Innovation is one of the most important topics concerning the long-term competitiveness of companies. But what is innovation exactly? Why is innovation management so important for organizations? And what different types of innovation are there?

What is Innovation? (Definition)

The word “innovation” is derived from the Latin verb innovare, which means to renew. In essence, the word has retained its meaning up until today. Innovation means to improve or to replace something, for example, a process, a product, or a service. In the context of companies, however, the term needs a definition:

Innovation is a process by which a domain, a product, or a service is renewed and brought up to date by applying new processes, introducing new techniques, or establishing successful ideas to create new value.

Why is innovation so important?

Organizations have several options to increase their competitiveness: they can strive for price leadership or develop a strategy of differentiation. In both cases, innovation is essential.

Continuous innovation is, therefore, crucial for all companies. The main difference is in the focus of the innovation strategy, which varies considerably from company to company.

This makes innovation one of the most important drivers for the long-term success of companies.

The Right Mindset for Innovation

Innovation requires more creativity and more willingness to take risks than the implementation of typical projects. To successfully realize innovation projects, a different mindset is needed.

The Different Types of Innovation

In the context of businesses, there are different types of innovation.

Digitalization and digital transformation also require companies to rethink and develop new approach.

Many Companies Focus on Incremental Innovation

There are different degrees of innovation. The mere improvement – for example, of processes or products – is called incremental innovation. Major innovations that lead to substantial changes are called disruptive innovation or radical innovation.

The Difference Between Incremental and Disruptive Innovation

For many companies, innovation means taking existing products and changing details: The color, the form, the functionalities, the size, etc.

To ensure their long-term innovation capability, companies worldwide have established an idea management and innovation management system that provides a structured approach: From the development of an innovation strategy to setting up an innovation roadmap and successfully implementing innovation.

Managing Incremental and Disruptive Innovation

For companies, setting up an innovation management is important in order to keep pace with changing customer needs.

Incremental innovation provides competitive advantages in terms of production costs, functionalities, or equipment.

Disruptive Innovation Needs Different Approaches

Companies that want to drive disruptive innovation forward need to take a different approach and pursue a revolutionary path in addition to traditional methods.

Methods for Managing Innovation

The methods of innovation management are as diverse as the types of innovation:

It is essential to select the right tools for innovation projects and to build up the innovation culture as well to increase the innovation capability of a company.

Reference: https://innolytics-innovation.com/what-is-innovation/

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