3 Types of Innovation Strategies

“What Innovative ideas can we implement?”

It’s one of the most asked but less understood questions I have faced at work. 

Every time this question is thrown at me, I look to run away. Where do I start thinking about Innovation? I understand Innovation is impactful, but how do you think and plan Innovation? 

As I could not find a way to run away 😔, I thought, let’s create a framework that will help me answer the ‘Innovation Question’ for any industry or company. 

In this article, I am sharing the framework that has helped me answer the ‘Innovation Question’ and has been a starting point in crafting innovative strategies and win at innovation.  

You can explore innovative ideas through the following 3 types of Innovation strategies.

Here are the 3 Types of Innovation Strategies 

Vertical Innovation

Vertical Innovation is the most elementary form of Innovation. This is where you start thinking when you face the ‘Innovation Question’. 

Vertical Innovation means innovating or planning something new on an existing successful idea or strategy line.

Build and Innovate on a Successful Idea until there is no scope for innovation left. If something has worked for you or a product is successful, you keep enhancing and evolving it until you have juiced out maximum potential from it.

So, think about your existing verticals and see how you can make them better to gain more benefits. Please dismiss the myth that Innovation needs to be a magical idea. It could be something as simple as adding Pasta as a Pizza topping for Domino’s.  

For Facebook, the Like button was super successful, so adding reactions like Love, Clap, and more was Vertical Innovation. 

Other prime examples of Vertical Innovations are Apple iterating new generations of iPhone for the last 15 years or Toyota launching 12 generations of Corolla. 

Horizontal Innovation

What if you are out of ideas under Vertical Innovation or want to expand to new markets and add more verticals. 

Horizontal Innovation is innovating new verticals related to an existing idea in the market. 

Horizontal Innovation can be for an existing business or lead to a new business. Every Horizontal Innovation will go through its cycle of Vertical Innovation.

Volkswagen Beetle is an excellent example of Horizontal Innovation; when it was launched it was smaller than most of the cars sold. 

Like button on social media is a Horizontal Innovation, i.e., innovating engagement on user posts. Apple Earpod is a good example, making wireless earphones truly wireless. 

Both, Vertical and Horizontal Innovation fit into a bigger umbrella called Sustaining Innovation.

Disruptive Innovation

As the name suggests, Disruptive Innovation is something that disrupts the market and creates a completely new market.

How do you know if your idea is Disruptive?

If it’s completely different from anything in the market, and it has the potential to kill an existing market and create a new ecosystem – an abundance of more new ideas around it

Apple disrupted the music industry with the iPod, the prominence of digital music and the killer of CDs/cassettes. This sparked new businesses/products like Spotify, Podcasts, and others. 

Tesla is disrupting the automobile industry with Electric Vehicles. It’s creating a new ecosystem of electric vehicles, battery manufacturers, battery stations, and others. It will impact the current ecosystem of the petrol station and fuel dependency. 

The cycle of Innovation Types

How do I use this to plan Innovation?

Keep in mind a simple Innovation Cycle. Every Innovation starts with disruptive Innovation – creating a new market. 

There will be initial Horizontal Innovations within the disruption – creating the first set of verticals for the new market. 

Every vertical will go through a series of Vertical Innovation. Once there is no more scope for Innovation, Horizontal Innovation takes place, and new verticals are innovated. 

This continues until someone does not disrupt the market and creates a new market. 

But, I still want to understand…

How do I answer the ‘Innovation Question’

It’s simple – follow the ‘Cycle of Innovation. First, think about your current verticals and explore if you can develop new ideas to evolve them. If not, then explore what new verticals or avenues you can launch. You think about the markets you can expand to or supplementary products you can deliver. 

Think about disruptive innovation if your company has not been disrupted for a long time, you are looking for exponential growth, or your organization is predicting a drop in business because of new alternative products. 

About Idea Toasters

Idea Toasters is a platform where we share ideas and practices to boost innovation and creativity. Our goal is to build the science of innovation and creativity.