Question: What defines innovation, and what can I do to promote a culture of innovative thinking in my business?

Answer (Part 1 of 2): The Business Week article “Hot Growth Companies” (June 7, 2004) stated that “Building a sustainable enterprise requires speed, flexibility, innovation, and at least a little luck to thrive in the face of relentless competition.” The dictionary definition of innovation is the process of making changes — a new method, custom or device. However, all innovation is not the same. Fortune magazine, in advertising the Fortune Innovation Forum in November, says that “innovation is ideas in action. It’s the origin of competitive advantage, the engine of economic growth, and the indispensable strategy for increasing market share and productivity.”

Donna Prestwood and Paul Schumann, in “Applications of the InnoVantage Grid” ( describe nine different types of innovation and display them on a grid, with the Nature (focus) of the Innovation along one axis and the Class of Innovation (how great the change is from current production) on the other axis.

The Nature of Innovation falls into one of the following three categories:

Product innovations: involve the way things interact with things — the function provided to customers or the form that function takes. Examples include improvement in industrial machinery, consumer goods, software and component parts.
Process innovations: involve the interaction of people with things — the way a product is developed, produced and provided. Examples include improvements in manufacturing, distribution and development systems.
Procedure innovations: involve the way people interact with people — the way in which products and processes are integrated into the operations of the enterprise. Examples include improvements in marketing methods, administrative methods, sales terms and conditions, and requirements generation.

The Class of Innovation falls into one of these three categories:

Incremental innovations: those that reflect a relatively small improvement over present products, processes, and procedures — advances that are a little better, a little faster or a little cheaper.
Distinctive innovations: those that provide significant advances or improvements, though not ones based on fundamentally new technologies or approaches.
Breakthrough innovations: those that are based on fundamentally different technologies and approaches, and which allow the performance of functions that were previously not possible, or the performance of presently possible functions in a manner that is strikingly superior to the old. Prestwood and Schumann go on to say that “breakthrough innovation results in the creation of a new industry or class of technologies,” which “result in a significant number of distinctive innovations, and, these, in turn, result in a flood of incremental innovations.”

Source: OrlandoSentinel, here. (free registration required)