So in this module, we're looking at what are some of the basic types of innovations? And the reason why we want to look at different types is we want to have an understanding of the range of types of innovations because there are a lot of different ways that innovations show up. And so by having an understanding of the spectrum of these innovations, you can begin to recognize what opportunities might develop for many of these. So let's start with the obvious one, one of the obvious ones, anyway. It's product innovation. And typically, a new innovative product is the result of what we call a new product development process. There are journals devoted to this. There are engineering societies devoted to this. And product innovations can be the new core products, or they can be additions to product lines, or extensions of product families. They can be any of these things, but they are about products, usually some tangible thing that a consumer would buy and pay for. So a process innovation is another example of an innovation type, and they typically improve activities, often interrelated activities that combine to produce a value-added result for customers. Now, that may mean that the way in which something is done inside of a company, it could be the HR process or how a company runs its HR department, might lead to an improvement in the way in which it operates. That would be a process innovation. They're not selling that to somebody, but they are making that improvement and that innovation effective in causing a positive change. And some examples are things like just-in-time inventories, total quality management, lean manufacturing, supply chain management, and enterprise resource planning. These are big categories, but they often are ways in which process innovations show up. So here we have a service innovation. And in a service innovation, we really have some high level of interaction with customers, for instance, a healthcare customer, a banking customer, a government customer, an education customer. And so the way in which the service is delivered and the nature of the service can be an example of an innovative approach. One example that you see, part of what we're doing here in this MOOC is online education. Online education is indeed a service innovation that's been around for a while now. But before it happened, there was no real way to convey and conduct teaching to a wide variety of people the way we can do it now. Some examples of service innovations are found in banks, mobile apps, in mobile service offerings that they have for their customers, and in, for instance, Amazon regional warehouses for quick and efficient delivery. So if you have ever had something delivered, obviously you can have it delivered by truck, but you can have it delivered by some drop box somewhere. So those innovations really help the providing companies do things more efficiently, save them money, and they are more convenient for the customers. So a position innovation. Now, what could that be? [COUGH] In this this case, a position innovation is a market-oriented Innovation that involves targeting a new offering with a convincing story about its need, about its value, and about its cost leadership. So what you're doing is it's kind of a marketing push out there. You're conveying the value of that innovation. And you're characterizing it as either something a customer might need, something a customer might value, or something the customer could pay less for. And all three of these things would be classified as what we would call a position innovation. So how do innovations emerge? We could say that they emerge in a couple of different ways. They can emerge incrementally, they can emerge radically, or they can emerge in a disruptive way. There's been a lot of discussion about what a disruptive innovation is, but let's look at how some of these things play out. Incremental innovations usually are improvements. They're incremental improvements. They're process improvements, often. Sometimes they could be a physical improvement to a product, or sometimes an incremental improvement to a service. But they do the same thing that the company does, but they do it better, and so incremental innovations add value. Usually it's a small value or a modest value to the customer experience. Some quick examples are razor blades, and here you see a couple of different examples of those. And razor blades are constantly being improved. There's constant improvement and incremental innovation with a razor blade experience. [COUGH] When you see innovations as radical or, typically, breakthrough innovations, they may be something that is much more than incremental. They create entirely new trajectories of products or services. And typically, a technology breakthrough or a scientific discovery will trigger this kind of a radical innovation. And so here are some examples. I mean, a very simple example in the upper left is the candle and the light bulb. Well, that's an old example, but it is an example of a radical innovation. We're not using candles anymore. We're using light bulbs, and pretty soon we're going to use other forms of incremental innovations to light bulbs. And cameras. We went from black and white film to color film to digital cameras, and so those are radical innovations. And so when you see an innovation as disruptive, a disruptive innovation triggers the creation of a completely new market. And that market is based on consumer perceptions that it works good enough and provide satisfactory value. And it means that what is available in the marketplace is not good enough anymore. So eventually, the new innovation disrupts existing markets and displaces the incumbent product or the service, and so that's how it becomes disruptive. And so some examples of that would be things like a Chromebook, which is a very low-cost computer that, really, I think is available to almost everybody, a medical device, or even Groupon, which many people now use as a basis for how they can do their shopping. So these are very disruptive ways in which shopping happens. So other innovation vocabulary that you probably want to be aware of are things like frugal innovation. And typically, frugal innovation are those kinds of innovations that work at the bottom of the pyramid. A management innovation is something that is implemented in a company at the companywide management level, where you can implement total quality management or lead manufacturing. And user-led innovation, where lead users, people who are way out ahead, who are doing things that companies aren't doing yet, but that the companies want to do. Market-pull innovations, where there is a market need and a company responds to that market need, or technology-push innovations where a technology enables a certain form of innovation. So the takeaway of this module is that having an ability to recognize the various types of innovation, and how they are labeled, and how they will increase your understanding of the innovation landscape, where innovation actually fits in, and the presence of innovations in everyday worlds around us, everyday marketplaces around us.
