Understanding Innovation: The Pioneers Path Four-Ward

Innovating industry is one of the greatest aspirations of any entrepreneur within a capitalist system. The way in which an industry can be innovated can take many forms and can occur through multiple different mechanisms. Often the form in which innovation occurs can often be dubious and hard to reach a qualitative consensus on. This article will aim to dispel the metaphorical fog surrounding the different terms associated with innovation and provide guidance upon what innovation to strive towards.

Disruptive Innovation – What does it actually mean?

Within the Venture Capital space, the term ‘disruption’ is thrown around regularly to describe any manner of new technology set to ‘shake up the way we currently do things.’ Where the term first came from however, and its actual meaning has become greatly misinterpreted since its inception. Commonly used to describe a breakthrough innovation, the term disruption has greatly deviated from its root of ‘disruptive innovation.’

The theory of ‘Disruptive Innovation’ was created by Harvard Business school Clayton Christensen in 1995 whilst teaching as a Harvard Business School Professor. Christensen described this phenomenon as when a new entrant in a market designs their product to be a simple version of existing products, removing the bells and whistles whilst simultaneously reducing the cost of said product. In doing so the new entrant Technology Progress vs Market Impact in the market accesses the perceived undesirable bottom end of the market. By servicing this part of the market, the new entrant amasses capital and resources and begins to build reliable revenue streams.

Once the new entrant has captured this segment of the market and fortified their position they then begin the vertical climb into middle-class products. By doing so the entrant begins to take away business from the existing market leaders through brand reputation and consumer loyalty. This process continues until the new entrant has wedged itself into all aspects of the market, displacing their predecessors as a new industry leader. Once this happens the cycle then repeats, unless certain precautions are made.


Breakthrough Innovation – Revolutionizing technology

Conversely, breakthrough innovation occurs with either a large technological leap or a completely revolutionary business model. In either of these scenarios the core concept is the innovation is coming from within an organization. The result of this is that the breakthrough causes the organization to leapfrog ahead of their competitors; allowing them to be the first to service new, untapped markets. However often with breakthrough innovations, especially those stemming from technological advancements, the markets that are born are usually slow to open-up as customers are sluggish in their reception of this innovation.


Incremental Innovation – The constant corporate grind

Incremental innovation is the gradual progress in both product quality and/or reduction of production costs. This type of innovation is the most common and is occurring within organizations daily. The goal of incremental innovation is to continually improve upon the product and/or business model of an organization. These innovations can range from better cost accounting technology/processes to better supplier contracts, or better quality of product output. In reality to label these advancements as ‘innovations’ is a slight exaggeration as they more so operate as gradual increases in quality or operational efficiency.


Game-changing Innovation – Moulding the future

The last notable form of innovation comes in the form of ‘game changers.’ A very bold label, game changing innovations occur when an organization completely revolutionizes both the market as well as the technological landscape. An example of game changing innovations are your absurdly famous organizations such as Apple, Microsoft and Alibaba. These organizations provided a new technological approach that was not only unique and valuable, but also astoundingly viable from a market perspective. Traditionally a rare occurrence, this type of innovation is beginning to occur more frequently in the 21st century with accelerating rates of technological advancement.


Evidently then, there are multiple avenues to generate innovation and change current industry landscapes. Therefore, businesses must understand the different shapes innovation can take in order to benefit and create impact. Organizations should be savvy in their evaluation of how they innovate and in what capacity these innovations affect current operations.

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