Flow of innovation from developing/ emerging country to developed country Generally it is meant for mass market For example.

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