What is innovation?

‘Innovation” – it concerns everybody. Some love it, some will view it as a confrontation. But however one feels about it, most people will be exposed to a major innovation at certain stage of their life. Often the question is posed: ‘What really is innovation’ and ‘What, then, is not an innovation?’ Most people will view the breakthrough of the electric car as a major innovation. This makes sense because everybody can see it and is to some extent influenced by it. But there are also changes that people would not specifically name as an innovation. For example, if Coca-Cola redesigns its bottles because the new design is easier to drink from, then we don’t automatically call it an innovation. But it is!

In this blog we will explain what an innovation is, which two global types of innovations there are, which ten kinds of innovations there are, how your company can benefit from innovations and why ideally an innovation should always be a ‘breakthrough’.

What is innovation?

When we talk about innovating, most people think of engineers working on a complicated new product. Of course this can lead to an innovation, but The Owls see it as something much broader:

‘A new solution for a recognised problem or an issue that occurs spontaneously. Existing products or services are no longer part of de solution for the problem of for the issue. The innovation could be part of an existing process aimed at realising a breakthrough. We also see innovating in itself, being the process of innovation, as an innovation.’

From this point of view, designing a new profit model can also be an innovation. This is about breaking through the conventional way of doing business in an industry. More about that later.

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Incremental innovation and disruptive innovation

To elaborate on the question ‘What is innovation’: there are two types of innovation.

Firstly, there is incremental innovation. Here, one optimises existing systems or processes rather than disruptively breaking with them. Example is a car running on diesel fuel that economises on fuel consumption. Of course this is a good development, but it does not alter conventional ideas. This type of innovation is popular with companies because it is safer, it involves less risk because the basic organisational structure often remains the same. But a company that clings to this method, can in the long run find itself on a slippery slope. It can lose out badly and prevent itself from implementing a major innovation. Think about Polaroid, once a leading company in the photo camera industry and a pioneer in the field of instant print photography. Alas, management did not believe in the digital camera and the company went broke. Incremental innovation is therefore not regarded as real innovation because it does not break with the present.

Secondly, there is disruptive innovation or autonomous innovation. Here, there is a disruptive break with the present. A breakthrough in conventional thinking is a prerequisite. Take Unilever  for example, that now links its business model to 17 Sustainable Development Goals . Here Unilever chooses to operate from a circular economic perspective then a linear economic perspective. Read more about this in our case study ‘’A vision for Unilever’’ . A company can of course follow a disruptive innovation and/or develop one for itself. If a company develops a disruptive innovation, it can find an untapped market and become market leader. There can be major advantages to developing a disruptive innovation. But it also can be riskier than an incremental innovation. The Owls therefore assists companies from innovation to impact. Check out this link https://www.theowlscooperative.com/nl/onderzoek to read more about the Owls’ approach.

Ten kinds of innovation

At the beginning of this blog we already indicated that there are different kinds of innovations. We also mentioned the renewal of the profit model. Following are ten kinds of innovations based on Larry Keely’s model (2013) that make the question ‘What is innovation?’ more specific. Starting point is the disruptive type of innovation and not the incremental type:

1.     Profit model: companies can make money in a different way. For example: a fashion company that, rather then selling clothing, sells exclusive fashion advice; a totally different way to generate turnover.

2.     Network: Companies can also start to use their network in a different way. For example cement alliances with suppliers or even with competitors.

3.     Structure: to be competitive and unique internally, a company can implement a unique internal structure where for example sales and logistics are tied together to prevent false promises to the customer.

4.     Process: the process within a business model can also change. A car dealer can also visit the customer rather then the customer coming to the dealership. This changes the whole process of doing business.

5.     Product prestation: as mentioned, a whole new product is also an innovation. This is however just one of the ten kinds of innovation.

6.     Product system: a company can also start cross-selling in an innovative way. It can offer a more complete product or service than the competitor.

7.     Service: a company can offer service in a completely different way. McDonalds for example was the first fast food chain that started serving food at tables.

8.     Distribution channels: companies can be the first to choose for shortening their distribution channel or lengthening it. Tesla for example does not use car dealers as intermediaries and this saves hugely on costs.

9.     Brand: a less intrusive sort of innovation can also be the positioning of a company. A unique market position that breaks with conventional views can be considered an innovation.

10.  Customer engagement: another less intrusive sort of innovation. When a company interacts with its customers in a unique way, it is also considered to be an innovation.

Innovations can start at all levels in a company: on a strategic, tactical or operational level. In our blog: “Where does innovation start?” we will elaborate on this. What the best kind of innovation is, we leave open for discussion!

How can your company innovate?

Underpinning innovations are ideas. Innovation is a process. When ideas are developed and structured, this leads to a new or renewed product, process, service or a combination of these that you might want to implement. Where are you on the road from idea to implementation? A handy tool that will help you find out quickly is The Owls Breakthrough Quick Scan©. This online test will give you global insight into the extent to which you attach importance to break through processes and how much impact your can realise. Click on Breakthrough scan to do the test.

And of course, it is important that your organisation becomes an innovative organisation. It might be difficult to implement your innovation process in the entire organisation. Companies often come across ingrained (power)structures. This is expected as a change in the structure of a company is, as mentioned before, an innovation in itself. The Owls help companies in stimulating an innovative mindset. How do we do that? Check our website.  

Finally: it is of course important that your organisation keeps on developing new ideas but also monitors trends and developments to be and remain future proof. Keep asking yourself what impact you want to achieve and are you still on course to achieve that? Want to know how you can benefit from The Owls? Please contact us.

Want to know more?

In our next blow we explain where an innovation starts where an innovation starts and with whom it can start. Want to keep track of The Owls? Follow us on LinkedIn, Twitter and Facebook. We will keep you posted on the world of innovation and creating impact.