Jump to section
The 4 main types of innovation
The 4 steps in the innovation process
How it works
Transform your enterprise with the scalable mindsets, skills, & behavior change that drive performance.
Explore how BetterUp connects to your core business systems.
We pair AI with the latest in human-centered coaching to drive powerful, lasting learning and behavior change.
Products
Build leaders that accelerate team performance and engagement.
Unlock performance potential at scale with AI-powered curated growth journeys.
Build resilience, well-being and agility to drive performance across your entire enterprise.
Solutions
Transform your business, starting with your sales leaders.
Unlock business impact from the top with executive coaching.
Foster a culture of inclusion and belonging.
Accelerate the performance and potential of your agencies and employees.
What is coaching?
Learn how 1:1 coaching works, who its for, and if it's right for you.
Accelerate your personal and professional growth with the expert guidance of a BetterUp Coach.
Types of Coaching
Navigate career transitions, accelerate your professional growth, and achieve your career goals with expert coaching.
Enhance your communication skills for better personal and professional relationships, with tailored coaching that focuses on your needs.
Find balance, resilience, and well-being in all areas of your life with holistic coaching designed to empower you.
Library
Research, expert insights, and resources to develop courageous leaders within your organization.
Best practices, research, and tools to fuel individual and business growth.
View on-demand BetterUp events and learn about upcoming live discussions.
EN - US
For Business
How it works
Transform your enterprise with the scalable mindsets, skills, & behavior change that drive performance.
Explore how BetterUp connects to your core business systems.
We pair AI with the latest in human-centered coaching to drive powerful, lasting learning and behavior change.
Products
Build leaders that accelerate team performance and engagement.
Unlock performance potential at scale with AI-powered curated growth journeys.
Build resilience, well-being and agility to drive performance across your entire enterprise.
Solutions
Transform your business, starting with your sales leaders.
Unlock business impact from the top with executive coaching.
Foster a culture of inclusion and belonging.
Accelerate the performance and potential of your agencies and employees.
Customers
See how innovative organizations use BetterUp to build a thriving workforce.
Discover how BetterUp measurably impacts key business outcomes for organizations like yours.
For Individuals
What is coaching?
Learn how 1:1 coaching works, who its for, and if it's right for you.
Accelerate your personal and professional growth with the expert guidance of a BetterUp Coach.
Types of Coaching
Navigate career transitions, accelerate your professional growth, and achieve your career goals with expert coaching.
Enhance your communication skills for better personal and professional relationships, with tailored coaching that focuses on your needs.
Find balance, resilience, and well-being in all areas of your life with holistic coaching designed to empower you.
Resources
Library
Research, expert insights, and resources to develop courageous leaders within your organization.
Best practices, research, and tools to fuel individual and business growth.
View on-demand BetterUp events and learn about upcoming live discussions.
Blog
The latest insights and ideas for building a high-performing workplace.
BetterUp Briefing
The online magazine that helps you understand tomorrow's workforce trends, today.
Research
Innovative research featured in peer-reviewed journals, press, and more.
Founded in 2022 to deepen the understanding of the intersection of well-being, purpose, and performance
Jump to section
The 4 main types of innovation
The 4 steps in the innovation process
You might think there are as many types of innovation as problems to solve. But sorting innovation strategies into logical categories allows you to identify your business’s strengths and weaknesses, opening up opportunities for more innovation and increased profitability.
Few people know that Toyota started as a loom company. Inventor Sachiki Toyoda, trying to save his female relatives from the back-breaking work of operating a manual loom, came up with a steam-powered version that radically increased the efficiency of loom work and improved the lives of thousands of operators.
After this breakthrough innovation, Toyoda set about gradually improving the loom and the process for manufacturing it. This commitment to slow, incremental progress eventually became Toyota’s famous “kaizen” system or continuous improvement.
These two examples of innovation in business show that although breakthrough innovations get all the press, incremental innovations are just as important. What matters is fostering every innovation type to see profound results.
Most professionals define innovation in business as solving a problem in an original way. This typically has two phases: first, coming up with new ideas, and second, applying these concepts in useful ways.
While creativity is part of innovation, they’re not the same thing. A science fiction writer might develop a new construction method that lets her characters build skyscrapers thousands of stories high. But if the idea doesn’t work in the real world, it’s not an innovation.
Businesses that innovate outperform those that don’t, because being innovative:
Increases profitability: Companies can sell innovative products at higher prices, and innovative processes increase efficiency and reduce costs.
Helps businesses stand out: Innovative product features delight existing customers and bring in new ones.
Increases company growth: Expanding into new markets helps companies gain and hold a competitive advantage.
Makes companies adaptable: Business books are full of examples of former market leaders, like Blockbuster and Kodak, that failed because they couldn’t innovate quickly enough in response to a changing market.
Means creating custom markets: When a company releases a fantastic product, it generates demand for that product, leaving competitors scrambling to catch up.
Here are the four main types of innovation. Use these categories to understand where your business should focus its attention to distinguish yourself from the competition.
This refers to improving existing technology in an existing market. Apple gradually adding new features to its iPhones is an example of incremental innovation.
Incremental innovation is a low-risk strategy, as the business already knows both the technology and the market well.
Architectural innovation occurs when a business expands existing technology into a new market. An example of architectural innovation is Uber’s expansion into the food delivery market with Uber Eats.
This innovation type is relatively low-risk, as the company has already tested the technology and knows it works. But the uncertainty regarding the new market introduces unknowns, so architectural innovations benefit from extra marketing investment.
Disruptive innovation, a concept first outlined by Harvard Academic Clayton Christensen, occurs when a company uses a new technology to enter an existing market. Wikipedia is an example of disruptive innovation. Its free digital crowd-sourced encyclopedia entries were a driving force in moving traditional print encyclopedias out of business.
Startups commonly use disruptive innovation strategies to implement a new idea on a shoestring budget. These strategies are most dangerous to large companies engaged in “sustaining innovation”: companies making small adjustments to their business to gradually increase profit margins.
Disruptors can claim market share at the bottom of a market, forcing established companies to raise prices to remain profitable. Disruptive innovations are a medium-to-high risk. Many fail, but as they usually use low-cost resources, the cost of failure is often manageable.
Radical innovation occurs when a company develops and applies a new technology to a new market. An example of radical innovation is Salesforce, an early developer of cloud computing and the software as a service (SaaS) business model.
Its release in 1999 created a new market for business clients who wanted a comprehensive software package to manage customer relationships.
Radical innovation is a high-risk, high-reward strategy. Companies may invest a great deal in developing the new technology and then feel disappointed by customer engagement. But if a radical innovation works, it gains the company a valuable head start in the new market.
While the above categorization covers four general innovation types, here are a couple of alternative ways of understanding innovation for your business.
This first one is useful when considering where to focus your innovation efforts:
Product innovations improve product performance or create entirely new products
Service innovations reduce service costs or improve the customer experience
Process innovations create new methods to make internal company processes (manufacturing, administration) more efficient or flexible
Business model innovations change how a company creates or distributes its products, like switching from a one-off purchase model to charging a subscription fee
Technological innovations are improvements in available technologies
Marketing innovations are novel marketing strategies, like rebranding or expanding into a new form of social media
This second breakdown is helpful when you’re considering adjusting your business’s core operations:
Core innovations are small ongoing improvements, like new packaging or optimized product features, that don’t require a significant change
Adjacent innovations expand existing operations, either bringing an existing product into a new market or developing a new product for the company’s existing market (think traditional car companies developing electric vehicles)
Transformational innovations change the company’s core business profoundly, usually by implementing a new business model, like when Netflix moved from mailing DVDs to streaming films on demand via the internet
Innovation goes through four main stages, starting with a problem and ending with a newly-implemented solution. Here’s what to do in each stage.
Determine the exact nature of the problem: who it affects, what barriers it introduces, and how people tend to solve it. This clarification may involve conducting market or customer research and holding team meetings to pinpoint product shortcomings, service bottlenecks, or sources of lost profits.
Seek possible answers to the problem. Brainstorm with teammates, using one person’s solution to kick-start thinking about another. Also ask your potential target audience or current customers what they think a possible solution could be. And research competitors’ solutions to learn what’s already available and consider improvements.
Pick a set of promising ideas to develop further. Create prototypes or preliminary versions to test and calculate detailed financial projections. After testing and receiving feedback, choose the best solution and develop it into a concrete strategy ready for implementation.
Roll out the solution in minimum viable product (MVP) form to get early feedback. Incorporate the feedback and develop the product into a fully-fledged version ready to distribute widely.
Here are a few ways to foster an innovative mindset in your employees to enjoy increased success.
To generate and freely share creative ideas, employees need to feel confident people won’t judge their ideas. Create an environment of psychological safety by actively listening, praising creative and innovative behaviors, and leading by example.
Research shows that normal on-the-job training leads to increased innovation — but this effect wears off over time. Make sure employees receive regular professional development on top of one-off training like onboarding workshops.
While surprisingly rare in large organizations, innovation-specific training has a positive effect on employee innovation. Consider running sessions with titles like “What’s disruptive innovation?” or “What sets innovative companies apart?” to raise awareness regarding different forms of innovation among your employees.
Consider running competitions among teams for innovative ideas, offering prizes, and awarding grants so employees can research their ideas and develop prototypes.
Singaporean bank DBS, a leader in innovation management, offers a “Gandalf scholarship” of $1000 to employees who commit to learning more about a topic of interest and then teaching it to others. And in 2007, India’s Tata Group started an annual “Dare to Try” program where teams are awarded for taking risks on promising ideas and fail.
Also, examine where you might be unknowingly rewarding behavior that supports the status quo. Eliminate awards for excellence in outdated areas, long or aimless meetings, and any habits that discourage diverse input.
Future-minded leaders combine optimism, pragmatism, and the ability to imagine future outcomes to increase overall team innovation, sometimes by 18%.
For example, Satya Nadella inherited a company culture that had become complacent when he became CEO at Microsoft. He fostered a new company culture where everyone valued others’ opinions and encouraged each other to take calculated risks on new ideas — and Microsoft is now soaring.
One group of researchers recommends identifying blocks to innovation by asking employees to complete the following sentences:
The answer to sentence #1 suggests potential avenues for innovation, while the answer to #2 uncovers why no one pursued these avenues.
The innovator’s bias is the optimism we all feel about ideas we have a personal stake. It’s common for people to consider the advantages of their own ideas and neglect the disadvantages, which is dangerous in the long term. The most effective way to neutralize this bias is to imagine your solution’s worst-case scenario.
Creating a diverse team and putting together cross-disciplinary groups synergizes people with different viewpoints, knowledge, and skill sets, making it more likely they’ll come up with something new.
If the aim is product innovation, for example, product designers are deeply familiar with the product, and marketing staff are knowledgeable about customer needs. Encouraging dialogue between the two will likely yield a product improvement that’s both realistic and likely to draw new customers.
Partnerships with academic researchers are mutually beneficial: businesses benefit from exposure to cutting-edge research, and researchers gain access to a forum where they can apply and test their ideas. Consider approaching a university or research institute or creating a chief research officer position to guide research in-house.
Research and apply the organizational innovation techniques that suit your business context. For example, consider conducting virtual brainstorming sessions, as they generate more ideas than in-person sessions. You could also divide meeting leadership roles. At DBS Bank, for example, a “meeting owner” runs each session and a “joyful observer” notes if the meeting was effective.
It’s easier to talk the talk than walk the walk. Many firms slip into “innovation theater” or “innoganda” (innovation propaganda) instead of doing the hard work to foster creativity. Reflect periodically to make sure you're promoting real innovation rather than just PR.
Thinking carefully about which types of innovation you’d like to cultivate and trying out a few tips to foster it will keep your business healthy and flourishing. Whether you’re disrupting the market with a new service or shaving off a few seconds from a manufacturing process, your customers (and bottom line) will thank you.
Foster creativity and continuous learning with guidance from our certified Coaches.
Foster creativity and continuous learning with guidance from our certified Coaches.
With over 15 years of content experience, Allaya Cooks Campbell has written for outlets such as ScaryMommy, HRzone, and HuffPost. She holds a B.A. in Psychology and is a certified yoga instructor as well as a certified Integrative Wellness & Life Coach. Allaya is passionate about whole-person wellness, yoga, and mental health.
How it works
Products
Solutions
Customers
What is coaching?
Types of Coaching
Resources