This document defines and describes different types of business innovation. It begins by defining innovation and a business innovation as a new or improved product, process, or business model introduced to the market. It then discusses three types of innovations based on what is innovated: product, process, and business model innovations. The document also discusses the need for innovation from micro and macro perspectives. Finally, it categorizes innovations based on factors like the industry system, opportunities for change, and the innovation process.

1. Business Innovation

2. Define Innovation
 1 : a new idea, method, or device : novelty. 2 : the introduction of something
new.
A business innovation is a new or improved product or business process (or
combination thereof)that differs significantly from the firm's previous products or
business processes and that has been introduced on the market or brought into use
by the firm
 A product is a good or service (or combination thereof). Business processes include
all core activities by the firm to produce products and all ancillary or supporting
activities

3. Business Innovation..
 A product is introduced when it is made available for use by its intended users. A
business process is introduced when it is brought into actual use in the firm’s
operations.
 The minimum requirement for an innovation is that the product or business process
must have one or more characteristics that are significantly different from what was
previously offered- Utilities that create competitive advantage
 An innovation can also result from a series of minor improvements
 The adoption of a new or improved product or business process by a firm that is part of
an enterprise group is an innovation
 Can be categorized to:
1. Product Innovation
2. Process innovation
3. Business Model Innovation

4. Need for Innovation
MICRO Perspective
 Successful innovation allows you to add value to your business so that you can
increase your profits
 Innovation helps you stay ahead of the competition-new ideas to the
marketplace
 Innovation helps to take advantage of new technologies.
 Staying ahead of disruption-Business innovation means keeping track of the
market’s direction in response to potential disruptions or a change in consumer
demand.
 Improving your brand
 Increasing efficiency
 Attract and retain top talent

5. Need for Innovation
MACRO Perspective
 economic growth- Economic growth refers to the increase in the inflation-adjusted market value
of the goods and services produced by an economy over time. It is conventionally measured as the
percent rate of increase in real gross domestic product, or real GDP.
 Future Jobs through Innovation- Technological advancement and increased productivity means
major changes for careers today as well. According to the new World Economic Forum report,
nearly 133 million new jobs may be created by 2022 while 75 million jobs are displaced by AI,
automation and robotics.
 increased well-being and communication- Innovation and economic growth increases well-
being because living standards rise.
 Reduced sickness, poverty and hunger
 Communication and educational accessibility-Technology innovation can also help rural areas
thrive and become more sustainable. Although there are some barriers to technology adoption,
such as low income or user capability, more people can access information an improve their
knowledge despite their socio-economic position or demographic area.
 Environmental sustainability- Sustainable innovations are bringing positive impact to the society
and environment

6. Types of Innovation
Based on the Industry System:
1. Product Innovation
2. Process Innovation
3. Business Model innovation

7. Product Innovation
 The term “product” is defined in the System of National Accounts and
encompasses both goods and services. Products are the economic output of
production activities.
 They can be exchanged and used as inputs in the production of other goods and
services, as final consumption by households or governments, or for investment, as
in the case of financial products .
A product innovation is a new or improved good or service that differs significantly
from the firm’s previous goods or services and that has been introduced on the market
 Relevant functional characteristics include quality, technical specifications,
reliability, durability, economic efficiency during use, affordability, convenience,
usability, and user friendliness

8. Process Innovation
 The term business process includes the core business function of producing goods
and services and supporting functions
 Distribution and logistics, marketing, sales and after-sales services; information and
communication technology (ICT) services to the firm, administrative and
management functions, engineering and related technical services to the firm, and
product and business process development.
A business process innovation is a new or improved business process for one or more
business functions that differs significantly from the firm’s previous business processes
and that has been brought into use in the firm

9. Business Model Innovation
 Business model innovation is the art of enhancing advantage and value creation
by making simultaneous changes both to an organization's value proposition to
customers and to its underlying operating model.
 the conscious change of an existing business model or the creation of a new
business model that better satisfies the needs of customers
 This can be also called as the revenue model, based on which the organization
grow in the market competitively

10. Based on the opportunities for change:
 “Jugaad” Innovation ( Ad-hoc Innovation)
People do some kind of ad hoc arrangement at the local level, may not be patented or
commercialized.
 Systematic(structured Innovation)
The structured or systematic innovation takes place in one kind of enabling
environment.
Leads to intellectual property creation, which can be converted into technology
transfer or some kind of commercialization.

11. Based on process of developing the
innovation :
 Incremental Innovation
 Breakthrough Innovation

12. Frugal Innovation
 Frugal Innovation is closely similar to Social Innovation
 Provide more value to the customer at the minimum possible cost and this
is the idea of a frugal innovation
We provide Y product we provide Z product and customer is looking for X product
and here lies the success of frugal innovation. If customer is looking for X product
provide only X product, do not provide even the least features of Y and Z products.