Disruptive Innovation and Value Innovation



Disruptive Innovation and Value Innovation

Introduction

Innovation is notoriously famous for changing the face of the world economy. Be it the assembly line of Ford cars, introduction of SMS on mobiles or Apple iPod. Innovation has been important to bring in a wave of change.

For the emerging economies this phenomena becomes all the more relevant. Innovations help these economies to funnel their growth, increase their GDP and their standard of living. But very few innovations get converted into the idea and even fewer are commercial successes. The commercial success is more important from an emerging economy point of view as if it is not it bleeds an emerging economy more than it will bleed an emerged economy owing to the shortage of resources in emerging economy (Collins 2011).

Innovation: Definition and types

Before proceeding with the research let us focus on what exactly does innovation means. According to some innovation means invention. But then innovation is not necessarily something new. Oxford dictionary defines it as “a new method, idea, product, etc”. So, it is something new but to present an old product/service in a new way is also an innovation by the same definition.

As per Organization for Economic Co-operation and Development (OECD) Innovation is a series of activities leading to the introduction of new products/services or introduction of new techniques to produce the same. It engulfs wide range of varied activities. Innovation is not just limited to production of new knowledge it also means applying the existing knowledge in new settings (Carney 2010).

Certain more important elements of innovation are: It should aim at bringing out better than what exists because new, if not improved, does not necessarily add value. Innovation in business sense should increase the value or should aim at decreasing the costs. Innovation as per Mr. Geoffrey Moore can be classified as:

Disruptive Innovation - aims at creating new market categories which is based on a discontinuous technology change or a business model which is disruptive. These types of innovations are incompatible with existing standards and value chain and they develop their own markets.

Application Innovation - It is also famous by the name of solution innovation and it aims at finding new markets for the existing products by finding their uses which are not yet exploited. They leverage existing value chains but provide a new focus to them.

Product Innovation - This is focussing on existing products working on existing markets but the products are differentiated by the features and functions that others may not have currently. A something extra to this innovation is that almost every product is made up of numerous components and may itself be a component in some other product. So, product innovation is not just limited to adding value in its hierarchy it also involves moving between the levels for more value.

Platform Innovation - This type of innovation focuses on having a simple layer at the top which hides the complexity below it and thus enables new ...