This document discusses different types of innovation. It defines innovation as incremental or radical changes to products, processes or services. The goals of innovation are to improve quality, customer satisfaction, reduce costs and environmental damage. There are three main types of innovation: product, process and service innovation; incremental and radical innovation; and modular and architectural innovation. Radical innovation significantly impacts markets while incremental innovation gradually enhances existing products. Modular innovation changes components while architectural innovation changes how whole systems are configured. The document also discusses different historical models of innovation: technology push, market pull, and an interactive model.

1. Innovation and its Types
Mr. Roshan Bhattarai
Kathmandu, Nepal

3. • There is no shortage of ideas in the world (Invention)
• The challenge is to introduce ideas successfully in the
market (Innovation)
• Innovation= Invention + Commercial Exploitation

5. Innovation
• Innovation refers to incremental or radical changes in
product, process or service
• An innovation can increase profits on the
– Value side (customer value the innovation and pay more
for it)
– Cost side (the company produces the offering in more
efficient way)
– Either way (value is created for the company and
consumer)

6. Goals of Innovation
Goals of innovation may be any of the following:
• Improving quality
• Improving customer satisfaction/service
• Reducing energy consumption
• Creation of new markets
• Reducing Labor cost
• Improving production process
• Reducing environmental damage
• Conformance to regulations
• Extension of product range etc

7. Types of Innovation
i) Product, Process and Service Innovation
ii) Incremental and Radical Innovation
iii) Modular and Architectural Innovation

8. i) Product, Process and Service Innovation
Product Innovation
• Change in how the product is noticed by a consumer or
change in physical structure
• Improvements to make the product more
•User friendly or useful (valuable)
•Effective/efficient
•Integrated with other products, technologies or systems
Examples: Internet access to TVs, CRT to Flat Panel displays etc

9. Process Innovation
• “Process” refers to the interrelated set of activities
designed to transform inputs into a specified output
• “Process Innovation” involves a new or significantly
improved method for production or delivery of outputs
that adds value to the organization/customer
• It makes processes
– Simpler
– Faster
– More accurate
– More reliable
– Less expensive etc
• Example:
– Automation in manufacturing, JIT, CAD etc

10. Service Innovation
• Service involves “intangibles” in a product life cycle, from
initial sales to end of life
• Organizations need to innovate continuously so that they
can improve the levels of service to their customers
• Service Innovation involves new way of providing service
or a new service
• Example:
– Internet based financial services
– Ebay, the internet auction

11. ii) Radical and Incremental Innovation
Radical Innovation
• is an innovation that has a significant impact on a market
and economic activity of firms in that market
• The innovation could change the structure of the market,
create new markets or make existing products obsolete
• “Radical” innovations create major disruptive changes
• Generally complex and implies a difficult, lengthy and
risky process
• The iPhone is a famous example of radical innovation
• It imagined the scope of what a “phone” could do and
affect many aspects including photography, e-commerce,
television, movies, and music.

12. Incremental Innovation
• concerns an existing product, service, process,
organization or method whose performance has been
significantly enhanced or upgraded
• “Incremental” innovations continuously advance the
process of change (gradual change)
• Incremental innovation is the dominant form of
innovation
• A hybrid car is an example of incremental innovation. It
does not change the nature or capability of a car, it just
adds a second source of power
• Offering a washing machine with a more powerful motor
to give faster spin speeds

13. iii) Modular and Architectural Innovation
• Modular Innovation is about
– changing a component without changing how a system is
configured
• It uses the architecture and configuration of an
established product, but employs new components
• Example: A clock powered by solar, only power source is
new, operates in much the same way as any other clocks
• Architectural Innovation refers to
– a change in the configuration of the entire system and how its
components interact
• Example: Introduction of Walkman replacing audio tape
recorders (lightweight headphones instead of speakers,
smaller battery, smaller size)

15. Innovation Models
1. Technology Push Model (1950s-1960s)
• Basic Science > Design and Engineering > Manufacturing >
Marketing > Sales
• Examples: Photocopy machines, typewriters, Telephone etc
2. Market Pull Model (1970s)
• Market needs > Design > Manufacturing > Sales
• Examples: UPS, invertors etc

16. 3. Interactive Model (1990s)
• Integrated approach of Innovation (Technology Push +
Market Pull)
• Examples: Cell phones, Laptops, Internet banking etc

17. THANK YOU!!!