NAME: ARITRA KARFORMA

ROLL NO: 33300923006

REGISTRATION NO: 233330710006

STREAM: MBA

SEMESTER: 1st Semester

PAPER NAME: Entrepreneurship and

Digital Transformation

PAPER CODE: MB 106

COLLEGE NAME: IMS Business School

TOPIC NAME: Types of Business

Innovations with IT
Innovation Taxonomy
Innovation can be categorized in many ways, and some of those categorizations are more or
less overlapping. The purpose of this post is to help you understand different approaches to
innovation and how different types of innovations link to the big picture.

Innovation Matrix
One way to categorize innovation is to classify it based on two dimensions: the technology it
uses and the market it operates in. We can use the innovation matrix to visualize the most
common types of innovation:

Incremental Innovation
Most innovations are incremental, gradual and continuous improvements in the existing
concepts, products or services in the existing market.
Incremental innovations are just a little better than the previous version of the product or
service and has only slight variations on an existing product formulation or service delivery
method.
Products can be made smaller, easier to use or more attractive without changing the core
functionality of it and services can be made more efficient through constant improvement.

Disruptive Innovation
Disruptive innovation is a concept introduced by professor, academic and business consultant
Clayton Christensen first in an HBR article and later in his book called Innovator’s Dilemma.

Disruptive innovation is a theory that refers to a concept, product, or a service that creates a
new value network either by entering an existing market or by creating a completely new
market.In the beginning, disruptive innovations have lower performance when measured by
traditional value metrics but has different aspects that are valued by a small segment of the
market. These types of innovations are often capable of turning non-customers into customers
but do not necessarily appeal to the needs and preferences of the mainstream customers, at
least not just yet.

What makes disruptive innovation difficult, is that established organizations are completely
rational when making decisions related to their existing business. They fail to adjust to the
new competition because they’re too focused on optimizing the existing offering or business
model that has proven to be successful in the market so far.

Thus, the market is generally disrupted by a new entrant rather than an incumbent.
This phenomenon called Innovator’s Dilemma is actually quite logical because the existing
market is often bigger, and the margins are better.

Disruptive innovation is where traditional business methods fail and requires new
capabilities. Although the risks are big, there’s a huge growth potential if everything
goes right.

Once the incumbents realize that new disruptive innovations are used by the mainstream, it is
often too late for them to catch up despite the amount of resources they have at their disposal.

Sustaining Innovation
Sustaining innovation is the opposite of disruptive innovation as it exists in the current
market and instead of creating new value networks, it improves and grows the existing
ones by satisfying the needs of a customer.
Just like incremental innovation, the product performance of sustaining innovation is made
slightly better with every iteration, reducing defects. The new improved version of the
product can be more expensive and have higher margins than the previous one if it targets
more demanding, high-end customers with better performance than what was previously
available.
However, it might as well be cheaper if it leads to higher volumes and thus higher absolute
profits.

Traditional business methods and sustainable innovations are often sufficient because they
are the most profitable, and the risks are lower. Disruptions, on the other hand, typically
enable top-line growth: large market share growth or the creation of an entirely new market
but aren’t typically profitable for a long time because it makes sense for disruptors to invest
heavily in growth.

Sustaining innovations, in turn, continues to grow the market slowly, but no longer in the
same proportion. At this point, the focus shifts to increasing profits.
Radical Innovation
Radical innovation is rare as it has similar characteristics to disruptive innovation but is
different in a way that it simultaneously uses revolutionary technology and a new business
model.
Radical innovation solves global problems and addresses needs in completely new ways than
what we’re used to and even provides solutions to needs and problems we didn’t know we
had, completely transforming the market, or even the entire economy.

Key Components Of Digital Transformation Include:

• Embracing emerging technologies like artificial intelligence (AI), IoT, and

blockchain.
• Reimagining business models and processes to take full advantage of digital
capabilities.
• Fostering a culture of innovation and adaptability within the organization.
• Enhancing the customer journey through digital channels and personalized
experiences. Digital transformation is often driven by a strategic vision to position the
company for long-term success in the digital age. It requires a commitment to change
and a willingness to invest in technology and organizational transformation.

Moore's Law

It is a principle related to the exponential growth of computing power, specifically the

doubling of the number of transistors on a microchip approximately every two years. While
Moore's Law is primarily associated with the field of computer hardware and semiconductor
technology, it has significant implications for digital transformation in a broader sense.
Here's how Moore's Law is relevant to digital transformation:

1. Accelerating Technological Change: Moore's Law reflects the rapid pace at which
computing capabilities have advanced over the decades. This acceleration in
technology underpins many aspects of digital transformation. As computing power
increases, organizations can leverage more powerful and cost-effective technologies,
such as artificial intelligence, big data analytics, and the Internet of Things (IoT), to
transform their business operations and customer experiences.
2. Increased Data Processing: With the growth in computing power, organizations can
handle and process vast amounts of data more efficiently. This is crucial for data
driven decision-making and improving customer interactions. Digital transformation
often involves harnessing this data processing capability to gain insights, optimize
processes, and develop predictive models.
3. Connectivity and Mobility: Moore's Law has enabled the development of smaller,
more powerful, and energy-efficient devices, which has facilitated the proliferation of
smartphones and connected devices. This connectivity and mobility are central to
digital transformation, as they provide new channels for engaging with customers and
enabling remote work and collaboration.
4. Innovation and Disruption: The rapid pace of technological advancement, driven in
part by Moore's Law, fosters innovation and competition. Businesses that embrace
 digital transformation can harness new technologies to disrupt existing industries and
create innovative solutions. Those that fail to adapt risk falling behind.
5. Cost Efficiency: As computing power increases, the cost of hardware and cloud
services often decreases relative to performance. This can make digital transformation
more affordable, allowing organizations to invest in technology and innovation
without incurring prohibitive costs.

Types of Business Innovations with IT

1. Process Innovation:

• Automation: Leveraging IT to automate manual and repetitive tasks, which reduces errors
and improves efficiency.

• Workflow Optimization: Using IT systems to streamline and optimize business processes

for better resource allocation and cost reduction.

2. Product and Service Innovation:

• Digital Products/Services: Creating new digital offerings, such as software applications,

online services, and mobile apps.

• Customization: Offering personalized products or services based on customer preferences,

made possible by data analytics and IT.

3. Customer Experience Innovation:

• E-commerce and Online Retail: Providing customers with convenient online shopping
experiences and personalized recommendations.

• Customer Relationship Management (CRM): Using IT systems to manage and enhance

interactions with customers, track their preferences, and improve service.

4. Data-Driven Innovation:

• Big Data Analytics: Analyzing vast amounts of data to gain insights into customer
behavior, market trends, and operational performance.

• Predictive Analytics: Using data to make predictions about future events and trends,
allowing for proactive decision-making.

5. Supply Chain and Logistics Innovation:

• Supply Chain Optimization: Utilizing IT to optimize the supply chain, reduce costs, and
improve inventory management.

• Fleet Management: Implementing GPS and tracking systems to optimize the routing and
scheduling of deliveries.

6. Business Model Innovation:

• Subscription Models: Shifting from one-time sales to subscription-based revenue models,

often seen in software and content streaming services.

• Platform Business Models: Creating platforms that connect producers and consumers,
fostering network effects and value creation.