There seems to be a common view that only “disruptive” innovation counts, i.e. technological innovation that radically disrupts business practice, when in essence this is only one – extreme – type of innovation which is certainly not the most frequent but, of course, potentially the most impactful if successful.
To quote from Applying Innovation, D. O’Sullivan, L. Dooley, 2008:
Every now and again a radical innovation is introduced that transforms business practice and rewrites the rules of engagement. In other words, business practice across an entire industrial sector changes radically.
[In “Innovator’s Dilemma”] Christensen (1997) defines these types of innovations as disruptive innovations. Disruptive innovation often occurs because new sciences and technology are introduced or applied to a new market that offers the potential to exceed the existing limits of technology.
Note that Gary P. Pisano (see “You Need an Innovation Strategy” below) only emphasizes the business model change but not a radical shift in technology:
Disruptive innovation […] requires a new business model but not necessarily a technological breakthrough. For that reason, it also challenges, or disrupts, the business models of other companies.
The maybe confusing usage of the term “disruptive” has been acknowledged by Clayton Christensen himself in this recent noteworthy Google Talk (@1:05:47):
BTW, Christensen does not consider Uber a disruptive innovation despite it’s profound impact on the established taxi market as explained in the 2015 “What is Disruptive Innovation?” HBR article nor does Tesla but Airbnb does qualify per explanation given in a 2015 Forbes interview.
Most ideas, however, will rather lead to incremental sustaining or routine innovation; that is often incremental, evolutionary improvements of existing products.
The concepts of “novelty”, “impact”, and “fields” of innovation listed below are taken from “Towards innovation measurement in the software industry“.
Novelty or Reach of Innovations
Note that only a very small fraction of innovations are new to the world, some are new to a market, or new to an industry, and most are (only) new to a particular organization or company.
Impact of Innovation
- Incremental innovation –
These are relatively minor changes in technology based on existing platforms that deliver relatively low incremental customer benefits.
- Market breakthrough –
These are based on core technology that is similar to existing products but provides substantially higher customer benefits per dollar.
- Technological breakthrough –
These innovations adopt a substantially different technology than existing products but do not provide superior customer benefits per dollar.
- Radical innovation –
They are referred to as disruptive innovations which introduce first time features or exceptional performance. They use a substantially different technology at a cost that transforms existing or creates new markets and deliver a novel utility experience to customer.
Fields of Innovation
- Product innovation
- Process innovation
- Market innovation
- Organisation innovation
Dimensions of Innovation
- Extent of change (radical—incremental)
- Modality of change (product—process)
- Complexity of change (component—architecture)
- Materiality of change (physical—intangible)
- Capabilities and change (enhances or destroys market/technological capabilties)
- Relatedness of change (replaces a firm’s existing product or extends it)
- Appropriability/Imitability (difficult or hard to hang on to)
- Cycle of innovation (time between discontinuities)
Types and Extent of Innovation (as cited by Andrew Davies in “Innovation contexts” except for the entries after 2003)
- Radical or incremental (Freeman 1974)
- Product life cycle – product or process innovation (Abernathy and Utterback 1978)
- Continuous or discontinuous (Tushman and Anderson 1986)
- Modular or architectural (Henderson and Clark 1990)
- Sustaining or disruptive (Christensen 1997)
- Open or closed innovation strategies (Chesbrough 2003)
- Market-pull, technology-push, meaning-driven innovation or technology epiphanies (Norman & Verganti 2012)
- Performance-improving or Efficiency or Market-creating (Christensen 2016)
- More recent concepts:
- Service innovation
- Business model innovation
- Management innovation
In his June 2015 Harvard Business Review (HBR) article “You Need an Innovation Strategy” Gary P. Pisano provides the following Innovation Landscape Map that list examples for four dimensions (routine, radical, disruptive, architectural):
Routine innovation builds on a company’s existing technological competences and fits with its existing business model—and hence its customer base.
Disruptive innovation requires a new business model but not necessarily a technological breakthrough. For that reason, it also challenges, or disrupts, the business models of other companies.
Radical innovation is the polar opposite of disruptive innovation. The challenge here is purely technological.
Architectural innovation combines technological and business model disruptions. As one might imagine, architectural innovations are the most challenging for incumbents to pursue.
A company’s innovation strategy should specify how the different types of innovation fit into the business strategy and the resources that should be allocated to each. In much of the writing on innovation today, radical, disruptive, and architectural innovations are viewed as the keys to growth, and routine innovation is denigrated as myopic at best and suicidal at worst.
That line of thinking is simplistic.
In fact, the vast majority of profits are created through routine innovation.