Innovation is the introduction of a new or improved product, service, process or marketing method that creates value or improves how the business operates.

Incremental innovation involves smaller ongoing improvements to something that already exists. Disruptive innovation creates a much larger change that challenges established ways of operating and can alter customer behaviour or reshape a market.

Product innovation involves creating a new physical product or meaningfully improving its features, materials, design or performance. Process innovation involves changing how a product or service is produced, handled or delivered to improve efficiency, cost, speed, safety or consistency.

A bakery could use process innovation by introducing automated mixing and portioning equipment. This would allow the bakery to produce goods more quickly and consistently while reducing labour time and ingredient waste. As a result, the cost of producing each item may fall, increasing the bakery’s profit margin or allowing it to produce and sell a greater volume using the same resources.

A live-stream fashion campaign is a marketing innovation because it changes how the business promotes and sells its clothing rather than changing the clothing itself. This gives customers a new way to discover products, interact with the brand and purchase items during the promotion. As a result, the brand may reach more potential customers and generate additional sales without needing to redesign the underlying product.

Service innovation changes or improves the service the customer receives, such as a gym introducing virtual personal training. This can improve convenience or access for customers because they can use the service in a new way. Process innovation, however, changes how the business produces or delivers its output, such as using automated scheduling to organise bookings more efficiently. As a result, service innovation mainly changes the customer offering, while process innovation mainly changes the method used to operate or deliver it.

Introducing an online pre-order system could allow customers to place orders before arriving at the café. This may shorten queues and waiting times, improving customer satisfaction and allowing more customers to be served during busy periods. The system could also send orders directly into a more organised preparation sequence. This may reduce errors and improve workflow, lowering wasted time while increasing the café’s sales capacity. Overall, the innovation could strengthen competitiveness by improving both the customer experience and operational efficiency.

Advantages: First, incremental innovation can improve quality, convenience or efficiency without forcing an established business to completely replace a successful product or process. Second, smaller improvements usually require less investment and may expose the business to less risk than a major innovation.

Disadvantages: First, small improvements may not be enough when technology or customer expectations are changing rapidly. Second, a competitor that introduces a much larger innovation may make the established business’s offer less attractive, even if that offer has been gradually improved.

I recommend service innovation. The gym could introduce live virtual personal training or on-demand classes because this changes the service customers receive and gives them greater flexibility. In this case, customers specifically want to train from home as well as at the gym, so the innovation directly responds to the identified need. As a result, the gym may improve convenience, retain members who cannot always attend in person and attract customers who value flexible access.

Product innovation: one advantage is that new materials, designs or features could make the clothing more attractive and differentiate the brand from competitors. However, one disadvantage is that developing and stocking new products may increase design, production and inventory costs, creating greater financial risk.

Marketing innovation: one advantage is that new promotional channels, packaging or pricing methods could expose the existing range to more potential customers without requiring a complete product redesign. However, one disadvantage is that stronger promotion may have little effect if customers do not actually value the clothing being offered.

Judgement: the best choice depends on why sales are weak. If customers value the products but awareness is low, marketing innovation should be prioritised because the main problem is reaching customers. If research shows the clothing itself is not competitive, product innovation is more suitable because the offer must improve before stronger promotion is likely to generate sustainable sales growth.