The 4 types of business innovation

In a highly competitive environment, business innovation has become the work horse of organisations. As Enrique Dans says, “the value of innovation is not in avoiding being copied, but in making everyone want to copy you”. Companies need to incorporate new products, services or processes to maintain their position in the market. However, there are different ways to achieve this added value.

Concept of business innovation

One of the earliest definitions of business innovation is that provided by the Austrian economist Joseph Schumpeter, who introduced the concept to the field of business in his work The Theory of Economic Development, conceiving it as  “the introduction of a new good (product) for consumers or of higher quality than the previous ones, the introduction of new production methods for a sector of industry, the opening of new markets, the use of new sources of supply, or the introduction of new ways to compete leading to a redefinition of the industry”.

The European Commission, for its part, in the Green Paper on Innovation, published in 1995, describes entrepreneurial innovation as “synonymous with producing, assimilating and successfully exploiting a novelty, in the economic and social spheres, in such a way that it provides new solutions to problems and thus makes it possible to respond to the needs of people and society”.”.

In the same vein, the Organisation for Economic Co-operation and Development (OECD), in the Oslo Manual of 2005 defines it as “the introduction of a new or significantly improved product (good or service), process, marketing method or organisational model into the company's internal practices, workplace organisation or external relations”.”.

Types of business innovation

Within the business innovation, In addition, we can also find numerous classifications. One of the most recent is the one proposed by Steve Blank., a renowned entrepreneur and academic from Silicon Valley (California) and the driving force behind the Lean Startup method with his work The Four Steps to the Epiphany.

For this expert, business innovation can be divided into the following groups:

• Individual initiative. This type of business innovation refers to the organisation's own capacity to create a company culture that fosters the creativity of workers and enables professionals to to implement their own ideas or projects. An example would be Google, which has specific programmes for individual innovation, offering employees the possibility to dedicate 20% of their working time to their own proposals.  
• Process improvement. This is business innovation par excellence, i.e. the introduction of new products, services or processes as mechanisms for continuous improvement without modifying the company's activity or business model. This group would include the new iPhone models launched by Apple, the launch of a mobile support as an alternative to Edenred's Restaurant Ticket or the streamlining of Inditex's distribution system.  
• Continuous innovation. In this case, business innovation occurs through the incorporation of new lines of business into the business model based on a constant review of the company. This is, for example, the case of Amazon, which marketed the Kindle e-book as an added value. It is even possible for continuous innovation to end with a comprehensive change in the business itself, as happened with Tiffany's jewellery, which began by selling stationery, or Nokia, which manufactured paper before selling mobile phones.
• Disruptive innovation. This is possibly the most difficult model to achieve as it implies the emergence of a new industry, not only for the company or its target audience, but for society as a whole. This type refers, for example, to the emergence of the car, television, computers, the Internet....