Harnessing the Four Types of Innovation in Business

Microsoft. Apple. Google. Amazon.

These are just a few of the most groundbreaking companies in the United States. The ones that disrupt existing industries — or create entirely new ones. They’re known for being fearless and fast-paced. They never settle for the status quo, and they go to great lengths to achieve world-changing results.

What do these brands have in common, and why do they consistently outperform their competitors?

The answer is innovation.

What is Business Innovation?

Innovation is a popular buzzword in business, often used interchangeably with terms like creativity and progress. But business innovation is a unique concept. It’s not merely having new ideas or making changes to differentiate your company.

Innovation is solving real problems with unprecedented solutions.

For a company to thrive, it must be innovative. The alternative is offering the same solutions over and over, or offering products and services that exist “just because” without addressing any real pain point.

Most business executives are eager for their organizations to be innovative. But before any of us can attempt to create innovative solutions, we must understand the four types of business innovation — and how to foster them.

What Are the 4 Types of Innovation?

When we talk about business innovation, we aren’t always talking about one strategy. There are four types of innovation, each with a unique purpose. The four types are:

Incremental

Incremental innovation means slowly improving existing solutions for your current markets. If your company created payroll software that you update with exciting new features each year, that’s incremental innovation. Every single company — without fail — must devote time and energy to incremental progress to stay competitive.

Disruptive

Disruptive innovation is about introducing new solutions into an existing market, eventually surpassing more established solutions. Apple is a classic example of this type of innovation. Before Steve Jobs entered the scene, computing was a complex and expensive process reserved for corporations and experts. But Apple disrupted the industry with the personal computer by making it accessible to the average user.

Architectural

Architectural innovation is leveraging existing solutions to reach new markets. The tech industry is rife with this type of innovation. Think of Google, which started as a simple search engine and slowly used its existing tech to build an entire portfolio of solutions, including email, cloud storage, and productivity software.

Radical

Radical innovation is the most, well, radical. It means creating new solutions for entirely new markets. This type of innovation is what most of us think about when we hear the word “innovation.” When a radical innovation hits the market, it usually changes how we live, work, communicate, and more. Netflix radically changed the entertainment industry, first through its mail-order DVDs and later through its TV streaming service, which is now the status quo for home entertainment.

How to Foster the 4 Types of Innovation

Each branch of innovation has a place in business. The most successful companies are the ones that foster more than one, if not all of them, as you don’t want to put all your eggs in one basket. Fostering the talents of different types of innovators helps diversify your company’s unique selling points, which strengthens your stake in your specific industry.

If you’re eager to encourage innovation at your organization, focus your leadership on a few key areas.

Foster Diversity

The research is clear: Diverse teams are more innovative, because innovation requires thinking outside the box. If everyone on your team has the same background and perspective, they’ll most likely bring the same solutions to the table over and over again. But a team of unique innovators has something fresh to offer. As they collaborate and share different worldviews, ideas spark and something completely new may emerge.

Build Trust

Trust is a key ingredient in innovation because it gives innovators permission to take ownership and lean in. And once they do that, the breakthroughs never cease. On the other hand, leaders who micromanage only accomplish one thing: control. And their team members will do no more than exactly what is asked of them. They’ll maintain the status quo instead of solving new problems.

Embrace Failure

Failure isn’t fun, but it’s a natural part of innovation. Think back through all the companies I’ve named throughout this article, from Apple to Netflix. Every single one of them, along with every other successful brand, has experienced failure along the way. By nature, innovation requires risk. And only those willing to embrace the risk and learn from failure will achieve great things.

Innovation Sustains Your Company

What is business innovation? It’s how your company stays relevant and competitive. It’s how you grow, year after year. This doesn’t necessarily mean you’re constantly disrupting or radicalizing the market — it may simply mean you’re improving the innovations you’ve already created. But continual growth is vital in the modern business world.

Focus your energy on fostering diversity, building trust, and embracing failure. You’ll be amazed at what your team can accomplish.