Understanding innovation terminology means more than just a command of technical buzzwords. It is foundational in making sense of innovation methodology and core concepts. The ITONICS Innovation Glossary defines some of the key terms you will most likely encounter as you embark on your innovation journey.
The 70-20-10 Rule, developed by former Google CEO Eric Schmidt, is a framework that guides organizations in allocating finite resources to various growth initiatives. As the practical application of Three Horizons of Growth, the 70-20-10 Rule aims to achieve a balanced portfolio of projects, 70% of which contribute to core business, 20% to adjacent, and 10% to transformational.
An accelerator is a structured program focused on scaling, optimizing, and speeding up the innovation process for a new business venture. Typically, this occurs at a later stage of development, requiring a business to demonstrate its growth potential and some initial traction. An accelerator aims to expedite the launch of a minimum viable product (MVP) to market quickly and with the minimum investment.
Adjacent innovation is developing new products or services related to an organization’s existing offerings but not necessarily an extension of them. It typically involves exploring new markets or identifying new customer needs that can be met through the application of the organization’s existing technology, resources, or expertise. Adjacent innovation can help companies to diversify their portfolio, enter new markets, capture new sources of revenue, and stay competitive by continuously introducing new products and services.
Agile is defined as the ability to quickly and effectively respond to change and adapt to new information. Agile in innovation involves being open to adopting, developing, testing, and iterating new ideas and approaches to identify the most promising paths forward. It emphasizes collaboration and the ability to pivot quickly in response to new information or market conditions through frequent feedback and testing—both with customers and internally to ensure that new ideas align with customer needs.
AI-driven innovation incorporates artificial intelligence (AI) in the innovation process. It can support all stages of end-to-end innovation, from scouting and sensemaking to automating repetitive tasks and decision-making, freeing teams to focus on more creative work. Many industries are also applying AI to augment discovery and development, such as in Computer-Aided Drug Design, Low-Code, No-Code platforms, and generative or Creative AI.
Architectural innovation is often focused on developing new products or services, reorganizing internal structures, or integrating new technologies into existing systems. For instance, a company that produces radio may produce smartphones by incorporating their current and adding new technology.
A business model is a way that an organization generates revenues and profits by selling products or services to customers. It outlines the various components of the business, including the target market, value proposition, marketing and sales strategy, and revenue and profit streams. Business models differ according to the nature of the products or services, size, and industry.
See also: Business Model Canvas
Business Model Canvas
The business model canvas (BMC) is a visualization tool used to design and test new business models that support innovation and business growth. It involves identifying the key building blocks of a business model and considering how they can be modified or enhanced. Through the BMC method, users can develop new value propositions, channels, revenue streams, and customer relationships and segments to target.
See also: Business Model
Casual AI shifts the focus of artificial intelligence (AI) from predictive analytics to prescriptive analytics, making it beneficial to gather decision intelligence. It is especially useful to understand the impact of predicted outcomes such as customer retention programs, marketing campaign allocation, and financial portfolio optimization.
Co-creation refers to the business practice of involving third-party stakeholders (e.g., business partners, suppliers, customers, start-ups, etc.) in the innovation process—from ideation and design to prototyping and testing.
Continuous foresight involves examining projections and backcasting from desirable future scenarios to prepare for and respond to a constantly changing world. It relies on a systematic foresight methodology to continuously assess macro-environmental drivers and weak signals, gather intelligence, and derive actionable insights that can potentially contribute to future success.
Corporate innovation is the process of intentionally seeking and implementing new opportunities and embedding innovation objectives into the corporate strategy.
Corporate incubators are programs run by an organization to support and guide early-stage ideas to develop them into marketable business models. Corporate incubators act as catalysts to stimulate innovation and successfully create new venture pipelines.
Closed innovation is when an organization develops new products or technologies internally without collaborating with external parties. The organization controls the entire end-to-end innovation process, from idea generation to product development to commercialization. A closed innovation approach allows an organization to maintain intellectual property protection and competitive advantage. However, it can limit the organization’s innovation process if there is a lack of diverse perspectives and resources which can be gained from open innovation.
See also: Open Innovation
Crowdsourcing is a type of co-creation that entails the gathering of information and ideas from external networks based on a call or criteria from the organization.
A demand driver is a driving force in society or the market that points in a certain direction, representing and affecting individuals’ and/or customers’ wishes, desires, and behaviors (e.g., trends).
Democratization of Technology
The democratization of technology is occurring as accessibility improves around key technologies that promise increased productivity for businesses and individuals. The barriers to technology adoption are lowering as digital equality and digital literacy rise globally and costs of buying, leasing, or implementing technology decrease. Democratized emerging technologies like Low-Code No-Code platforms and generative or Creative AI are empowering a new generation of innovators, entrepreneurs, and creators to participate and compete in the digital economy.
Digitalization refers to the application of digital technologies and digitized data to transform core business models such as customer engagement, relationship management, or revenue streams. Digitalization relies first on the digitization of processes from analog or offline systems.
Digitization refers to the conversion of information from an analog format to digital. It results in internal efficiencies and process optimization.
Disruptive innovation is a type of innovation resulting in new concepts, products, technologies, or business models that drive transformation. It fundamentally changes an existing industry, creates new markets and value networks, displaces conventional practices, and eventually leads to new customer expectations.
As part of a balanced growth portfolio, disruptive innovation makes up the third, outer horizon of the Three Horizons of Growth framework. It should account for approximately 10% of resource allocation, according to the 70-20-10 Rule.
Doblin's Ten Types of Innovation is a framework that encourages organizations to look beyond product innovation and explore opportunities for innovation through several different channels—including product offering but extending to an organization's configuration and customer experience.
A driver is a macro-level external factor that influences the broader social, technological, environmental, economic, and/or political landscape. Therefore, organizations can use STEEP or PESTEL analysis to understand how the driver may impact its environment by shaping technology, consumer demand, competitor activity, supply networks, etc.
Environmental scanning is the capability to scan one’s business environment comprehensively and continuously in order to build innovation intelligence and inform decision-making. It includes scouting for and managing information related to trends, technologies, start-ups, and potential partners.
Foresight refers to a structured and systematic way of identifying possible futures to be able to prepare accordingly. Foresight activities like environmental scanning and scenario planning enable organizations to adapt to opportunities and challenges that the future holds and align their innovation strategy accordingly.
A go-to-market strategy is a structured and actionable plan that lays out how an organization will deliver its value proposition to customers. It includes consideration of resources and timeline, identification of the target audience, and marketing and sales plans.
In contrast to a trend, a hype is a collective and often spontaneous fad that disappears after a short period of time.
An idea is a novel suggestion, concept, or solution that addresses an existing challenge or opportunity.
Idea management refers to the structured process of generating, assessing, and improving ideas that contribute to an organization’s innovation strategy. This includes the prioritization and implementation of ideas.
Idea management can occur through a centralized or decentralized process. Centralized idea management allows an entire organization to engage in the process, whereas decentralized idea management allows different teams or business units to manage their own ideas.
Ideation is a systematic and creative method for generating new ideas and concepts. Ideation commonly occurs in a collaborative workshop environment that involves multiple, cross-category stakeholders, after which ideas are refined through a phase-gate process.
Incremental innovation is a type of innovation that entails the gradual yet continuous improvement of existing products, technologies, or processes in order to maintain an existing customer base and sustain a certain level of strategic positioning.
As part of a balanced growth portfolio, incremental innovation makes up the first, inner horizon of the Three Horizons of Growth framework and should account for approximately 70% of resource allocation, according to the 70-20-10 Rule.
An incubator is a structured program that supports entrepreneurs, intrapreneurs, and start-ups with the resources to create and grow new business ventures. Typically, this occurs at an early stage of development and ends with a novel and viable idea that is ready to pitch to investors or consumers. An incubator aims to set the foundation for new business ventures.
See also: Accelerator
Innovation is the process of turning an idea into a product or service which addresses a certain problem and creates value for the organization and the customer. Innovation is a driving force behind growth, competition, and efficiency. It is closely linked with creating value, balancing risk and reward, and building future resilience.
The term 'Innovator's Dilemma' was first coined by Clayton Christensen from the Harvard Business School. It refers to the situation in which established businesses make incremental innovations to their successful existing products to support customer demands and miss out on disruptive innovations. As a result, when new entrants introduce disruptive innovations to compete with existing products in specific segments, they can potentially capture a significant market share with little competition from incumbents.
An innovation ecosystem involves collaborative efforts in various forms, such as commercial or academic, shared research and development centers, or government programs. They utilize these partnerships to speed up the innovation process, lower risks, decrease costs, properly allocate and utilize resources, and gain access to a larger collection of ideas.
An innovation framework is a set of guidelines or principles that an organization can use to guide its innovation efforts. It includes mission statements, values, goals, strategies, and processes related to innovation. An innovation framework helps to identify promising opportunities, generate ideas, and commercialize new products or services. It creates a systematic and structured innovation approach by providing a common language and a set of tools to guide decision-making.
Innovation management is the process of organizing, monitoring, and executing each stage of end-to-end innovation within an organization, from foresight and ideation to portfolio management and commercialization. It involves a structured innovation framework, governance model, and internal culture of creativity and experimentation to guide and sustain innovation activities.
See also: Innovation
Innovative intelligence is the ability to collect, process, act on, and learn from information, insights, and abstract concepts related to innovation. It entails the application of this acquired knowledge together with internal skills and capabilities in order to enhance innovation outcomes.
An innovation lab is a separate and dedicated unit within an organization whose core focus is nurturing innovation, possibly from environmental scanning and ideation to proof of concept and market launch.
Innovation portfolio management is a method for organizations to align innovation assets and capabilities with their strategic objectives. It entails the selection and prioritization of projects in order to identify gaps or redundancies, allocate finite resources, and balance growth initiatives within the business.
An innovation strategy involves detailed goals, policies, timelines, and behaviors needed to achieve a competitive advantage by developing and bringing new and creative ideas to market. It is connected to the overall organization’s business strategy and results in a clear vision and focus for future growth and value creation.
Innovation theater is the act of undertaking any initiative to produce new ideas, products, or processes. It does not directly create real business impact but rather signals that innovation is happening through events like innovation summits, hackathons, or early public announcements about innovative projects.
An inspiration is an evidence of how organizations or individuals are responding to a trend or technology in the real world. Inspirations serve as springboards for ideation, helping innovators look beyond their category, connect the information in new ways, and nurture fresh thinking.
An intrapreneur is an employee who applies an entrepreneurial mindset to the innovation process and proactively generates and executes new ideas.
An invention is a novel idea that is proven viable based on a process of validation, typically from an experiment or pilot project prior to implementation.
A lean startup is a method for developing a new business or product through an iterative design process, incorporating experimentation, customer feedback, and validated learning. A lean startup aims to move through the development cycles—build, measure, learn—with greater agility and speed to discover early if a proposed idea or business model is viable and recover quickly from failure. In this method, new products are often tested in the form of a minimal viable product (MVP), and features are iteratively revised to meet market demand.
Market intelligence refers to the systematic process of scanning, interpreting, and responding to information pertaining to multiple stakeholders, including but not limited to customers and competitors.
Market pull occurs when innovation is driven by customer expectations, desires, and needs. Often represented as trends, market pull helps guide organizations in knowing what people value.
See also: Trend
A minimum viable product represents the most basic version of an innovation that is ready for use by early adopters or loyal customers. The aim is to collect critical input on customer desirability and product functionality to feedback to the development team.
Open innovation represents a collaborative approach to innovation in which companies embrace co-creation and the exchange of internal and external knowledge. This includes partnerships with third-party stakeholders (e.g., vendors, suppliers, customers, start-ups, etc.) and is contrary to traditional approaches to innovation that emphasize secrecy and a silo mentality.
An opportunity is a potentially rewarding business situation in which a company can create significant benefits by addressing previously unmet customer needs uniquely and/or introducing new, better solutions to existing customer needs.
Partner relationship management (PRM) is an approach to maintaining an organization's relationships with its strategic partners as well as its knowledge of the main players in its environment. PRM aims to identify, recruit, and build prosperous partnerships with key entities that contribute to an organization's innovation strategy.
Partner scouting refers to the environmental scanning activity in which information is collected and analyzed relating to the main players in an organization’s environment that are of strategic interest as potential partners or acquisition targets.
A phase-gate process is an innovation management model that divides a complex process or project into different stages with more specific objectives (e.g., refinement, prioritization, resource allocation). Within each stage, a gate serves as an assessment or decision point with pre-defined criteria.
A prototype is a tangible model or representation of an idea that serves to test and validate its viability.
Radical innovation refers to the development of technologies, products, or services that entirely replace existing offerings and unlock a new market—in contrast to incremental innovation that gradually optimizes the existing offerings. This type of innovation can be a combination of new, revolutionary technologies and business models. A classic example of such innovation is the invention of the airplane, which reinvented traveling and launched a whole new industry and market.
A risk represents an event that can potentially result in a negative impact on an organization’s ability to conduct business. It implies a level of uncertainty regarding future expected outcomes and stability. Typical consequences include qualifiable, often financial loss, damage, or disruption. Risk triggers are usually internal or external vulnerabilities that could have been eliminated by preventive measures.
Risk analysis refers to the process of identifying and assessing factors, either internal or external, that could potentially threaten the success or progress of a project or initiative. This includes determining the likelihood of a risk to occur and the magnitude of the potential impact.
A roadmap is a visual representation of the innovation milestones and deliverables required to manage an organization’s transition from its current state to a future state over a specific time period.
Roadmapping is a method for long-term strategic planning, implementation, and visualization of innovations, products, and technologies, broken down to the necessary resources, steps, and milestones and aligned with the corporate and innovation strategy.
A scenario is a postulated sequence or combination of events projected to take place that could hold relevance to the organization’s future state.
Scenario planning is a structured process in which organizations consider variable data trajectories (based on key drivers influencing their environment) to arrive at a limited number of plausible future scenarios. Scenario planning equips decision-makers, innovation leads, and strategists to anticipate exposures appropriately, evaluate innovation opportunities, and act timeously.
As a key environmental scanning activity, scouting refers to the process of observing shifts and developments. It involves collecting pertinent data, contextualizing change to uncover discernible patterns as weak signals, and identifying trends, technologies, start-ups, and potential partners that hold both impact and relevance.
A solution driver is a new or existing means, method, tool, and/or capability that can practically solve certain problems and is future relevant (e.g., technologies).
See also: Technology
Start-up relationship management (SRM) is an approach to maintaining an organization's relationships with and knowledge of the start-up environment, main players, newcomers, and activities. SRM aims to identify, recruit, and build prosperous partnerships with key start-ups that contribute to an organization's innovation strategy.
Start-up scouting refers to the environmental scanning activity in which information is collected and analyzed relating to start-ups and developments that have potential relevance and impact in your (business) environment.
STEEP—social, technological, economic, environmental, and political (sometimes PESTEL, which includes legal)—is a framework for segmenting the macro-level environment to facilitate scanning and analysis. Performing a STEEP or PESTEL analysis allows organizations to evaluate where an observed change or driver is occurring and how it could potentially impact their business environment.
See also: Driver
Strategic foresight is the systematic process of gathering future-relevant information, through environmental scanning activities, in order to extrapolate different plausible scenarios that could hold strategic relevance for an organization. Organizations can anticipate and prepare for future opportunities and challenges through this scenario planning and align their innovation planning and goals accordingly.
Strategic search fields are macro-level topics of specific organizational interest, i.e., activities in the field that fundamentally influence a company’s core. Therefore, developments in such fields require dedicated attention and the contribution of specialist knowledge and observations from key stakeholders.
A technology is a type of solution driver that represents a tool designed through R&D and innovation in response to new consumer needs or desires. Technologies are an indication of market push, enabling new business models, products, and services.
See also: Solution Driver
Technology management refers to the integrated planning and control of technologies within an organization. This may entail R&D or investment, technology roadmapping, and technology portfolio management.
Technology push occurs when innovation is driven by R&D and new technologies. Technology push guides innovators in developing new products that make use of technologies to meet an existing or emerging need.
A technology radar is a visualization of an organization’s technology portfolio. It maps evaluated existing and emerging technologies, optimizing technology management activities and improving strategic decision-making. The radar can help users gather and make sense of emerging technology intelligence, prioritize relevant and enabling technologies to pursue, and identify promising opportunity spaces to explore.
Technology scouting is an environmental scanning activity that refers to the systematic scanning of information related to emerging, evolving, and existing technologies, R&D, and market push that have impact and relevance in one's business environment. Technology scouting involves aggregating, assessing, and disseminating technology information to enhance innovation intelligence.
Three Horizons of Growth
The Three Horizons of Growth is a framework developed by McKinsey & Company that guides organizations in portfolio management, structuring initiatives, and finding a balance between short- and long-term projects. Horizon 1 includes incremental innovation aimed at sustaining the core business and customer base. Horizon 2 looks at emerging opportunities for adjacent business. Lastly, horizon 3 is where transformation and disruptive innovation occur. The three horizons framework is related to the 70-20-10 Rule of innovation that recommends organizations allocate 70% of their resources to core business, 20% to adjacent, and 10% to transformational.
A trend is a demand driver that represents new consumer attitudes, expectations, behaviors, or other market shifts that drive new change. Trends are an indication of market pull, guiding innovators in knowing what consumers need, desire, and occasionally demand.
A trend radar is a visualization tool that displays relevant and evolving trends that are impacting the business environment or likely to impact in the future. A radar can help an organization focus its attention and make informed decisions by tracking macro-environmental drivers, nascent consumer needs, and market responses or events that are shaping change in the environment. Trends on a radar are evaluated for criteria that are meaningful to an organization’s innovation strategy.
Trend scouting or trendspotting is an environmental scanning activity and refers to the systematic scanning of information related to emerging, evolving, and existing consumer needs and market pull that have impact and relevance in an organization’s environment. Trend scouting involves aggregating, assessing, and disseminating trend information to enhance innovation intelligence.
A value proposition refers to the value that an organization or solution claims to deliver to its customers. An organization often communicates its value proposition through a concise marketing statement that summarizes what a customer can expect in terms of functional and emotional benefits.
A (weak) signal is a concrete, socially situated indicator of change in trends, technologies, and systems. It serves as context-specific information from the environment that is currently of interest and may have an impact in the future.