Distinguishing Three Types of Innovation
Christensen (2014) argues that investing in different types of innovation will influence markets and firms in different ways. Therefore it is important to make a distinction between the different types of innovations, and when assessing them to use appropriate metrics.
Basically, 3 different types of innovations exist:
1. PERFORMANCE-IMPROVING INNOVATIONS: Those innovations will replace old products or models with new and more effective ones. The products or models that are improved are substitutes, as a result that consumers will only buy the new one. Therefore, these innovations do not lead to the creation much more jobs.
2. EFFICIENCY INNOVATIONS: These innovations support firms and organizations to build and sell already established goods or services at lower prices to the same consumers. These innovations can be low-end disruptions (creating a new business model) or process advancements. Efficiency innovations have two important effects. They increase productivity and as such, ...