Innovations can be labeled as product, process, positioning, or paradigm. Innovations sometimes overlap, but they can usually be placed into one of the following broad categories:

Product
Product innovation occurs when a business either creates or improves a product. Whether you invent an entirely new product or just tweak one that already exists, that’s considered product innovation. The iPhone is one well-known example of product innovation. Apple didn’t invent the phone, but they improved upon what already existed and created a new product.

Although we often think of product innovation as it relates to technology, it’s actually involved in every aspect of our daily lives. Think about Swiffer microfiber disposable dusters and sweepers. You probably see so many commercials for them every week that you’ve forgotten they didn’t always exist, but they’re relatively new products! Many people complained that regular dusting and sweeping just spread dust around, which aggravated their allergies. So, Procter and Gamble designed the electrostatic Swiffer products, which capture dust and remove more allergens than traditional dust rags or brooms. This is an example of innovation that caught on in a big way—in fact, you may have a Swiffer product in your own home!

Examples of product innovation are all around us. Product innovation occurs when a shoe company introduces a new running shoe, a baker creates a new type of cookie, or a gaming company comes out with a new and improved gaming console. Product innovation is the type of innovation most of us are familiar with because it’s easy to see. New (or improved) products come on the market all the time!

Process
Innovations don’t just happen to products themselves—they can also happen to the processes that create products. Process innovation focuses on how something is done. Companies usually want to find ways to make their processes faster, cheaper, or more efficient for one obvious reason: money! Better processes typically mean more profit. If a company can make a product more quickly, it can produce more in the same amount of time—which means it can sell more products and make more money.

Process innovation is also happening around us all the time. Just think about how much manufacturing has changed in the last 100 years! Many things that used to be made slowly by hand are now produced quickly in mass quantities by machines. One extremely famous and important example of process innovation happened way back in the early 1900s when Henry Ford revolutionized the auto industry. When he introduced the moving assembly line, he changed the process by which the Ford Motor Company made its iconic Model T. The car that used to take over 12 hours to make now took only 93 minutes! This meant Ford could produce many more cars and sell them for less, which led to huge profits. In fact, Henry Ford was even able to shorten his employees’ work day and pay them more. Many of his workers repaid him by purchasing their very own Model T’s!

Read more about the assembly line on Ford’s website.

You can also check out the video “Henry Ford and the Model T” from History.com to see Ford’s innovations in action.

Don’t forget about the huge changes that occurred for many businesses when the Internet came along. Now, it’s much easier for companies to make sales and conduct business online. People enjoy booking hotel rooms or airline flights, making dinner reservations, ordering new clothes, or making their doctor’s appointments online. Online sales and interactions eliminate many processing steps—not to mention the cost of paper and all the time that would otherwise be spent actually visiting or calling the business. All this means that customers are able to get the products they order more quickly and for less money.

Positioning
Positioning innovation occurs when the purpose of a product is changed. The product itself remains the same, but it is marketed differently. In other words, the company focuses on changing the customer’s perception of its product. With markets and consumer needs changing rapidly, companies may find out that there’s no longer a huge desire for what they produce. If they don’t want to go out of business, they need to reposition their products.

When the PlayStation 3 wasn’t competing against other gaming consoles as well as Sony hoped it would, the company decided to reposition it. Instead of marketing it solely as a video game console, the company advertised it as an all-in-one entertainment source. You could use it to play video games, download movies, and watch Blu-ray discs. At the time, the PlayStation 3 was the only major video game console that could play Blu-rays, so this strategy gave the PlayStation 3 a unique edge in the marketplace.

Just look at Levi Strauss blue jeans. You probably think of them as a fashionable item of clothing that you can pick up at a department store. But, they were originally intended to be heavy-duty work pants for manual laborers. Positioning innovation transformed blue jeans from a work uniform into a stylish staple of everyday wear.

Paradigm
Perhaps the most difficult type of innovation to achieve (and understand!) is paradigm innovation. That’s because paradigm innovation doesn’t simply rely on changing a product or the way a product is made—it relies on a much bigger, more drastic change. Paradigm innovation occurs when there is a significant change in thinking.

Paradigms are the values, assumptions, and beliefs that make up the way people see things. You can understand why paradigm innovation is so hard to achieve—changing the way people think can often be more difficult than creating a new product or process.

A well-known example of paradigm innovation involves personal computers. Once upon a time, computers were only in labs—it would have been downright bizarre for a person to have a computer in his/her own home, office, or school! As you no doubt know, though, this all changed with the creation of the personal computer. Computers became something that virtually everyone wanted and needed—in fact, you might even be reading this LAP on a computer right now. This paradigm innovation involved shifting beliefs about computers and turning them from something for a select few into something for everyone.

Google is one company that many people think of as being particularly innovative. In fact, Google has an entire secret lab—called Google X—where the company works on its most innovative products, like Google Glass and a driverless car. In this article, “Inside Google’s Secret Lab” by Brad Stone, you can read more about Google’s approach to innovation, specifically paradigm innovation. One Google employee even suggests that Google Glass is as innovative as the first Apple personal computer because “we are proposing that there is value in a totally new product category and a totally new set of questions.”