The two primary categories of innovation are radical and incremental. Radical innovation tends to replace existing ideas, products, services, or processes. They are innovations that are very different or even revolutionary and they replace existing ideas, products, services, or processes and perhaps lead to markets that were previously nonexistent. Radical innovation can lead to massive changes in an industry and to what is referred to as creative destruction in the marketplace. The internet, the horseless carriage, GPSs, and digital encoding of music and video technology were radical innovations resulting in the development of new markets.
Incremental innovations involve smaller improvements in ideas, products, services, and processes. They are like adding unique features to a product or service. But even incremental improvements can have a radical effect on the marketplace. For example, consider the incremental improvements in wireless phones that eventually lead to the development of Apple’s iPhone and to the numerous smartphone offerings.