Innovation Strategy Considerations
Innovate products, services, and processes strategically via categories to better manage creativity and innovation.
With global competition, businesses that continuously innovate or manage innovations well both from within the enterprise and from the game survive and thrive. In the sciences and place, a principle states that when something can be categorized or segmented, these concepts can be better understood and managed.
Here are the 9 Innovation Management Strategy Categories that every executive should consider to manage creativity and innovation.
Nine Innovation Management Strategy Categories
- Incremental Innovation
- Radical Innovation
- Modular Innovation
- Architectural Innovation
- Sustaining Innovation
- Disruptive Innovation
- Displaced Innovation
- Product Innovation
- Business Process Innovation
Rebecca M. Henderson and Kim B. Clark in the influential “Architectural Innovation: The Reconfiguration of Existing Product Technologies and the Failure of Established Firms” in the Administrative Science Quarterly, 1990, observed from several studies the following:
- Incremental innovation improves the existing product in a minor way, maximizes the established design, and helps maintain the market and technology leadership of the established company.
- It strengthens the dominance of an established company.
- It refines and extends a traditional design.
Henderson and Clark assert that radical innovation often applies different engineering and scientific theories, mostly resulting in new practical and potential products and demand. It can emerge as the established design with new concepts in the components and how these integrate into the new system. New small companies with radical innovation often begin to dominate the market and/or technology or even create new industries on their own.
Emerging from new and often small companies, established companies that are about to be displaced, technology-wise, and market leadership-wise are defensive. They have to adjust or perish. Adjustment usually entails learning new technical skills in the radical innovation, or buy it, and investments in research, development, and engineering (RD&E) as well as retooling in the supply chain, manufacturing, marketing, and other aspects of the business.
While the original concept of radical innovation pertains to new product development, it can also apply to systems as they manifest in business models, supply chain systems, manufacturing processes, operations, project management models, and quality management systems.
Modular Innovation or Component Innovation
Modular innovation refers to the improvements made on a per-component basis without changes to the architecture.
Henderson and Clark define these as innovations that change how components are integrated, yet the design’s engineering and scientific principles remain the same. Professor Michael L. Tushman of the Massachusetts Institute of Technology and Harvard Business School coined the term “architectural.” Architectural innovation displaces the knowledge base and skillsets on an established architecture and retains the knowledge base and skillsets on the components.
Architectural innovation reconfigures the way how components are integrated in a new way. Moreover, the parts are also sometimes subjected to incremental innovations or tweaked to fit the original architecture.
Disruptive innovation has seen its roots in Joseph L. Bower and Clayton M. Christensen’s “Disruptive Technologies – Catching the Wave” in the Harvard Business Review, 1995. It has evolved from the concept of “disruptive technologies.”
Five years earlier, Henderson and Clark have insightfully suggested that technology or business processes will first undergo several experiments until these become established. These are perfected as day-to-day work routines provide opportunities for learning and mastering the technology or business process. The usual motivation for continuous improvement will be efficiencies or government regulation to sustain profits.
Afterward, when introduced in the market, the efficiencies that have evolved in the technology or business process assert their superiority in customer demand, thereby gaining considerable market growth or creating a new market or industry. Ultimately, the established technology or market leader is displaced or disrupted from its position of leadership or dominance.
Bower and Christensen originally described this as “sustaining technologies [that] tend to maintain a rate of improvement…which …gives customers something more or better in the attributes they already value.”
Thus, in this sense, sustaining innovation can be both incremental or radical innovations.
It pertains to the technology or process that the disruptive innovation replaced in the market and/or technology leadership. The displacement here refers to the product or service’s former dominance, although the technology or process still serves particular market segments.
It refers to any innovation applied to an item that serves a specific set of customers in the market place. It can be non-technology related and may cover attributes such as packaging, style, size, or any desirable characteristic usually discovered through market research.
Business Process Innovation
It is management innovation from an executive viewpoint to improve efficiencies within a business. Middle managers, supervisors, or consultants can also initiate this kind of design. Lean manufacturing techniques, including offshore outsourcing, are good examples.