8 Types of Innovation (With Examples and Integration Tips)

Updated 18 September 2022

Keeping up to date with changes and developments may help an organisation or business unit maximise its success and profitability. Prioritising innovation is one way a business can benefit from the changes taking place so it can make improvements, develop solutions to challenging situations and add value. Understanding the different forms that innovation can take and what this can look like may help you create and integrate it into your areas of responsibility. In this article, we outline eight different types of innovation that exist with relevant examples of each one and provide you with tips for integrating them.

Related: Innovation Skills: What They Are and Why They're Important

8 types of innovation

There are several types of innovation. Here are eight different types a company may adopt to improve its business practices:

1. Product innovation

Product innovation involves visibly improving a product's performance and updating or upgrading its characteristics. It may include creating a new product or enhancing or adding features to an existing one. As a product designer or manufacturing and production manager, you may consider using product innovation to meet evolving customer requirements or help the company to access an entirely new market. A business may adopt this form of innovation as a preemptive measure to become more competitive or reduce costs to help maintain its current market position and profitability.

An example of product innovation may be a manufacturer of party supplies transitioning from offering customers plastic disposable cups and plates to offering ones made from recyclable paper. The manufacturer may decide to do this after undertaking a customer survey and market research and discovering that many customers prioritise shopping from businesses that offer more environmentally friendly product choices.

2. Service innovation

As a service manager or supervisor, you can integrate service innovation into a business by improving or launching a service concept in a new market. This may also involve delivering an existing product or service in a more convenient, efficient and affordable way to customers or integrating value-added services into an existing service. This form of innovation may provide a valuable way to differentiate a business from its competitors. An example is a ride-sharing service that offers affordable transportation, adding a delivery service option for customers to send packages to different locations.

Related: Service Businesses Definition (With 22 Service Examples)

3. Process innovation

A business process analyst or specialist can create or adopt a range of processes that help transform a business's raw materials and use different skills, equipment and technology. A company may consider using process innovation to improve its product or service production and delivery to make them more efficient and cost-effective. This innovation may relate to product manufacturing or include improving secondary or supporting business processes. A company may facilitate process innovation by integrating innovative technologies or methods of operation.

An example of process innovation in action is a coffee roaster selling bulk packages of roasted coffee beans to various cafés. The roaster can integrate product and sales management software that automatically reorders a client's usual volume of coffee every month. This innovation doesn't directly impact the coffee's quality but affects how clients receive it by ensuring they never run out of coffee.

4. Technological innovation

Technological innovation is relevant to business analysts, project managers or systems experts. Integrating new and improved automated technology, software or machinery or enabling more affordable and efficient processes can reduce product variability and improve quality. Technological innovations may produce a more efficient or connected customer or client experience. An example of this is a gym that installs treadmills that record a person's performance and store the information in a cloud. The gym may also consider creating a mobile phone application where the person can review their performance.

Related: Disruptive Technology: Definition, Examples and Benefits

5. Business model innovation

Someone who oversees the operation of a business may benefit from business model innovation to address specific challenges. Business model innovation involves changing how a business functions and makes money and changing what customers it targets, how it targets them and what it uses to target them. This type of innovation also involves changing how a company adds value and what type of decisions it makes. Integrating business model innovation can involve taking calculated risks. It's also a good way to keep up with trends, manage market saturation or address fluctuating profit margins.

An example of this is an online makeup retailer experiencing poor sales as it faces increased competition from other online beauty retailers. The retailer may revisit its business model and switch to offering monthly subscription boxes of curated and themed makeup products. This business model allows the business to better plan its product demand and helps it secure a more stable income.

6. Marketing innovation

Marketing innovation can expose a product or service to a new market or increase current market share by alerting more customers to what a company offers. It may help a business better connect and engage with new customers by finding new uses for an existing product or highlighting qualities customers might not be aware of.

An example of this is a menswear boutique that specialises in designing and creating bespoke tuxedos for male grooms. The boutique may expand its market base by advertising its services to women or non-binary individuals who may prefer to wear a suit to their wedding.

Related: What Are Marketing Trends? (With Some Examples of Trends)

7. Architectural innovation

This innovation refers to how a business combines various system components to create or add value. It can also involve revisiting these combinations to determine areas that may benefit from improvement. This may include improving one of the core business systems, including existing networking, accounting, manufacturing or inventory systems. It does this without changing the fundamental components of the system itself or altering or changing these components. A common example of this is businesses that develop certain technologies for industrial use and rework how these components interact to create smaller versions of the product for a retail market.

8. Social innovation

Social innovation involves adopting or developing new practices or tools a business can use to meet its responsibilities. Non-profit and commercial companies often rely on social innovation and may use it to create improvements in a wide range of societal areas. Communicating these innovations to customers can help them view the business positively and help the company become more sustainable. An example is a business that manufactures certain products, switching to using less energy-intensive machinery to reduce its reliance on fossil fuels and communicating this to customers in print adverts.

Related: Sustainability in Business (With Definition and Tips)

Tips for integrating innovation

The following tips may help a business select the best form of innovation and integrate it effectively:

  • Adopt an integrated approach. It's potentially challenging to adopt an innovation in one part of a business without affecting how the rest of the business operates. Undertaking an integrated approach may help a company preview how proposed changes might impact other areas and allow it to adjust its integration accordingly.

  • Foster communication. If an innovation involves multiple individuals in a business, it may take some time to explain its benefits to them and answer any questions they have. Creating open communication channels and encouraging everyone involved to raise any concerns may improve the chances of success.

  • Encourage innovation. Cultivating a culture of innovation may encourage businesses to adopt major changes more easily. A business may encourage its employees to become more innovative by allowing them to suggest and integrate new and improved ways of undertaking their responsibilities.

  • Track your efforts. Tracking the cost, time and effort involved in integrating an innovation may help you determine if it has added value to the business and identify areas that may benefit from improvement. It may also help motivate further innovations with the business leaders.


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