Nine types of innovation entrepreneurs should know about

For decades, “innovation” has been the automatic response of many entrepreneurs to questions about their growth strategy. It provides them with a way to stand out from the competition and survive in a world in which quality is improving and prices are dropping at a frantic rate. Companies - including SMEs and even one-person companies - which don’t integrate innovation into their mission or values don’t stand a chance. However, what exactly does it mean to innovate, and what types of innovation are there? Here are the 9 most common types of innovation.

Innovation: a catch-all concept

The simplest definition of innovation is the introduction of "something new". In practice, it is often a generic term used to designate all sorts of changes and improvements. The tag does not solely apply to new product features, it also encompasses sustainable, organizational, process, and marketing innovations. The greatest common denominator is, on the other hand, the need to create a new form of added value. 

Innovation differs from research and development (R&D) because R&D transforms money into knowledge whereas innovation transforms knowledge into commercial opportunities. 

The 9 most common forms of innovation

1. Product innovation

Most often, this kind of innovation is an improved iteration of an already existing product. Refreshing low-sugar beverages, electric cars and the latest iPhone model are examples of this. It’s important to note that product innovations can be disruptive or incremental. Disruptive innovation refers to a totally new product, like an electric car. Incremental innovation is the process of improving existing products, like a smartphone.

2. Innovation in services

This type of innovation provides a way to improve interaction with customers who are increasingly accountable and well-informed. Your customers are changing and are likely to see alternatives to your company everywhere. As a result, it’s crucial to optimise your services and innovate regularly, for example, by providing chatbots which can learn by themselves, by launching an online shop or by using artificial intelligence to predict customer behaviour.

3. Business model innovation

There are times when you need to take a leap of faith and challenge your business model. Does your current strategy allow you to achieve your goals, or have better alternatives emerged? This is an important decision which you can not take lightly. What business models are your competitors using, can you take your cue from successful international models, or is a slight adjustment to your current economic model enough? Our advice: the Business Model Canvas will help you find the answers.

4. Organisational structure innovation

This type of innovation can be useful if you have employees. Remote work, flexible work schedules, redistribution of responsibilities, new internal communication channels, the Agile Method, etc. are examples of the options available to you. After an hour of research on Google, it is more than likely that you will have found many useful innovation tips for your organisational structure.

5. Market innovation

This type of innovation consists in introducing your products or services to new markets, for example, by exporting. With good preparation and a clearly defined export strategy, some foreign markets can be more accessible than you think. Market innovation can, however, also involve other sectors and new users for your original outlet. The disposable nappy, which was “invented” by an airline company and then passed on to the retail sector, is a good example.

6. Technological innovation

The fourth industrial revolution is ramping up. New technologies like the Internet of Things (IoT)), 5G, artificial intelligence (IA), virtual reality (VR), blockchain and machine learning are more accessible than ever. As a result, these technology skills are no longer reserved for the few. You can also benefit from them. Don’t have the required skills in-house? Nearly all sector federations and organisations for the middle classes provide training, workshops and support.

7. Sustainable innovation

In cosmopolitan cities like Brussels, sustainability is an omnipresent creator of opportunities. By successfully providing a sustainable dimension to your company, products or services, you will appeal to a growing number of consumers. Whether it’s the efficient use of energy, a circular production chain, or the use of sustainable materials, this innovation will enable you to control your costs.

8. Process innovation

Process innovation aims to optimize operations by making your company's processes faster, more efficient, customer-oriented, or profitable. In other words, you innovate the process behind your products or services. Many companies can still become more efficient by opting for digital transformation.

9. Trademark innovation

When consumers think about your company, they automatically associate some values and characteristics with your brand. Are these values and qualities the ones you want to promote? If this isn’t the case, it may be time to reposition yourself. Careful, however: refining your brand is a delicate balancing act. You have to avoid frightening off existing customers.

Open or closed innovation?

Innovation experts often make an additional distinction between open and closed innovation. This primarily involves the way you innovate. Closed innovation means that all the innovation processes take place within the company. A specific person or department will be responsible for everything related to innovation. Here you will be 100% reliant on the knowledge and know-how of that person or department. With open innovation, you will also involve other players in your innovation goals, such as knowledge centres, suppliers, customers, company employees, and even competitors. In this case, you will have access to several channels for creative content.