Innovation Matters: Balancing Sustained vs. Disruptive Innovation

While we struggle to emerge from a full-blown recession, marketers know all too well that advertising and (unfortunately) innovation are the first budgets that are most likely to get cut.

So how can marketers continue to innovate?

Before we answer that question, we need to define innovation, since it has become a very popular and often misinterpreted topic.

There are four distinct types of innovations—product optimization, brand extension, target ownership, category leadership:

1. Product optimization—which seeks to optimize a product's or service's usage
2. Brand extension—which stretches a brand's equity into adjacent spaces
3. Target ownership—to own a greater share of a specific target's wallet across multiple segments, whether the segment is attitudinal, psychographic, or demographic
4. Category leadership—to sustain or achieve leadership by reshaping consumer attitudes and behaviors in a given segment or industry

Product optimization and brand extension, referred to as "sustained innovations," usually build off an extant frame of reference. Therefore, although safer, they are likely to generate only limited incremental value.

Target ownership and category leadership, referred to as "disruptive innovations," can yield much larger growth, but they are also more capital-intensive and more unpredictable. Indeed, because they have the power to shift the paradigm, they can set new standards and change consumer behaviors, but they require significant amounts of time and money.

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