Classifying Innovation

by Ivar Slavenburg

Earlier, I wrote about the history of the word “Innovation”. As it turned out, the use of the innovation was closely linked to invention. Hence the title of my article, “No innovation without invention“.

Innovation is about asking the right questions

Writer Greg Satell has written a lot about Innovation. In a series of articles he tries to classify Innovation. He publishes the first classification in 2012 "4 Types of Innovation (and how to approach them)?" (Greg Satell, 2012). In his Harvard Business Review article in 2013, he describes the 2 fundamental questions that are the foundation of his classification  "Before You Innovate, Ask the Right Questions" (Greg Satell, 2013). Later, in a blog published in the same year, he clarifies his classification a bit more "What is Innovation?" (Greg Satell, 2013). The 2 fundamental questions he describes are:

  1. Problem definition: is it possible clearly frame the problem and therefore the solution?
  2. Is the domain defined: who is best positioned to solve the problem?

The innovation matrix

Based on these two questions he derives the innovation matrix. As is shown, based on whether the problem and the domain can be determined properly, he defines 4 types of Innovation:

  1. Basic Research: as these types of activities are mostly done in research labs or universities, they is not always classified as Innovation. However, it can’t be denied that results of basic research is often the fuel for further development, ultimately resulting in tangible services or products.
  2. Breakthrough Innovation: in this case the problem is well-defined, but it takes extraordinary efforts to solve it. These efforts can be even of such complexity that basic assumptions of the ruling theory of science need to be adapted (also known as a Paradigm shift).
  3. Sustaining Innovation: cited by Satell as the most common way to innovate, often also called engineering. In this case it is clear what needs to be done and for which markets the solution will be developed. In most cases it concerns improving existing products and services.
  4. Disruptive Innovation: according to Satell, this is the most difficult type of innovation. The product or service is already there and to enter this market it is required therefore to radically change something. In many cases this the business model behind the product or the service. In the graph the example of Netflix is given, as it is on its way replacing both the DVD retail, rental and Service Providers Pay per View models.

Combined, the classification of Innovation as described by Satell results in the following model.

Innovation Matrix (Satell, 2013)
Innovation Matrix (Satell, 2013)

As the term model implies, in reality it is difficult to clearly define boundaries between these 4 types of innovation. Satell categorizes in his latest article the iPod in the Sustaining Innovation quadrant, as such a type of device is on the market already when it is released. If you look back at the announcement video of the iPod, this is something Steve Jobs recognizes. He is not satisfied with how these devices are working though and neither he sees a clear market leader. He thinks Apple can create a better device and reach a very significant market share.

Different types of innovation during the product lifecycle

Ultimately, with the iPod Apple redefines how these type of devices should work, using breakthrough components. Ultimately, with launching the iTunes store, Apple disrupts the music industry. Surely, after that a lot of the developments around the iPod can be called incremental, though the iPod Touch is disruptive again. Not for the music industry this time, but for the phone industry, as it brings large touch screens to the masses, lowering the barriers for the iPhone.

Further Reading

  1. Greg Satell (2012), 4 Types of Innovation (and how to approach them)?. Retrieved from http://www.digitaltonto.com/2012/4-types-of-innovation-and-how-to-approach-them/.
  2. Greg Satell (2013), Before You Innovate, Ask the Right Questions. Retrieved from http://blogs.hbr.org/cs/2013/02/before_you_innovate_ask_the_ri.html.
  3. Greg Satell (2013), What is Innovation?. Retrieved from http://www.digitaltonto.com/2013/what-is-innovation/.
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  1. […] stay focussed on innovation. Based on the blogs “No innovation without invention” and “Classifying Innovation”, we can say that when we try to innovate, […]