Nowadays, if you belong to the corporate universe and the word “innovation” is unfamiliar to you, take it as a sign that you should run and train yourself on this topic. It is no accident that the most recognized companies in the world - such as Google, Apple, IBM and LEGO - have become the bastions of business innovation, whose main characteristic is disruption.

To say that your company is in tune with the latest trends in organizational matters, knowing the bases and varieties of business innovation is a task on your check list that must occupy first place. The benefits of learning and democratizing these methodologies in your workspace will not only generate an impact on the corporate culture, but also on the statistical results of the various areas -and exponentially-, generating a positive and noticeable added value.

In general terms, innovation is the conception and implementation of valuable changes in a product, in its manufacturing process, in the marketing it entails or in the organization itself, under the primary objective of optimizing results and obtaining greater profits. In this sense, innovation incorporates a profound modification that improves the results of an entity and impacts its reference market, being sustainable over time. 

Regarding the implementation of these novel formats within organizations, a study conducted by the IBM Institute for Business Value showed that the majority of participating companies are implementing business innovation by making changes to their organizational strategy, since 94% of leaders plan to participate in platform-based models in the coming years. Likewise, this survey also revealed that managers are considering increasing the application of cloud technology by 20%.

In the short term, companies will bet more on technologies such as artificial intelligence (AI), automation and cybersecurity. 76% of the companies surveyed stated that they would work specifically on cybersecurity issues, while 60% would prioritize process automation. Finally, 20% would choose to focus their efforts on artificial intelligence. 

Basic typology of Business Innovation

Taking into account that the calling card of innovation lies in its ease of adaptation to the environment to which it is applied, we can say that a whole range of different colors and sizes opens up before us. There are them for those who want to go progressively and also for those who want to implement a revolutionary state in their offices in order to generate rapid changes.

Whatever the degree of change implied by this transformation model of a company, you can opt for at least 3 typologies of business innovation. Below we develop them:

• Radical innovation: this type of business innovation - also known as revolutionary - exists to modify the scenario of an organization, regardless of its field. It can occur through a 180-degree change at the company level, in the way of working, in the processes, in the services and products offered and in the way of relating to the client. In cases like these, the exploration of unconventional skills is part of it. Open innovation strategies can be very effective in this sense, because they help expose the problem to multiple points of view.

An example of revolutionary business innovation is Apple's iPhone. Although this product was not the first smartphone on the market, the special features with which the sale was promoted were the ideal combo to be a resounding success.

• Incremental innovation: incremental innovation is characterized by providing new qualities to an established framework without promoting drastic changes as we saw in the previous section. In most cases, this type of business innovation deals with the evolution of an innovation already imposed within the company or organization. This is how both versions complement each other to give rise to a framework with updated adaptations worthy of improvement. For these types of challenges, strategies such as strategic planning, R&D laboratories - Research and Development - and the use of new resources and skill sets to the organization are the key to effectiveness in this sense. Design thinking methods are also often a great tool for internalizing both the problem and the skills needed to solve it.

As an example of incremental business innovation, we can cite the example of Google's email application, Gmail, which was born with the task of sending and receiving emails quickly and easily. However, as time went by, competitive functions were added to improve the customer experience.

• Disruptive innovation: This type of business innovation places emphasis on the market and is known for being a scalable movement that reaches many people at the same time. Visionary Clayton Christensen introduced this concept of business innovation in his study of the faulty practices of good companies. Then he discovered that what is typically considered best practice—listening to customers, investing in continuous improvement, and focusing on the bottom line—can be lethal in many situations. This means that when the basis of competition changes due to technological or other changes in the market, companies can get better and better at the things that people want less and less. When that happens, your product innovation won't help. Final answer: you must innovate your business model.

An example of disruptive business innovation was Netflix. When long ago, companies like Blockbuster reigned in the entertainment market, with DVDs. Analyzing this, Netflix began offering DVD shipments by mail but later made the decision to innovate and began offering the service on a streaming platform through a monthly subscription. Blockbuster had an expiration date, and effectively disappeared from the market almost completely.

• Open innovation: Product production processes are very far from the linear concept when we work with open innovation. This means that products can enter and exit in the various phases, finding new ways to reach a complete MVP. 

Taking into account the current financial situation worldwide, it is not strange to mention that the possibility of working on a project incorporating external agents is a new way that reduces time and resources according to the business model adopted. In this type of business innovation, the leading role of new technologies together with the collaborative and participatory attitude of people belonging to the organization and outside it - such as clients - provides a transformation shock to any plan that is desired to be carried out.

As for its greatest benefits, we can highlight the ease of finding new business models external to the existing one, the agility it provides when incorporating cutting-edge technologies within the company - it allows pilot tests to be carried out in a certain time to confirm whether it is useful or not for the teams -, the collaboration and fusion between companies makes possible an economy of resources and time, the open mind mindset allows for attracting new and good human talents that contribute competitiveness to the company, and finally, it enables a much closer relationship with end clients achieving accurate knowledge about their needs and preferences when developing the requested product.

A clear example of this typology is the case of the BBVA bank's open innovation capsule: Open Innovation. This area aims to provide support and monitoring to fintech startups that managed to scale their business model, through strategic alliances with venture capital funds and investors interested in adding value to companies nascent.