Defining Innovation

Innovation and related terms are often misused and in many cases, they become business buzzwords. Let’s shed some light on the most important ones.

A bookshelf with books and the word definition — referring to the need to define the term innovation.
Images by Gerd Altmann from Pixabay

Depending on their angle, people understand different things when they hear the word ‘Innovation’ — and this varying level of understanding occasionally leads to lengthy discussions, confusion, and eventually, false expectations.

In today’s world, everybody is talking about Digital Transformation, being Agile, and delivering Disruptive Innovation. But very often, these terms become business buzzwords: they are overused and gradually lose their essence.

This page is part of the effort to organize and explain frequently used innovation terms into a practical Innovation Glossary. Find below the core innovation definitions along with related processes, methodologies, practices, and innovation artifacts.


Agile Engineering

Agile engineering refers to software development practices and methods that embrace change, engage with customers early, and deliver incremental value, frequently. It is characterized by fast iterations, user feedback loops, continuous learning and improvement.

Related: Rapid Prototyping practices for Software Engineering teamsAgile Software Development


Business Model Innovation

A business model is the set of elements and mechanisms that allow the company to pursue its overall purpose. It may include the offerings, the value proposition, the cost structures, the pricing, and monetization models. Introducing new ‘logic’ to any of these components or the whole model constitutes business model innovation.

Related: Wikipedia: Business Model


Disruptive Innovation

“Disruptive Innovation describes a process by which a product or service initially takes root in simple applications at the bottom of a market — typically by being less expensive and more accessible — and then relentlessly moves upmarket, eventually displacing established competitors.” — Clayton Christensen



Experimentation (in Business)

A business attitude that promotes hypothesis testing and learning through experiments and feedback loops. It needs technology, culture and a special mindset that treats failure as a learning opportunity.

Definition: The Innovation Mode


Fail-Safe, Fail-Fast

An approach in product development that encourages experimentation and risk taking by bringing decisions early in the process: an unsuccessful result is smoothly accepted as soon as it happens early enough (fail fast), before significant allocation of resources, investment and prior to any dependencies or expectations made (fail-safe).

Definition: The Innovation Mode



A hackathon is a design sprint-like event in which computer programmers and others involved in software development, including graphic designers, interface designers, project managers, and others, often including subject-matter-experts, collaborate intensively on software projects” In practice, it is frequently used to describe any idea-generation initiative with or without functional software deliverable.

In the Innovation Mode we defined it as: An intensive, software-centric ideation, prototyping and presentation challenge on known or unknown problems or opportunities.

Definition: The Innovation Mode


Innovation Culture

Innovation culture is the system of values, behaviors, symbols, and mental models that embrace novelty and change as the drivers of business improvement and success.

Definition: The Innovation Mode

Innovation Function (of the organization)

“The Innovation Function is an always-on system of procedural, cultural and technical activities, innovation enablers, and resources, aiming to maximize the likelihood of producing successful Innovation Opportunities.”

Definition: The Innovation Mode

Innovation Opportunity

A feasible, well-structured solution to a defined problem, with some novel aspects that are validated as highly probable value-drivers for a critical mass of users.

Definition: The Innovation Mode

Innovation (Outcome)

An innovation is the implementation of a new or significantly changed product or process. A product is a good or a service. Process includes production or delivery, organization, or marketing processes.

Definition: OECD — the Oslo Manual Related Article: Innovation & Novelty

Innovative Organization

“An organization is innovative when it consistently demonstrates an in-creased ability to generate validated Innovation Opportunities in alignment with its purpose.”

Definition: The Innovation Mode


An idea or a solution to a problem that is novel and proven workable. An invention does not necessarily need to be implemented — it may be just a validated technical description of a new, non-obvious solution to a problem. It must be novel to the world — ‘something that has never been made before’.



Marketing Innovation

“A new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing.”

Definition: OECD



“The state or quality of being novel, new, or unique; newness”. In a business context it may refer to the newness of an idea from the perspective of the company, the market or the world.

Definition: Related Article: Innovation & Novelty


Open Innovation

“Open Innovation is a ‘new’ paradigm on how companies utilize internal and external knowledge as part of their innovation process. It allows economic entities to connect and selectively exchange knowledge, form partnerships, and speed-up the innovation process in ways that create benefit for all.”


Organizational Innovation

“A new organisational method in business practices, workplace organisation or external relations.”

Definition: OECD


Product Innovation

“A good or service that is new or significantly improved. This includes significant improvements in technical specifications, components and materials, software in the product, user friendliness or other functional characteristics.”

Definition: OECD

Process Innovation

“A new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software.”

Definition: OECD


Radical Innovation

“It is a form of innovation that brings a major change in something established, usually as a breakthrough idea or technology. In some cases, it replaces existing solutions or technologies entirely.

Definition: Wikipedia


Social Innovation

Social Innovation prioritizes impact and value at the societal level — it focuses on bringing improvements in working models, education, access to health services, and community development. It may be driven by non-profits, activism, volunteers, or self-organizing communities.

Definition: Wikipedia

Feedback or Suggestions?

This is a ‘living document’ where we organize, present, and discuss frequently used innovation terms — or even define new ones for special cases. We’d love to capture your questions or suggestions! Use the comments area below.



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