Types of Innovation
“Companies must accept the inevitability of change by valuing innovation above past success” (Utterback 1994). In order to maintain a competitive advantage and to countervail the influences of a non-friendly environment, companies should struggle in continuously innovating. As Michael E. Porter states in The Competitive Advantage of Nations (1990),
“Companies achieve competitive advantage through acts of innovation.” and “They approach innovation in its broadest sense, including both new technologies and new ways of doing things”. These statements focus on the centricity of innovations in every industry, both as disruptive innovations, which are able to change radically an industry thanks to their impact, and as evolutionary or marginal innovations, renovating products or processes without completely disrupting them.
The financial services industry is on the brink of major innovation. This is important since there is strong evidence that the development in this sector contributes to the economic growth.
From a practical point of view, the innovation can be in the following:
- • Product (or services)
- • Process
- • Organization
- • Business models