Four Types of Innovation – part 2

by Jane Stevenson and Bilal Kaafarani

“Without a doubt, Category Innovation tests leadership courage, but without some failures, there can be no big successes.”–excerpt from the book Breaking Away by Jane Stevenson & Bilal Kaafarani.



More evolutionary than revolutionary, Category Innovation originates at the industry level and builds off of proven Transformational Innovations. Breakthroughs at this level are often found in the new application of ideas, products or services rather than in the creation of inventions. This level of innovation is primarily market driven and geared towards meeting customer needs often before customers even know they need it.

Examples: automobile service stations, lamp manufacturing, virtual bookstores.

Defining Characteristics of Category Innovation

  • Driven by felt or anticipated consumer needs and insights
  • Builds on or stems from Transformational Innovation
  • Are usually new breakthrough applications or new customer segments
  • Guided by a valid business case
  • Allows for follow-on innovation at the Marketplace and Operational levels

Business Attributes of Category Innovation

  • Profitable
  • Provides significant and completely new revenue streams
  • Has predictable revenue and timelines
  • Fits well with Wall Street expectations
  • Led by business opportunity rather than technology

In part one of this series we looked at Transformational Innovation. In part three of this series, we will look at a third type of  innovation we call Marketplace Innovation and discuss how it differs from the other three types of innovation. While Category Innovation is an equal mix of risk and opportunity, when you step into the world of Marketplace Innovation, you’re moving into a zone where risk is fairly controllable. That’s because Marketplace Innovation is more about broadening and reviving your customer base than it is about originating one.

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Jane StevensonNamed by BusinessWeek as one of the “100 Most Influential Search Consultants in the world”, Jane Stevenson is Vice Chairman, Board & CEO Services at Korn/Ferry International (Atlanta/New York). An industry expert on recruiting leaders, Jane was responsible for bringing in many of the first Chief Innovation Officers and CEOs who focused on growth through innovation. Jane is the coauthor of  Breaking Away: How Great Leaders Create Innovation that Drives Sustainable Growth–and Why Others Fail. (McGraw-Hill 2011).

Bilal KaafaraniNamed by BusinessWeek as one of the worlds “Top 25 Masters of Innovation”, Bilal Kaafarani is Chief Innovation Officer and Group President for Yildiz Holding (owner of Godiva, Ulker and 90+ other global brands) and Vice Chairman of Northstar Innovation in Istanbul, Turkey. A global innovation executive at P&G, Kraft, FritoLay, PepsiCo International and The Coca-Cola Company, he has worked with top brands and developed many innovations under his leadership. Bilal is the coauthor of  Breaking Away (McGraw-Hill 2011).

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