Types and Patterns of Innovation

1. CHAPTER 3
SCHILLING 2017
Types and Patterns
of Innovation
By LINDA MAYA SARI
HARAHAP

2. Types and Patterns of Innovation
Technology trajectory The path a technology takes
through its lifetime. This path may refer to its rate of performance
improvement, its rate of diffusion, or other change of interest.

3. TYPES OF INNOVATION
• Product Innovation versus Process Innovation
Product innovations are embodied in the outputs of an
organization—its goods or services. For example, Honda’s
development of a new hybrid electric vehicle is a product
innovation.
Process innovations are innovations in the way an
organization conducts its business, such as in the techniques of
producing or marketing goods or services.

4. TYPES OF INNOVATION
• Radical Innovation versus Incremental Innovation
Radical innovation An innovation that is very new and
different from prior solutions.
incremental innovation An innovation that makes a
relatively minor change from (or adjustment to) existing practices.

5. TYPES OF INNOVATION
• Competence-Enhancing Innovation versus Competence-
Destroying Innovation
Competenceenhancing (-destroying) innovation An
innovation that builds on (renders obsolete) existing knowledge
and skills. Whether an innovation is competence enhancing or
competence destroying depends on whose perspective is being
taken. An innovation can be competence enhancing to one firm,
while competence destroying for another.

6. TYPES OF INNOVATION
• Architectural Innovation versus Component Innovation
Component (or modular) innovation An innovation to
one or more components that does not significantly affect the
overall configuration of the system.
Architectural innovation An innovation that changes the
overall design of a system or the way its components interact with
each other.

7. TYPES OF INNOVATION
• Using the Dimensions
Though the dimensions described above are useful for
exploring key ways that one innovation may differ from another,
these dimensions are not independent, nor do they offer a
straightforward system for categorizing innovations in a precise
and consistent manner.

8. TECHNOLOGY S-CURVES
• S-Curves in Technological Improvement
Many technologies exhibit an s-curve in their
performance improvement over their lifetimes.7 When a
technology’s performance is plotted against the amount of effort
and money invested in the technology, it typically shows slow
initial improvement, then accelerated improvement, then
diminishing improvement

9. TECHNOLOGY S-CURVES
• S-Curves in Technology Diffusion
S-curves are also often used to describe the diffusion of a
technology. Unlike s-curves in technology performance, s-curves
in technology diffusion are obtained by plotting the cumulative
number of adopters of the technology against time.

10. TECHNOLOGY S-CURVES
• S-Curves as a Prescriptive Tool
Several authors have argued that managers can use the s-
curve model as a tool for predicting when a technology will reach
its limits and as a prescriptive guide for whether and when the
firm should move to a new, more radical technology

11. TECHNOLOGY S-CURVES
• Limitations of S-Curve Model as a Prescriptive Tool
First, it is rare that the true limits of a technology are known in
advance, and there is often considerable disagreement among firms
about what a technology’s limits will be. Second, the shape of a
technology’s s-curve is not set in stone. Unexpected changes in the
market, component technologies, or complementary technologies can
shorten or extend the life cycle of a technology

12. TECHNOLOGY CYCLES
The s-curve model above suggests that technological
change is cyclical: Each new s-curve ushers in an initial period of
turbulence, followed by rapid improvement, then diminishing
returns, and ultimately is displaced by a new technological
discontinuity