According to data available in the 2022 Global Innovation Index, the level of innovation continues to rise worldwide, despite the global economic downturn and the pandemic. Particularly in the health and environmental industry.
Indeed, innovation is a function of entrepreneurship that is constant and relevant in the business space. It’s essential for the economic growth of any business, nation, or world.
In this article, you’ll learn:
- What is innovation in entrepreneurship
- Why innovation is important in entrepreneurship
- Types of innovation in entrepreneurship
- 3 types of innovation strategies
What is Innovation in Entrepreneurship
You’ll agree that people’s needs and consumption patterns evolve alongside the steady, consistent technology change.
That also informs you that the journey of entrepreneurs is dynamic. No wonder being innovative and curious are qualities of entrepreneurs.
The business environment and marketplace are dynamic. From one change to another. Be it developing new products or services or modifying existing ones to add and give value. And that’s what entrepreneurship innovation is all about.
Innovation brings new ideas to fruition. It could be to develop an entirely new product or make a change in a product, service, strategy, or business model.
Hundreds of years back, people couldn’t slide phones into their pockets. And therefore, couldn’t walk about with them as you can today. Also, businesses could hardly do business online with ease for lack of the facility to do that.
There was no internet. No social media and sophisticated technologies. What has now made that possible?
Innovation! You guessed right.
Why Innovation is Important in entrepreneurship
More than ever, there’s a growing importance of innovation in business. Since innovation is a follow-up effort on creativity, its goal is to solve problems.
One of the importance of innovation in entrepreneurship is that it helps solve complex business problems in the corporate world. And usually, the outcome of innovation is increased productivity of individuals, processes, and firms.
On top of that, business owners and top executives can earn competitive advantages for their businesses by consistently implementing innovative ideas. It could be advertising and promotional strategies, or as the case may be.
In addition, through the adoption of innovative ideas, business leaders, managers, and executives achieve efficiency accompanied by increased revenue.
Types of Innovation in Entrepreneurship
Innovations in entrepreneurship have been classified differently in different contexts. But in this article, you’ll learn the 3 types of innovation strategies in entrepreneurship. They include radical innovation, incremental innovation, and disruptive innovation.
3 Types of Innovation Strategies In Entrepreneurship Explained
#1. Radical innovation
Radical innovation, as its name implies, is the type of innovative strategy that involves a business offering an entirely new solution to an existing problem(s).
To apply this innovation strategy, companies invest lots of time and technology into the process.
Take a moment to think about this:
Between renovating a building and demolishing it to rebuilding a new one, which would cost more effort and resources to achieve?
The latter, right?`
Similarly, that’s what radical innovation is all about.
Through it, existing products, services, or/and business models become obsolete upon the emergence of groundbreaking new ones.
Radical Type of Innovation in Entrepreneurship
A typical example of radical innovation was the launch of the Google search engine in 1998. It became an entirely new way of searching for information online.
Before then, people only used online directories such as Yahoo and the like for finding information. Alternatively, by browsing through websites. But the advent of Google brought a breakthrough to how users could find information online.
So now, you can search for practically anything on Google. By simply typing your keywords.
And boom! What you’re looking for is before you like a fresh pie of pizza awaiting your consumption.
Another example of radical innovation in the book publishing industry was the launch of Amazon in 1994. It caused a notable disruption to the existing market. Authors who never had the capital required to publish their books traditionally in print began to do that.
While on the other hand, book lovers searching for great books in their favorite genres can now do that with a few clicks. That was what they couldn’t do before, except visit physical bookstores. It doesn’t matter if they’re ordering an ebook (kindle version), paperback, or hardcover.
#2. Disruptive innovation
Disruptive innovation involves the execution of an idea designed to cause improvement to an existing product, service, or market beyond customers’ expectations. Through innovation strategy, companies start by examining existing markets to determine if there are any gaps to get filled up.
Upon discovering these potential opportunities in the current market, these businesses create new products and services with new features to augment existing ones. And in test-running these innovative ideas, feedback from potential customers or users (early adopters) is treated as a goldmine.
And it’s on the strength of this feedback that these businesses launch modified or upgraded versions of their product or services.
Disruptive Type of Innovation in Entrepreneurship
A typical famous example of disruptive innovation is the introduction of the iPhone into the smartphone market. And as you know, it disrupted this specific market, offering more features and functionalities than its competition.
Another practical example is the ease and convenience that got introduced by Uber in the taxi industry. Now you book your movement online, and all you have to do now is step out of your apartment and hop into the car waiting for you.
#3. Incremental innovation
Many believe that the two primary types of innovation: are radical and disruptive innovations. But in this section, you’ll be learning about incremental innovation.
So what is incremental innovation?
As its name implies, it’s the type of innovation that allows an organization to develop or build further. Whether on its products, services, processes, technologies, and business model. Incremental innovations can be new designs, product features or functions, and improved business processes. And these altogether may lead to cost reductions.
Incremental innovation involves continuously adding significant newness and value to an existing product or service. So it’s also known as sustaining innovation.
Incremental Type of Innovation in Entrepreneurship
An example is how smartphones have metamorphosed from simple calling devices to gadgets that can perform many tasks in the last decades.
And to sustain their brand and relevance in a fast-changing world driven by technology, most cellphone manufacturers, such as Apple, Huawei, LG, Techno, etc., continue to release updated versions. Year in, year out. To integrate new technology into their products and services and meet their customers’ needs.
Another apt example of incremental innovation is the continuous evolution we experience with computers. Unlike in the past, a single computer occupied a big room, portable computers with increasingly powerful processors.
A Final thought Types of innovation in entrepreneurship
You’ll agree that entrepreneurship is about problem-solving. Based on that, one cannot overemphasize the importance of innovation to your businesses. Every business organization needs it to meet the needs of their customers.
So, there’s no best innovation strategy in entrepreneurship. And since the goal of any entrepreneur is to solve more problems and make more money as profits, you can explore the 3 types of innovation strategies.
In other words, you shouldn’t befriend any of the strategies above. Rather let your business goal as an entrepreneur be your drive for your organization and the team.