Free Course: What is Innovation?

Links: Home | Contents

Levels of Innovation

We have now established a definition for innovation but, as shown previously, innovation means different things to different people in terms of the level of impact. Innovation may have a significant impact for just two people, but it is more likely to be associated with having an impact for a department, business, corporation, or even globally. Here we describe various levels of innovation.


It is worth pointing out here that impact is a matter of perspective.

There are usually at least two perspectives to any innovative impact:

» The perspective of the developer and provider of the innovation (e.g. the seller).

» The perspective of the consumer, or user, of the innovation (e.g. the buyer).

Note that it is also possible to fulfil both a seller and buyer type role (e.g. within a supply chain).

In actual fact, there are more than the two perspectives above.

Common Terms

In reality the impact of innovation falls somewhere along a spectrum of continuous values that may range from no impact to a major global impact (or even beyond, in the future). However, within the "innovation industry" there are some common terms in use that represent regions along the spectrum.

Change Nothing - Carrying on doing the same thing, in the same way, will have no innovative impact; and this could turn out to not only have no benefits but also represent a risk. [See: Benefits of Innovation.]

Incremental Innovation - Relatively small, easily achievable, innovations are made to a product or service; and these are intended to add some value to the product or service, and / or deliver it more efficiently (e.g. at a lower cost). This is a common form of innovation, and may in some cases simply represent an organisation trying to catch up with its competitors, or copying what they have seen done elsewhere. This copying aspect sometimes overlaps with what is called "benchmarking", "good practice" and "best practice".

Radical Innovation - This goes much further than incremental innovation, and the changes to a product or service are likely to be very significant. It may even involve the creation of a completely new product or service, or a very unique way of doing something.

Disruptive Innovation - Some radical innovations have such a large impact that they are widely adopted across an entire marketplace, section of society, or globally. This means that the old ways of doing things are abandoned by the majority, and organisations that fail to adopt such innovations are significantly disrupted and face probable failure. For those that embrace the disruption, and adopt the new way of doing things, new benefits will accrue. (Note: The original definition of this term has a specific meaning and only represents a subset of what others mean when they talk about disruptive innovation.)

Another Perspective

Here is another way of looking at levels of innovation.

Level 0: No innovation - Continue doing what we have always done.

Level 1: Departmental innovation - New "innovative changes" are made to what a department produces and/or the way the department functions. A department may buy in a new IT product and/or change some of its processes. The department may think this is innovative, but often the department is just adopting some aspect of best practice. For example, it may simply be copying what a competitor does.

Level 2: Organisational innovation - Similar to departmental innovation but with a framework to support the innovation across all departments in the organisation.

Level 3: Incremental product or service innovation - A new version of a product or service is introduced into the marketplace. This is incremental innovation. For example, each year the latest version of a computer or mobile phone is released. Sometimes the product enhancements are relatively minor (e.g. more memory, faster processor); sometimes major new features are incorporated. Sometimes an existing product may be enhanced by including a feature that is used on a different type of product.

Level 4: New product or service innovation - A new product / service is released that implements a new concept - high level innovation. For example, the first release of a product type (the first car, aeroplane, or spaceship). This level of innovation may apply a new concept to an existing product or service, e.g. a car that drives itself. Its impact on business or society will (eventually) be very significant. Innovation that radically changes an aspect of business or society is sometimes called "disruptive innovation" - typically the majority of people (or businesses) will adopt this as it provides outstanding benefits, compared to the traditional way of doing things. Another term associated with high impact innovation is "blue skies research".

Try the quiz to test your understanding of innovation. Under the stretch task you have the option to rate how innovative your own organisation is currently.


Links: Home | Contents