*Exploring the Different Types of Innovation for Firm Competitive Advantages DOI: http://dx.doi.org/10.5772/intechopen.111820*

vision is as follows: "A world of proven talent delivering innovative solutions giving our customers a unique competitive edge enabling societies to master their most vital challenges and creating sustainable value", [7]. GE's purpose is "We rise to the challenge of building a world that works" [8]. Apple's vision statement is "to make the best products on earth and to leave the world better than we found it" [9]. Such firms focus on NPD innovation. They continually seek to develop new products and compete by being at the forefront of innovation. Technology innovation is complex, causing many firms to fail and new products to fail. Scanning through the TOP technology companies in 2010 and comparing that list to the TOP technology firms in 2023. Only 2 of the TOP 10 firms from 2010 appear in 2023, namely: Apple and Amazon. Thus, one can say that it is challenging to maintain one's ranking. It requires consistent innovation and being able to meet market needs, **Table 2**. It requires one to stay ahead of the competition. NPD is not easy, and it requires firms to look at opportunities for NPD continually. Moreover, [12] highlighted that "Nearly 85% of companies say that innovation is critical, yet 75% of the world's 1000 largest publicly listed corporations report that they are failing to out-innovate their competitors, and 42% of companies fear they are at risk of being disrupted".

From an NPD perspective, let us understand how product innovation occurs. The theory on technology S-Curves (Foster curves) is well known and is widely published. Let us consider **Figure 2**, where the Technology S-curve is illustrated. Technology A goes through a period of infancy, then it goes through a growth phase, and thereafter a phase of plateauing and decline which occurs when the technology reaches its ultimate performance limit and no further product innovation is possible. The market has a certain level of performance demand, Technology A supersedes this demand, and the mainstream market receives technologies which are beyond what it can use. For example, consider high-performance automobiles. These vehicles can reach top speeds which we cannot drive at as there are specific road ordinance regulations which prevent us from doing so. Notwithstanding this, automobile manufacturers continue to innovate, bringing new high-performance vehicles to market. The reason for this is because of consumption. Consumers buy these high-end products because it appeals to them as a nice-to-have, despite them being unable to extract the total value of the automobile.


#### **Table 2.**

*TOP technology firms comparing 2010 to 2023.*

**Figure 2.** *Technology S-curves.*

These manufacturers innovate because of market demand, customers demand more, and firms continue to innovate more than what the market can use. Firms continually innovate to compete and leapfrog other firms (competitors). Now consider Technology B, from **Figure 2**; while Technology A is still in its infancy, Technology B is developed by competitor firms; therefore, for a certain period in time Technology A and Technology B are competing, Technology A is seen as the older technology soon to be replaced by Technology B. Technology B promises even more technological innovations beyond what the market requires; in the same way, Technology C is developed to replace Technology B, which is a continuous cycle of innovation. However, one must be cautious of the market needs.

#### **2.2 Technological innovation: architectural innovation**

Architectural innovation is described as combinations of existing technologies to create novel innovation solutions. Different technological components are integrated to create a novel system of technologies which, once integrated, offer a different value to customers. Architectural innovation only affects a product's architecture without changing the fundamental components. Architectural innovation enables firms to create solutions that enable them to maintain or expand their customer base without developing new technologies or products. Moreover, it comes at a lower cost and less risk than NPD. Note that architectural innovation has risks of diminishing returns; there is only so much novelty one can extract from the existing combination of technologies. Note that architectural innovation is about re-configuring existing technologies or products to offer more value to an existing market or a potential new market.

Some examples of architectural innovation include:

*Exploring the Different Types of Innovation for Firm Competitive Advantages DOI: http://dx.doi.org/10.5772/intechopen.111820*


#### **2.3 Non-technological innovation: process innovation**

Now let us consider process innovation; when technology is in its growth phase, and a dominant design has been reached, there is not much additional benefit from the novel emerging technology, so firms start focusing on process innovation. The dominant design is what the mainstream market demands an acceptable product that conforms to the norms and beliefs of society. Process innovation is when firms have exhausted economic benefits from product innovation and now seek opportunities to extend the product life cycle (PLC) so that they have a longer window to exploit the market. In process innovations, firms focus on how to manufacture and make innovations in terms of manufacturing at a lower cost, improving speed to market, etc. They explore opportunities, including how to improve quality, improve reliability, be more flexible to customer demand etc. Many firms can gain much additional revenue by focusing on process innovation. Process innovation spans 50% of the PLC. Therefore, while product innovation is essential, so is process innovation. There are many opportunities in the second half of the PLC which firms need to exploit from a process innovation perspective.

#### **2.4 Non-technological innovation: organizational or business model innovation**

There are many definitions of organizational innovation, [13] states that this type of innovation enables the firm to achieve better performance thresholds. Hamel [13] discuss that organizational innovation is about how managers do what they do. Alves et al. [14] cited the Oslo Manual Organization for Economic Co-operation and Development (OECD: 2005), where organizational innovation is "the implementation of a new organizational method in a firm's business practice, workplace organization

or external relations". Given these definitions, organizational innovation may be seen as the firm's ability to re-organize itself so it can better respond to market needs. Organizational innovation may be viewed as the ability to improve and increase a firm's performance through reducing administrative practices and transaction costs, improving the workplace environment and, as such, laying the foundation for better productivity and improving firm competitiveness.

Organizational innovation also includes better work processes and business process re-engineering; it is about operational excellence. It is also inclusive of developing dynamic capabilities that will propel the firm into new ways of working that enable the firm to adapt to market requirements and hence develop competitive advantages to outsmart the competition. Re-engineering the supply chain, applying different sourcing methods and reducing input costs are all part of organizational innovation. Applying and adopting different production and operational methods are all part of organizational innovation. In organizational innovation, one can leverage many theories and models to mention at least the resource-based view (RBV) and transactional cost economic (TCE). Where in the RBV, one tries to obtain the best value from the resources of the firm and in the TCE view, one tries to reduce the costs of transacting.

Organizational innovation also involves new and emerging technologies and methods, for example, the 4th Industrial Revolution (4IR) technologies which many claim improve connectivity and improve the throughput of the firm. 4IR technologies also enable different organizational methods of working; for example, remote working reduces the need for offices, thereby reducing the firm's infrastructure costs.

Other examples are digitalization; many firms are employing technologies to streamline operations and business processes. This is all in an endeavor to improve efficiency and improve effectiveness.

## **2.5 Non-technological innovation: marketing innovation**

Marketing innovation can be described as the firm's ability to adopt different marketing approaches that will enable more effective use of channels of communication to facilitate the delivery of products and services to serve its customers better [15]. Marketing innovation is essential for NPD; there is much uncertainty when new products are introduced into the market. Notwithstanding that new and emerging products have the potential to provide customer benefits with different core technology, there is much uncertainty for both the firm and the customer [16]. Marketing innovation can assist in reducing these uncertainties and enable the firm to develop new relationships with potential new customers and to understand their behavior and learning requirements. Leveraging marketing resources such as brand name, reputation, and loyalty can also play a significant role in driving product diffusion. Marketing innovation also involves lead user analysis. Lead user analysis is where a select group of early adopters of the product are leveraged to test the appetite for the new product or technology; they also help with product development, ensuring that the new product will meet the expectations of the mainstream market. Marketing innovation is not only about the diffusion of new products, but marketing innovation can also play a significant role in portraying to customers that incremental product innovations are indeed novel [16].

Marketing innovation goes beyond supporting the diffusion of NPD. Manufacturing firms have achieved competitive advantages such as product differentiation and cost leadership through marketing innovation efforts [17]. This can be achieved through, for example, marketing organizational and process innovation initiatives and not to mention service innovation initiatives which are next discussed.
