Types of innovation

Scholars have identified at a variety of types of innovation, including for example:

* Business Model innovation involves changing the way business is done in terms of capturing value e.g. Compaq vs. Dell, hub and spoke airlines vs. Southwest, and Hertz/Avis vs. Enterprise.

* Marketing innovation is the development of new marketing methods with improvement in product design or packaging, product promotion or pricing.

* Organizational innovation involves the creation or alteration of business structures, practices, and models, and may therefore include process, marketing and business model innovation.

* Process innovation involves the implementation of a new or significantly improved production or delivery method.

* Product innovation, involves the introduction of a new good or service that is new or substantially improved. This might include improvements in functional characteristics, technical abilities, ease of use, or any other dimension.

* Service innovation, is similar to product innovation except that the innovation relates to services rather than to products

* Supply chain innovation where innovations occur in the sourcing of input products from suppliers and the delivery of output products to customers

For example, financial innovation occurs as new financial products and services are developed, combining basic financial attributes (risk-sharing, liquidity, credit) in innovative ways, as well as exploiting the weaknesses of tax law.

To address problems or capitalise on opportunities, new financial products and services are developed, new business models emerge, and business processes are adapted and improved. Financial innovation, therefore, may be seen in general to involve most of the above mentioned types of innovation.