12 types of innovation that transform businesses and industries
Why is innovation key to business success?
Innovation is a key cross-cutting axis for business success. It allows us to adapt to change, anticipate trends, solve problems creatively and offer more efficient, sustainable and customer-focused solutions. Far from being an option, innovation is a necessity to ensure competitiveness and sustained growth. Innovation takes many forms. Here are a couple types with their specific characteristics and impacts.
Iberdrola's Innovation and Training Campus in Madrid, a sign of the group's strong commitment to technology and R&D&i.
At Iberdrola, we’ve been committed to innovation as a key lever for transforming energy for more than two decades. Our strategy is based on developing technological solutions that not only respond to current needs but also anticipate those of the future. This has enabled us to position ourselves, for the fourth consecutive year, as the private utility that invests most in innovation worldwide according to the European Commission.
Innovation and sustainability: a necessary pairing
Innovation and sustainability are not independent goals, but complementary forces that must be integrated into a company as two cross-cutting axes of its identity and business. Innovation makes it possible to improve processes, products and services, and doing so from a sustainable perspective ensures that this process is maintained over time, minimising environmental impact and maximising social impact.
At Iberdrola, this vision is materialised in an innovation model aimed at transforming the energy industry through sustainability. With more than €400M invested annually in R&D&i and a cumulative investment of more than €2B over the last decade, we promote clean technologies, smart grids, and digital solutions that pave the way towards a greener future. We also incorporate the circular economy into our business.
Types of innovation every business needs to know about
Innovation is not just about developing revolutionary products. Below, we explore the 12 key types of innovation, with examples reflecting their impact on key sectors. In the case of the energy industry, the massive electrification of energy production and end uses is accelerating the need to innovate on multiple fronts to build a more secure, sustainable and digital model.
Product innovation: the driver of growth
Create new products or improve existing ones to deliver greater customer value and differentiate in competitive markets. Brands in electronics and mobility, for example, have made history by introducing a completely different product that redefines standards. In the energy industry, we develop solutions such as heat pumps for decarbonising industry, smart air-conditioning systems and green hydrogen-based products for industries that are difficult to electrify.
Process innovation: efficiency and optimisation
Improve the way products or services are produced or delivered, reducing costs and issues, increasing operational efficiency and improving productivity. Automating industrial processes such as assembly lines or digitising operations can transform the paradigm of an entire industry. At Iberdrola, we apply digitalisation and automation in all our processes to optimise energy generation, distribution and consumption.
Business model innovation: adapting to survive
Redefines how a company creates, delivers and captures value, allowing it to adapt to new market situations. A good example is the shift from physical movie rentals to the digital streaming subscription model. In our case, we are committed to new business models such as C2Nature, EnergyLoop and CPD4Green, and partnerships to push forward the economy’s electrification, such as Q-CERO, PIRVEP and Net-Zero Mar.
Radical innovation: transforming markets and industries
Introduces disruptive breakthroughs that completely reshape the market. It requires high levels of investment and risk, but its impact can be revolutionary. One case study would be the application of nuclear energy for civilian uses such as medicine. In energy, the early commitment to smart grids, large-scale pumped storage and the deployment of renewable energies are examples of radical changes in the market driven by Iberdrola.
Incremental innovation: small changes, big results
Generates continuous and gradual improvements to existing products, services and processes. An example integrated into our daily lives is the regular software updates for apps. At Iberdrola, we’re constantly working to improve the efficiency of our facilities and to adapt solutions to new energy use habits.
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Open innovation: collaborating to innovate
Leverages external and internal knowledge to develop innovative ideas through partnerships and knowledge sharing. At Iberdrola, we have an open innovation model with which we work with universities, startups, technology centres and suppliers. This commitment is materialised through our centres of excellence such as the Global Smart Grids Innovation Hub in Bilbao and the Innovation and Training Campus in Madrid, our Iberdrola U Universities Programme, and the PERSEO Programme for innovation with start-ups.
Disruptive innovation: how to change the rules of the game
It replaces dominant technologies with new, more efficient products or services, displacing traditional players. An example is the rise of VTCs over traditional transport. In the energy industry, we see it in the evolution from fossil fuels to clean energy on an industrial scale.
Social innovation: solutions that improve society
Seeks to solve social or environmental problems in a sustainable way. It prioritises positive impact (strengthening the local social fabric, inclusion, reduced environmental footprint, etc.) over direct economic benefit. It is often worked on by the corporate social responsibility of large companies as it strengthens their business reputation.
Two basic examples would be: microcredit, to encourage entrepreneurship among people with limited resources, and ‘libraries of things’, to facilitate access to certain tools and promote the circular economy. Iberdrola, for example, promotes projects that strengthen the local social fabric and foster the circular economy, such as the EnergyLoop blade recycling plant in Navarre.
Technological innovation: the basis of digitisation
This is a transformation of products, services and processes based on technological disruption. For example, virtual assistants or intelligent energy management platforms for residential and industrial customers by applying artificial intelligence.
Marketing innovation: reaching the customer in new ways
Reinvent how a brand communicates with its audience, improving customer experience and loyalty by better understanding and connecting with the consumer. Today, there are many fashion brands, for instance, that compete to achieve the most viral campaigns on social media. At Iberdrola, we’re committed to responsible, transparent and sustainability-oriented marketing.
Organisational innovation: creating a culture of change
It restructures ways of working to be more agile and resilient. With the same resources, this innovation manages to improve a company’s efficiency and adaptability. At Iberdrola, we foster a culture that promotes collaboration, teamwork and creativity at all levels of the organisation.
Sustainable innovation: a path towards a responsible future
It combines economic development with care for the environment and society, promoting business models that minimise negative impact. It can be seen in those companies that focus on ethical production, adopting different changes such as using clean energy. Iberdrola is leading this energy transformation as the core of its business model.
How to apply the types of innovation in your business
To implement innovation in a company, the first step is to observe its environment, listen to its employees and analyse its own internal processes. Innovation can arise from creating new products, improving existing ones, optimising processes, adapting the business model or adopting emerging technologies.
It can also involve changes in communication, stakeholder relations or positive social or environmental impact. Key strategies include as basic points:
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Fostering a culture open to exploration and change
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Collaborating with external actors and sharing knowledge
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Adopting digital tools
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Driving continuous improvement
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Aligning innovation with the values of sustainability and social responsibility
At Iberdrola, innovation is not an end, it is a means to lead the change towards a cleaner, digital and fairer energy model. For our innovation model to work, the participation and commitment of all employees is essential. That’s why we promote a culture of innovation and intrapreneurship that permeates the entire organisation and promotes all employees’ participation and commitment, who lead ideas and solutions from within.
Because innovation is not only about creating something new, but also about building a better future: at Iberdrola we work every day to make that future dream come true.