Innovation and how to classify it

What Is Innovation, And How To Classify Its
Various Aspects
A practical approach for using the right vocabulary in a competitive
environment that comes with cost and time restraints.
Public Talk At www.IP-Lawyer-Tools.com on 12 December 2021
by Martin Schweiger
www.IP-Lawyer-Tools.com

The Basic Definition Of Innovation
Do Something that is
a) New
and that
b) Generates Profit
and all that
c) Done in a Short Amount Of Time
Anything that does not fulfill the criteria b) and c) is „inventing as a
hobby“.

Existing Products New Products
Existing
Market
New
Markets
Increasing Risk
Increasing
Risk
Increase Market Penetration
(= find more customers for
the existing product in the
existing market)
Do Market Development
(= find customers for the
existing product in other
markets)
Do Product Development
(= alter existing product so
that it addresses the needs of
more customers in the
existing market)
„Development“
„Incremental
Innovation“
Diversification
(= „non-incremental innovation“)
„Transfer
Innovation“
(ca. 75%) „Breakout
Innovation“
(ca. 25%)
The Ansoff Matrix
re-visited:
Classify Innovation
By What You Do
And What You
Want To Achieve
„moving up the
S-Curve“

Now Chose Your Own Terminology
• Breakthrough Innovation
• Pioneer Innovation
• Ideation
• Invention (Patentable vs.
Non-Patentable)
• Disruptive Innovation
• Radical innovation
• Architectural Innovation
• Schumpeter Innovation
and many more …

Outlook:
Managing
Innovation
Stage-Gate and Waterfall
Management Methods work well
Management Methods may or
may not work for parts of the
R&D project
Management Methods will NOT
work. Use the Right People and
leverage on Agile Management
Methods.

Outlook:
Which
People For
What
Innovation
60% of the engineers like that,
because they are not creative at
all. And the creative 40% of the
engineers will find that work
boring on the long run
only the creative 40% of the
engineers will like that work
only 1% (or 0.1% in larger
companies or 0.01% in large
companies) of the engineers can
do that: „Serial Innovators“
Important note: a large part of the creative 40% of the engineers can never create any successful innovation. Most of
them are only inventors, creating new things without the intention or knowledge of how to generate profits from them.

Outlook:
Marketing and
Marketing Support
Goal: Increase Sales
Classify That By
What You Do And
What You Want To
Achieve:
a) Sell more to the
existing customers
b) Increase Sales
Price
and
c) Find new
customers

Existing Products New Products
Existing
Market
New
Markets
Increasing Risk
Increasing
Risk
Increase Market Penetration
(= find more customers for
the existing product in the
existing market)
Do Market Development
(= find customers for the
existing product in other
markets)
Do Product Development
(= alter existing product so
that it addresses the needs of
more customers in the
existing market)
Diversification
(= „non-incremental innovation“)
Outlook:
Marketing and
Marketing Support
Goal: Increase Sales
Classify That By
What You Do And
What You Want To
Achieve:
a) Sell more to the
existing customers
b) Increase Sales
Price
and
c) Find new
customers

That is what happens when you let
incremental innovation take place on an
almost perfect product, for 25 years.
And if you think that this applies only to mechanical inventions
then you are wrong.
Just ask a programmer who maintains the control software of
an electric drive that is 25 years old. He will tell you that every
fix that was done to that computer program brought in at least
one more bug.

Conclusions
This is how innovation takes places at different levels
1) Incremental Innovation
An ongoing improvement and further development of an existing product or service along the S-curve
to match more market needs, to increase sales price, to reduce production costs etc.
OR
2) Non-incremental Innovation
Produce enormous performance increase in existing products (5-fold) or at least 30% cost decrease in
cost to produce: doing something that has not been done before, entering "a white space on the map"
by providing an entirely new set of performance features. This is moving the company into a new
competitive space.
a) Transfer innovation: products or services that another firm already has commercialized, just
in a different business area.
OR
b) Breakout Innovation: products or services that will move a firm into a new market space,
with products for which there are no competitors already in the market

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