Types of Innovation

Chapter 2

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 Objectives

When you have completed this chapter you will be able to:
• distinguish the different forms that innovation can take, such
as product, service and process innovations;
• analyse the characteristics of these different forms of
innovation;
• differentiate and distinguish between the different types of
innovation, such as radical and incremental innovation;
• analyse the impact of the different types of innovation on
human behaviour, business activity and society as a whole.

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 Forms of innovation
• Product innovation
• Service innovation
• Process innovation

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 Forms of Innovation
• Product Innovation
• The development of a novel/new product
• Using a new technology (e.g. Dyson’s ‘dual cyclone
vacuum)
• Re-configuring a technology (e.g. Sony Walkman)
• Better at meeting consumer needs (e.g. Workmate
workbench)
• Meeting new consumer needs (e.g. JCB excavator)

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 Forms of Innovation
• Service Innovation
• Offering a new/different service to consumers
 Using a new technology (e.g. Amazon.com,
First Direct)
 Better at meeting consumer needs (e.g.
EasyJet, Paypal)
 Meeting new consumer needs (e.g. Facebook)

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Den Hertog’s 4 dimensions of
service innovation

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 Forms of Innovation
• Process
• New way of making things or delivering services
• New technologies
• e.g. Pilkington’s ‘float glass’ process
• New methods/ organisation
• e.g. F. W. Taylor’s ‘scientific management’
• e.g. Ford’s moving assembly line
• e.g. Toyota’s Just-in-Time production

• Note: Process innovations can lead to what Schumpeter described

as ‘creative destruction’ as new industries rise & old ones disappear

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Innovating the production/service
delivery process

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Levels of process innovation

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Technological v. organisational
process innovations
Table 2.1 Technological v. Organisational forms of Process Innovation

Technological Organisational

NC and CNC machine tools Fordism (mass production)

Scientific Management
Industrial robotics
(Taylorism)
Float Glass Lean production
SABRE computerized flight reservation
Just-in-time (JIT)
system
Total Quality Management
Electronic Point of Sale (EPOS)
(TQM)

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Hub-and-spoke operations at
Federal Express

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Typology of innovations

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Changes associated with types of
innovation

INNOVATION COMPONENTS SYSTEM

Incremental Improved No change
Modular New No change
Architectural Improved New configuration
Radical New New configuration

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 Radical Innovation
“Radical innovation establishes a new dominant
design, and hence a new set of core design
concepts embodied in components that are
linked together in a new architecture.”
Henderson and Clark (1990)

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 Incremental Innovation

“ a change that builds on a firm’s expertise in

component technology within established product
architecture.”
Christensen (1993)

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 Modular Innovation

“an innovation that changes a core design concept

without changing the product’s architecture.”
Henderson and Clark
(1990)

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 Architectural Innovation
“leaves the core technological concepts of
components intact but changes the way they are
designed to work together.”

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 Classifying Innovations?
• Innovations aren’t all the same – they vary enormously (e.g.
in terms of novelty)
• Some innovations are closely bound up with technology and
technological change
• Innovation leads to “Creative destruction” – Schumpeter
(1939) – i.e. transforming society

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