The Four Fundamental Categories of Innovation
In our book, Ten Rules for Strategic Innovators: From Idea to Execution, Chris and I made it clear that our subject was strategic innovation.
We strongly believed that there are many different kinds of innovation, and each requires a profoundly different management approach.
Here are the four fundamental categories of innovation, as described in our book:
1. Continuous Process Improvement
GE's well publicized six-sigma program made continuous improvement a household word. The focus is on incremental process innovation.
2. Process Revolutions
The implementation of new technology to create a significant improvement in process efficiency. For example, the introduction of RFID technology can dramatically improve supply chain management productivity by 30 percent.
3. Product or Service Innovations
Remember Cabbage Patch dolls, Tickle Me Elmo, and Razor scooters? Those were all product innovations- creative ideas that bring in revenue, but don't change existing business models.
4. Strategic Innovations
As described earlier, strategic innovations may include process or product innovation, but they always involve uncertain, new business models.
The cost, timeframe, and risk of each type of innovation increases as we go down this list. We encourage companies to try all four, but we chose to focus on strategic innovation because it's the key to breakthrough growth. It is through strategic innovation that companies lead change, create new lifecycle curves and alter the very nature of their industries.
Finally, the limits of innovation have less to do with creativity or technology than management skill. But that's the subject of another post.