When we ask the question “what to innovate,” we recognize that the unpredictable nature of change requires us to prepare for many types of innovation options for a wide range of possible futures. Therefore we use the typology introduced by Trott (2008) to gain greater specificity about the kind of innovation that is applied. The seven types of innovation are the following:
- Product Innovation: the development of a new or improved product.
- Process Innovation: the development of a new process, for instance a manufacturing process, talent-management process or supply process; typically driven by digitalization, automatization, robotics, artificial intelligence, and new man-machine interfaces such as tablets and smartphones that can be integrated in managing and optimizing processes.
- Organizational Innovation: a new venture division, a new innovation center, internal communication system, and introduction of a new accounting procedure are some examples.
- Management Innovation: examples include TQM (total quality management) systems, BPR (business processes reengineering) and Agile Development for software engineering.
- Production Innovation: quality circles, just-in-time (JIT) manufacturing systems, new production-planning software as well as new, more advanced and technology-related areas such as Industrial Internet of Things (IIoT) used to connect machines to each other as well as to producers, operators, and even customers.
- Commercial/Marketing Innovation: can be new financing arrangements, new sales possibilities, pricing models with low-entry process levels, market approaches (e.g., direct marketing); this can also be referred to as business-model innovation, meaning the development of new or improved business models and value propositions.
- Service Innovation: examples include Internet-based financial services (typically referred to as FinTech), user-experience-based service innovation using new interfaces like virtual reality and augmented reality.
By linking why with what, we delineate the strategic rationale of the innovation-management work within the organization.