Our modern day lives are rife with innovations, some that are more notable like the smartphone you are most probably reading this article on, to the less noteworthy wrist watch which is one of the few accessories for men nearing its extinction due to another innovation.
However, due to the sheer ubiquity of technology around us, we tend to bunch up the different types of innovation under the umbrella of technological innovation. AirBnB for instance is oft mistaken for a technological innovation as it leveraged technology to provide a platform, however in doing so it caused a paradigm shift as we shall see further in the article.
Knowing your innovation
We identify and attempt to classify the key types of innovation, this classification is in no means exhaustive and could very well have sub classifications. With that being said, this will nevertheless help you identify or who knows maybe even find your own differentiating innovation, so lets get into it.
- Technological Innovation - Probably the biggest bucket under which most innovations are cast into when people think about them. Digital watches are a great and easy to relate example, Digital watches with the advent of quartz technology fundamentally revolutionized what was traditionally a mechanical process consisting of tiny gears and springs. Smart watches are taking these a step further by using the same form factor engineered by the first wrist watch but using technology to optimize the use of your hand’s real estate. Similarly, digital cameras and LED based Televisions replaced film based cameras and CRT TVs. Film and CRT were almost a chemical industry in terms of its roots in science. Digital cameras and LED TVs come along and they're more of electronics industry. So once again, these are both examples of radical changes in the fundamental technology within an industry.
- Architectural Innovation - Nothing explains the concept of architectural innovation better than Rebecca Henderson and Kim Clark at Harvard Business School in their paper published in 1990, since then little has changed with the concept and there are several instances of it around us. The Sony Walkman and modern day E-Readers are prime examples. They did not invent a new technology, but what they did change was the form factor; cassette players and e-ink technology were around for a while. These products revolutionized how the technology was remodeled to be portable and derive more utility from it. You could now just wear the Walkman on your side or carry hundreds of books with you during a journey. So, while the underlying technology didn't change, the value proposition and the way they organized it did change very much.
- Business Model Innovation - Innovation is not only limited to your product but also how you manage the journey between the supplier and the end customer. AirBnB, our reference from the preamble, is in recent times the best example of this; it is a $2.5 Billion company listed under the lodging industry without owning a single lodging asset. AirBnB used existing technology, albeit with some help from the financial crisis and growing unemployment, to create market efficiencies between owner and tenant. As a result, they redefined the market, redefined the value proposition and create new opportunities for others to participate in those exchanges. Zipcar or Car2Go is another example of redefining a business model. Rather than a traditional rental car model where you go to the rental car agency and rent your car, they create a world in which you can walk on the street, put in a code, and enter a car and use it for a couple hours. Once again, leveraging technology changing the business model.
- High End Innovation - Most of you might be wondering why the iPhone which is regarded as one the most innovative products in modern time has not been cited in the technological or architectural innovation. The reason behind this is the iPhone although being technologically advanced combined a list of feature no one expected in a phone and was targeted towards an audience at the high-end of the market, when the iPhone launched its target customer base was never the $50 feature phone user.
- Low End Innovation - Innovations don’t always have to demand a hefty price tag and going substantially lower than the price tag of market incumbents while providing similar utility can provide a huge competitive edge. One of my favorite examples of this is the Nintendo Wii. We had two dominant players leading up to that in Microsoft with their Xbox and Sony with their PlayStation. Then comes the Wii, both Sony and Microsoft were competing on the idea that the winner would be those who offer the most highly technical new gaming system. The one that had the most processing power that allowed for the most sophisticated games. Nintendo came in with arguably a much, much technologically simpler machine, one that cost a fraction of the cost of the other players but had an innovative game control that allowed them to do some creative things with games that resonated with the marketplace. So, it entered in at the low-end and then ended up disrupting the whole market, and in that generation became the market winner. You might think of Wikipedia along the same way. Wikipedia is arguably not of the quality of an Encyclopedia Britannica, but its new model of using crowd-sourced information allowed them to have a very low cost of entry, obviously a free entry for usage by individuals. While it didn't have necessarily the same quality, it still provided enough value that it could penetrate the market and take over large parts of the Encyclopedia market.
We detail some examples during our classification but surely there are more that might have come to your mind while reading through, let us know in the comments section below.
Lastly, not all innovation is categorized as exclusively into one of the above categories, some are a combination of more than a single type of innovation. One such example is Qualibrate, a tool that revolutionizes how documentation, testing and test automation is looked upon. Qualibrate exhibits high end innovation by combining features such as a cloud based testing solution that also manages the documentation of processes as the system or project evolves, the same documentation then forms the basis for creating training material, manual and even automated test cases to be utilized after go-live. By making the tool extremely user friendly and allowing the user to see only information that is relevant to them while encapsulating the technical details, Qualibrate creates a low end innovation that significantly lowers the barrier to entry to testing tools for most end users.This article is based on learning derived from the course "Digital Transformation".