Column: the evolution of different types of innovation over time and a novelty in the ecosystem
From 2018, the Oslo Manual proposed that innovation be identified and measured in two large groups and eight subdivisions
If Joseph Schumpeter is known as one of the leading scholars of innovation, who inserted this concept in the world of economics and, in 1934, proposed the existence of five types of innovation (products, processes, market, raw material and organizational), Keith Pavitt it is notorious for bringing innovation to the context of management.
Pavitt’s Taxinomy, from 1984, is still considered one of the main works in the area and gave rise to much that came afterwards. It classifies the types of innovation according to the different sector groups and the flow of knowledge between these groups: dominated by the supplier, intensive scale, specialized suppliers and based on science.
In 2001, that is, 16 years later, Daniele Archibugi published an article reviewing Pavitt’s Taxonomy and relating the publication to the waves of Christopher Freeman’s capitalist development (1987) and to the present. From this article, it is observed that each long period of capitalism ended up creating new organizations and also a new typology of innovative companies .
The types of innovation
Currently, we live in the Information and Communication era, which started with the wave of PCs, passing through the Internet and which today has evolved to the predominance of mobile and innovation based on digital platforms. Specifically, in the last ten years, we have seen (and dominate the main world exchanges in market value) businesses based on platforms , or business platforms , such as Apple, Google, Amazon, Microsoft and Facebook, to name the main ones, in addition to hundreds of emerging unicorns , of which more than 60% have business models based on platforms.
The emergence of a new category does not necessarily eliminate pre-existing organizational forms, but it is a fact that when new organizational forms emerge, all other existing companies are forced to introduce changes at some level. These changes take shape in different types of innovation, which is why it is important to know or remember what they are.
In addition to the publications by Schumpeter and Pavitt, one of the most notorious works in the field of Innovation, is the Oslo Manual, developed collaboratively by industrialized nations that are members of the OECD (Organization for Economic Cooperation and Development). It was created as an international reference guide to collect and use data on innovation and, until its third edition (2005), proposed four types: product, process, organizational and marketing.
From the fourth edition (2018), the Oslo Manual reorganized its typology and proposed that innovation be identified and measured in two major types and its eight subdivisions: product innovation (divided into goods and services) and innovation in business processes (divide into production of goods or services; distribution and logistics; marketing and sales; information and communication systems; administration and management; and development of products and business processes).
Several other types that help to describe the phenomenon of innovation and to distinguish its different objectives and impacts have gained the vocabulary of company managers . Among the four most used, three make theoretical oppositions between two antagonistic models and the fourth treats innovation as a combination of three different types. Are they:
1. Sustainable innovation versus disruptive innovation (Christensen, 1997)
Whether innovation aims to sustain the current business model or break with it — not necessarily with a better or more expensive product or service — but for a business model more adapted to a larger user base, attracting “non-customers”.
2. Configuration, offer and experience innovation (Kelley, 1998)
A set of innovation approaches that must be combined to produce high impact. Configuration innovations are more focused on the inner workings of a company and its business system. Offering products, on the other hand, focus on a company’s main product or service, or a collection of its products and services. And the experience ones are more focused on elements focused on a company’s customer and its business system.
3. Open innovation versus closed innovation (Chesbrough, 2003)
If the innovation process is closed or if companies are open to greater interdependence with external actors to innovate.
4. Incremental innovation versus radical innovation
Whether innovation is carried out in incremental accumulations or if it is radical leaps, generally supported by new scientific discoveries or technological developments, but which do not necessarily change the business model or the customer base.
Agile methodologies in platform innovation
Currently, innovation has been increasingly recognized as the result of the interdependence of ecosystems and, as we saw earlier, of their orchestration via platforms. Among the types described above, which gives greater focus to this approach is the open innovation , or open innovation , and why it has become so popular among medium and large enterprises.
In this new business model based on “platforming”, innovation based on agile methodologies also gains importance , which, unlike the model of McKinsey’s three Innovation Horizons, understands that disruptive innovations do not necessarily have to be long term or from technological breakthrough . On the contrary, they can be combinations of existing technologies, which can happen in a shorter period and still be of high impact.
These methodologies are typically explored by startups , which further strengthens this movement of medium and large companies to seek interdependence with the innovation ecosystem , since it is the actors in agile processes that will have the most flexibility to validate the innovation.