Different types of Innovation
As long as it is new and creates value [further discussed in What is innovation?], innovation can be almost anything. We can however, categorize and name innovation to keep different types apart. No matter what we choose to call it or how we want to categorize, the most important thing is that we agree on a language we can all understand and use. Categorizing and separating different types of innovation from each other helps us to see the differences and adapt our efforts to fit our strategic goals.
One way of categorizing innovation is by using the labels "Continuous Improvement", "Incremental Innovation", "Radical Innovation", and "Disruptive Innovation". The differences between these terms are really how closely related to, or very different from, today's core business the innovation is. Working with Continuous Improvement, or Incremental Innovation, is working with new things which create value, and are strictly related to today's core business. Radical- or Disruptive innovation concerns new and valuable things that are not related to today's core business at all. Charles A. O'Reilly III and Michael L. Tushman are describing these categories and the dynamics of working with them in so-called 'Ambidextrous Organizations' in their HBR-article.
Continuous Improvement & Incremental Innovation
Continuous Improvement and Incremental Innovation are often close to what we usually call R&D, and is related to improving and renewing values we are already delivering. These projects are typically associated with a lower degree of the challenges connected to driving innovation [further discussed in Driving innovation projects], as they are easier to relate to and will do better in relation to the KPIs set up for today's core business compared to projects that does not have any relation to today's business.
Being crass, we could say that these categories should not even be called innovation, as they could be seen as a part of core business operations and R&D. However, Continuous Improvement and Incremental Innovation could also be viewed as one extreme on the scale of innovation. We could call them innovation projects on a lower level of abstraction, which is closer to implementation, and that relates to today's core business.
Radical- & Disruptive Innovation
Driving radical innovation is about creating completely new core businesses or new ways of working for the company. These projects are capable of disrupting a company's entire industry. The term "Disruptive" is not suitable for any innovation project that has not been realized yet as it implies that the innovation has disrupted and changed the conditions for, e.g. an entire market or product segment.
As we have no chance of predicting if this is going to happen before the innovation is released to the market, the term disruptive innovation is better used for innovations that have already been released, and become so widely spread in society that they have contributed to radical change or disruption.
One example of this could be the smartphone. Before the smartphone was introduced to the market, most people were carrying a telephone device in their hands. Afterwards, most of us are carrying a small computer instead. Now, no one wants to go back to holding only a telephone - hence, the market has been disrupted.
Radical innovation projects most often face all the challenges we associate with innovation, full on. Due to the high level of uncertainty [further discussed in Driving projects without a set end goal], and the fact that most established organizations are not adapted for promoting these types of projects, we need to actively create the conditions required to succeed [further discussed in Conditions for innovation].
Why use these categories?
Continuous Improvement, Incremental- and Radical innovation are usually facing very different degrees of uncertainty and resistance from a company. Therefore, we cannot fully compare them to each other. Incremental innovation projects have a relatively good chance of surviving and being implemented, even if the organization is not adapted for innovation. In contrast, radical projects have a statistically lower chance of succeeding. This is not due to that the radical projects generally provide less value, quite the opposite, but because they imply a considerably higher degree of uncertainty and challenge [further discussed in Innovation vs Operations]. If aiming to succeed in all categories, we need to start establishing the right conditions for the different categories within our companies.
Even though we separate these categories from each other, we must remember that one is no more important than the other. We need to work with innovations of all kinds to both refine the current core business and find our competitive edge for the next 2,5 or 10 years. By actively choosing to establish initiatives in all categories, acknowledging their differences, and creating the conditions they require to flourish, we can succeed with our innovation efforts over time.