Do you consider yourself to be an innovator? What kind of innovation do you practice? Henderson and Clark have identified four types of innovation: radical, incremental, architectural, and modular. In this blog post, we will discuss each type in detail and give examples of businesses that have succeeded with each one. So, which kind of innovation do you think your business should practice?
The four types of innovation
Radical innovation "establishes a new dominant design and, hence, a new set of core design concepts embodied in components linked together in a new architecture". In other words, radical innovation creates something entirely new that changes how we do things. An excellent example of this is the automobile. The first cars were very different from the horse-drawn carriages that came before them; they had a new design, components, and a new way of doing things.
Incremental innovation "refines and extends an established design. Improvement occurs in individual components, but the underlying core design concepts, and the links between them, remain the same". Incremental innovation makes minor changes to an existing product or process. An excellent example is how businesses have continuously improved upon the automobile's design over the years.
Architectural innovation is "innovation that changes only the relationships between [the core design concepts]". This type of innovation changes how innovators put components together without changing the parts themselves. An excellent example is how Apple has changed how we use our phones over the years. They have kept the same basic design (a rectangular slab with a screen on one side and buttons on the other), but they have changed how we interact with it (through the introduction of touch screens and apps).
Modular innovation is "innovation that changes only the core design concepts of a technology". This type of innovation changes the essential components of a product or process. An excellent example is how businesses have changed how they make cars over the years. They have changed the materials they use, how they assemble the components and even the engines that power them.
Which type of innovation should your business practice?
There is no easy answer to this question. It depends on several factors, such as your company's goals, industry, and competitive landscape. For example, incremental innovation may be the best way to stay ahead of your competitors if you are in a mature industry. On the other hand, if you are in a rapidly changing industry, you may need to practice radical innovation to survive.
How to implement the type of innovation your business chooses
Once you have decided which type of innovation your business should practice, you need to figure out how to implement it; this can be a challenge, but there are a few things you can do to increase your chances of success:
Make sure that you have the right people on your team.
If you are going to practice radical innovation, then you need people who are comfortable with change and willing to take risks.
Create a culture of innovation.
Encourage your employees to come up with new ideas and to experiment.
Make sure you have the right resources.
You need the financial resources to support your innovation efforts, as well as the physical resources (e.g., lab space, equipment) and human resources (e.g., skilled workers). You may need to outsource some of this if you don't have it in-house.
Set realistic goals.
Don't try to bite off more than you can chew. Instead, start small and scale up as you gain experience.
Examples of businesses that have implemented each type of innovation successfully
Radical innovation: Tesla, Uber, Airbnb
Incremental innovation: Ford, GM, Toyota
Architectural innovation: Apple, Google, Facebook
Modular innovation: Boeing, Airbus, Daimler
Many more examples of businesses have successfully implemented each type of innovation. These are just a few of the most famous ones.