Ambiguity of Innovation Typology in Innovation Measurement:

Towards a Unified Typology of Innovation and Measurement Model

Tomasz Sierotowicz

Department of Economics and Innovation, Institute of Economics, Finance and Management, Faculty of Management and

Social Communication, Jagiellonian University, Prof. Lojasiewicza 4, 30-348, Krakow, Poland

Keywords: Typology of Innovation, Innovation Management Innovation Development, Innovation Measurement Model.

Abstract: Innovations are seen as opportunities to sustain and accelerate countries’ development of not only their

companies but also their economies. The literature on the subject presents a number of different and often

contradictory typologies of innovation. This raises the problem of discrepancies in terms of the definitions,

as well as possible socio-economic effects of particular types of innovation and their relationships to ex post

and ex ante phases in innovation process models. So far, no attempt has been made to address the problem of

unifying the typologies of innovation. The main objective of this paper is to attempt this challenge and propose

one consistent typology of innovation that allows the design of a framework for an innovation measurement

model. The presented research results are the next steps towards developing a consistent innovation theory,

and will help design a coherent innovation measurement model.

1 INTRODUCTION

It is beyond question that the development of

innovation is closely linked to raising the level of

knowledge, carrying out R&D activities, and seeking

new ways to apply knowledge and technology in the

economy. Hence, the knowledge-based economy, by

nature, refers to innovation. The concept of the

European Union Regional Policy for RIS3 (Regional

Innovation Strategy for Smart Specialization)

emphasizes the need to take into account the life cycle

of the product, which varies according to the type of

innovation RIS3 Guide (2012).

The World Bank proposal contains four pillars of

the Knowledge Economy (KE) framework, one of

which is strictly dedicated to innovation: “An

effective innovation system of firms, research

centers, universities, consultants, and other

organizations” Derek et al., (2006, p. 4). The

proposed innovation measurement system consists of

22 variables Derek et al., (2006). These variables, on

the other hand, correspond to the subjective concept

of innovation measurement presented in the Oslo

Manual (2018). In this manual, the examination of

connections between innovations and the economic

changes, is considered as the main goal of measuring

https://orcid.org/0000-0002-1462-8267

innovation (both at the microeconomic level, i.e. in an

enterprise, as well as at the macroeconomic level),

Oslo Manual (2018). Consequently, a typology of

innovation is proposed, involving the classification of

innovation based on the area in which it occurs. Thus,

four basic types of innovation are identified in the

following areas: products, processes, organization,

and marketing, Oslo Manual (2018) and James

(2017). However, in the literature on the subject, we

find various alternative typologies of innovation,

including, among others, classification of innovation

as radical, breakthrough, incremental, disruptive, and

displacement. Are these innovation typologies not

important, both in the process of planning the strategy

of innovation development and in the analysis of the

level of innovative development of national or

regional economies? In particular, the theory of

innovation presented by Christensen et al., (2004) and

Christensen (2016), where one of their types causes

disruption is a proposal to establish a typology of

innovation, whereby the impact on the economic

environment has been applied as a criterion of

classification. Plainly, reference to different types of

innovation raises obstacles to their unique

identification and interpretation. An efficient and

effective model for measuring innovation cannot be

Sierotowicz, T.

Ambiguity of Innovation Typology in Innovation Measurement: Towards a Uniﬁed Typology of Innovation and Measurement Model.

DOI: 10.5220/0009434800370048

In Proceedings of the 2nd International Conference on Finance, Economics, Management and IT Business (FEMIB 2020), pages 37-48

ISBN: 978-989-758-422-0

based on different typologies of innovation, as this

could lead to conflict or ambiguity in the results of

any analyses performed. In addition, different types

of innovation can be achieved in a single innovation

process, Pombriant (2017), Prahalad et al., (2017).

For example, the development of new technologies,

in particular high-tech, is not only a complicated

process, but also a complex one, Espinosa et al.,

(2017), that often lasts several-or, in some cases, a

dozen or so-years, with numerous innovations

consisting in improvements in various areas of the

developed technology, Chiva et al., (2014), IBM

(2007, 2016). The development of different types of

innovation requires different methods of financing,

the involvement of knowledge resources, different

partnership agreements, and the use of various tools

anticipating and measurement of the expected effects

of implementation. So, the question arises: should not

the innovation typology of the subject matter be

included in the innovation measurement model?

According to the definitions of innovation in the Oslo

Manual (2018), the innovation take place only when

its implementation is noted. How then should we

anticipate the economic effects of innovation at the

planning stage of an innovation development

strategy, and indeed how can we predict the economic

impact of implementing an innovation development

project prior to actual commencement of

implementation. Hence, it follows that separate

analyses, based on different research tools, are needed

at two stages of the innovation process: at the

planning and implementation stage of R&D projects

within a specific innovation development strategy,

when the real economic value of innovation is hidden,

and at the post-implementation stage, when it is

possible to obtain empirical data from the economy,

and to measure the impact and effects of the

implementation or another form of

commercialization of innovation. It seems that the

correct and exhaustive innovation development

measurement model should consist of two stages,

with implementation as the only criterion for

demarcation between these stages. The first is the ex

ante stage, where it is necessary to predict and

estimate the effects, and the second is the ex post

stage, where the measurement of effects occurring in

the economic environment is made. This means that

the measurement results of the two stages cannot be

compared. How does the typology of innovation,

presented in the rich literature on the subject, refer to

the division into ex ante and ex post stages?

Answering this question can help in designing an

appropriate innovation measurement model,

applicable both to an enterprise as well as to the

macroeconomic level, for national economies.

Taking into account the different typologies of

innovation, as part of a model for measuring the

potential and actual economic effects of innovation,

requires prior elaboration and adoption of a consistent

innovation typology; otherwise, carrying out

comparative analysis with different typological

solutions is methodologically unreasonable. For this

reason, the first step towards designing a coherent

model for measuring innovation involves attempting,

firstly, to present the different typologies of

innovation and, secondly, to identify the main

differences between them, these constituting the

barriers to the development of a single, consistent

innovation typology. The main objective of this paper

is to attempt to delineate the major differences in

innovation typologies, advancing a proposal to use a

single, consistent typology of innovation that would

help to build a framework of the innovation

measurement model, both at the ex ante and ex post

stages. So far there was no solution of such problem

presented in the literature. The common issue in this

case is to attempt to find solution with use of

reductionist approach. In such complex and not only

complicated phenomenon as innovation development

is, using such approach may not provide the adequate

solution. That is the point of novelty presented in this

paper. In order to achieve the objective of this paper,

the complexity theory paradigms, Cicmil et al.,

(2017), Espinosa et al., (2017), along with mutatis

mutandis methodological approach was used. The

framework of the innovation measurement model can

helpful not only in measurement process but also in

comparative analysis of innovations regardless of

innovation typology. Thus, it is the first phase of

design a coherent innovation measurement model,

performed based on the subject literature.

2 TYPOLOGIES OF

INNOVATION

One of the first innovation typology approaches

proposed in the literature was Joseph Schumpeter’s

five-tier classification system. These categories are

considered in the context of the changes that they

induce in the economic environment Schumpeter

(1934) as cited in Oslo Manual (2005, p. 29; 2018, p.

45):

 introduction of new products;

 introduction of new methods of production;

 opening of new markets;

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 development of new sources of supply for raw

materials or other inputs;

 creation of new market structures in an industry.

The introduction of new elements in the existing

economic environment of a given industry branch-

such as the opening up of a new market or the

introduction of a new technology or method of

production-falls under a single process, which,

despite its nomenclature, does not necessarily implies

neither revolution in the structure of an economic

environment nor its destruction, but rather the

creation of a new one. Joseph Schumpeter described

this process as ‘creative destruction’, pointing out its

fundamental importance to capitalism (Schumpeter,

2008, p. 85).

Stephen Kline and Nathan Rosenberg, whilst

presenting the concept of the chain process of

innovation, proposed the following typology of

innovation (1986, p. 279):

 new product;

 new process of production;

 the substitution of a cheaper material, newly

developed for a given task, in an essentially

unaltered product;

 the reorganization of production, internal

functions, or distribution arrangements leading

to increased efficiency, better support for a

given product, or lower costs;

 an improvement in instruments or methods of

doing innovation.

Apart from the above classification, the following

innovations were differentiated (Kline & Rosenberg,

1986, pp. 288-304):

 evolutionary – the small, cumulatively

important, evolutionary changes that reduce

costs and bring better fit of the product to

various market niches;

 radical, revolutionary – these occurrences are

rare, but often mark major changes that create

whole new industries, and they should therefore

not be excluded from consideration. Radical

innovation is inherently a learning process. It is

very difficult and may be counter-productive.

Recent examples include semiconductors,

lasers, atom bombs, Internet, and genetic

engineering.

Stephen Kline and Nathan Rosenberg also specified a

spectrum of innovations, a field within which all

innovation occurs (1986, p. 294): “… it is far better

to conceptualize this range as a spectrum than to think

of two kinds of innovation, revolutionary and

evolutionary. Where a given task lies along this

spectrum of uncertainty has a major influence on

many aspects of what is appropriate innovation.”

Since a certain spectrum of innovation was defined,

with two types of innovation identified as the

boundary lines of demarcation-on the one hand,

evolutionary, and, on the other, revolutionary-then

the question about the definition of these lines arises.

How can one distinguish a change that is a refinement

from evolutionary innovation, which is already part

of the innovation spectrum and therefore lies within

that spectrum? What are the criteria constituting this

demarcation line that allow distinction between what

is an innovation and what is not (and, such as lies

beyond the innovation spectrum)? The solution to this

problem, as well as to the problem of the second

demarcation line in the innovation spectrum, for

radical innovation, is proposed in the results and

conclusion subsections.

According to Christensen et al. (2004, pp. 277-

279), innovations are divided into two main types:

 sustaining to firms – developed systematically

and allow firms to provide better and more

profitable products that meet the expectations of

the most demanding customers in the market;

 disruptive – initially inferior to existing

offerings, not good enough to meet the

performance requirements of the core market.

There are two types of disruptive innovation:



those that can compete against non-

consumption and establish a completely

new market (new-market disruption), and

 those that can deploy a business model that

profitably serves the less demanding

customers (low-end disruption).

The systematic innovations play two fundamental

roles in the market environment Christensen et al.,

(2004, p. 284):

 they define the path of incumbent improvement,

and

 they allow for disruptive companies to develop

their own improvement trajectories.

In the area of sustaining innovations, a

classification system has been proposed that outlines

the three main types of innovation Christensen et al.,

(2004, pp. 284-285):

 displacement sustaining innovations – are

innovations that target a specific piece of an

industry’s value chain;

 radical sustaining innovations – are the complex

end of the continuum, tend to be very

complicated and expensive, can be introduced

only by integrated incumbents that control large

swaths of an industry’s value chain, and also

give firms an opportunity to dramatically

change their competitive position in the market;

Ambiguity of Innovation Typology in Innovation Measurement: Towards a Uniﬁed Typology of Innovation and Measurement Model

 incremental sustaining innovations – offer

smaller improvements than radical sustaining

innovations, are less expensive and less

complicated, and, therefore, have less influence

on competitive position in the market.

The point of distinction between the

abovementioned innovations is the point of

modularity criterion presented by Clayton

Christensen. If innovation occurs at a point of

modularity, then it is a displacement innovation.

Otherwise, it is radical or incremental innovation. In

Clayton Christensen's typology of innovations

Christensen, et al., (2004), radical and incremental

innovations are in the same area of the continuum.

The same incumbent company can easily and

efficiently create radical and incremental innovations.

On the other hand, there is no continuity between

sustaining and disruptive innovations, as the latter

involve the introduction of other and, therefore, new

products to the market (Figure 1).

Figure 1: Spectrum of innovation typology based on

Clayton Christensen’s concepts.

The scale of modularity (novelty) in the area of

radical and incremental sustaining innovations of the

same product is a factor that distinguishes these

innovations. So, there is a spectrum of innovations in

the same product or service, with level of novelty

features, which defines the following demarcation

lines (Figure 1):

 for incremental sustaining innovations – a single

change that has a novelty feature,

 radical sustaining innovations – the number or

complexity of changes that have a large novelty

feature.

The demarcation line between the continuity of

innovation development (Figure 1) and displacement

innovations is the point of modularity. The open

question in the presented concept is to determine the

degree of complexity of improvements between

incremental and radical sustaining innovations, the

latter being defined as the introduction of many

changes at the same time or as a big leap in the

development trajectory.

The lack of clarification through quantitative

indicators (Figure 1) leaves efforts to identify a

precise position for the demarcation line between

these types of innovation open, significantly

impeding its use in the innovation measurement

model.

The spectrum of change, characterized by the

novelty feature, was also defined by Joe Tidd, John

Bessant and Keith Pavitt. On the one hand,

incremental innovation has been adopted as the

border of the discussed area, and, on the other hand,

within radical innovation, the innovation termed by

the authors as ‘novelty for the world’ was adopted.

The defined area of changes, characterized by the

novelty feature, makes reference to each of the four

types of innovation (four "P") Tidd, et al., (2005, p.

10):

 product innovation – changes in the things

(products/services) that an organization offers,

 process innovation – changes in the ways in

which they are created and delivered,

 position innovation – changes in the context in

which the products/services are introduced,

 paradigm innovation – changes in the

underlying mental models that frame what the

organization does.

The presented typology, therefore, represents a

spectrum of innovation where each type has an area

of innovation ranging from incremental innovation-as

the minimum, representing of ‘doing what we do

better’-to radical innovation-as the maximum,

representing of ‘new to the world’ Tidd, et al., (2005,

pp. 11-13).

‘New to the world’ has been defined as

introducing to the market new goods and services that

lead to the emergence of a new market. An example

of this kind of innovation that resulted in the

emergence of a new market is the introduction of the

first telephone, radio, TV, computer, wireless phone,

and steam engine. Such innovations have been

described separately in the conceptions of Joseph

Schumpeter and Clayton Christensen, removed from

the continuous area of changes in the innovation

spectrum, as they are completely novel. Specifically,

in the Clayton Christensen conception, new to the

world innovation is defined outside of the continuity

of sustained innovations development area, due to the

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fact that it is not a result of systematic development

of a product presented previously and therefore

known in the market. On the other hand, further

development of a completely new product that had

previously been introduced belongs to the continuity

of sustained innovations area.

Another example of innovation typology that can

be found in the literature is the innovation matrix,

which presents three types of innovation, linked to the

development levers in two areas Davila, et al., (2012,

p. 41):

 the business model, which contains three levers:

value proposition, value chain, and target

customer;

 technology, which also contains three levers:

product and service, process technology, and

enabling technology.

The following three types of innovation are

specified in each of the two areas Davila, et al., (2012,

pp. 29-46):

 incremental – small change in one or more of all

six levers within either business model and

technology;

 semi-radical – business model-driven

innovations include:

 significant change in one or more of the

three levers of the business model area;

 small change in one or more of the three

levers of the technology area;

 semi-radical – technology-driven innovations:

 small change in one or more of the three

levers of the business model area;

 significant change in one or more of the

three levers of the technology area;

 radical – significant change in one or more of all

six levers within either business model and

technology.

This concept (Figure 2) highlights the role of

technological innovation and the impact of the

application of new technologies on products,

services, processes, and business model. As, in the

previous concept, radical innovation is identified

through the novelty of the object of implementation

as a whole, an approach has been proposed whereby

the type of innovation is defined by distinguishing

between improvement – which, in this concept,

means changes made to existing products – and

novelty, which refers to wholly new and therefore

non-existing objects of implementation. This

distinction represents the demarcation line between

incremental, semi-radical, and radical innovations.

Given the criterion of distinguishing between small

and significant changes, it leaves room for different

interpretations, and not specify whether it is a single

or cumulative change. After all, it is not necessarily

the case that a small criterion that marks a single

change is not at the same time significant.

The graphical representation of this innovation

typology is shown in Figure 2.

Figure 2: Spectrum of innovation typology based on

concepts of Davila et al.

The blurry criterion causes creation of a single area of

the typology of innovation, where a single

demarcation line is characterized by subject to

interpretation drift. It is important to point out in this

concept the need to measure appropriately selected

input values and output innovations including

tangible and intangible assets that represent two ex

ante and ex post areas of the innovation process

Davila, et al., (2012). It is infeasible to design a valid

innovation measurement model without

simultaneously including the two types of variables

belonging to both phases of the innovation process.

Vijay Govindarajan and Chris Trimble (2005,

pp.21-22), proposed four different types, thus

introducing a basic distinction between the types of

innovation:

 continuous process improvement – improves

existing business and involves countless small

investments in incremental process innovations;

 process revolutions – improve existing business

processes, but in major leaps—say, a 30 percent

increase in productivity—through the

implementation of major new technologies;

 product or service innovations – are creative

new ideas that do not alter established business

models;

 strategic innovations – they may include

innovations in process or product but always

involve unproven business models.

As innovation development is complex,

multidimensional, and burdened by increased risk

Ambiguity of Innovation Typology in Innovation Measurement: Towards a Uniﬁed Typology of Innovation and Measurement Model

level, each of the specified types of innovation

requires a different management approach, so all

efforts should be made at the planning stage of

innovation development, followed by measurement

and analysis of its effects with particular attention to

unambiguous conclusions. Attention should be drawn

to the quantitative specification given in the

description of the revolutionary process, which

represents a 30% increase in productivity, as the

minimum criterion for this type of process. A similar

criterion was proposed by Richard Leifer, et al. (2000,

p. 5) as one of the conditions of a radical innovation

project-namely, a 30% reduction in costs or a fivefold

improvement in the achieved parameters that describe

current functionalities-which, together with the

description of revolutionary process by Vijay

Govindarajan and Chris Trimble, allows treatment of

these two categories as one type of innovation (Figure

3).

Figure 3: Spectrum of innovation typology based on

concepts of Vijay Govindarajan and Chris Trimble.

In the presented typology of innovation, the

continuous improvement process and the

revolutionary process are a single, continual area of

innovation that is being systematically developed.

The criterion that distinguishes the continuous

improvement process from the revolutionary process

is the achievement of the proposed boundary value of

efficiency, which belongs to the output values of the

innovation measurement model. This value thus

identifies the unambiguous position of the

demarcation line, without drift, as was the case in the

previous innovation typologies. The boundary value

can be reached by implementing a new technology,

which differs from Tony Davila, Marc Epstein and

Robert Shelton's concept, where the introduction of a

completely new technology is considered as semi-

radical innovation, regardless of the increase in

performance. Exceeding the boundary value can also

be achieved either by a single improvement or by

many cumulative improvements. In this innovation

typology (Figure 3), we can speak of the cumulative

nature of improvements or incremental innovations.

When you exceed the boundary value of the selected

indicator, you can speak of radical innovation. In

contrast, in the area of product and service

innovation, the boundaries between the types of

innovation have not been specified. Nevertheless,

product and service innovation compose one area of

innovation that includes the entire spectrum of

innovation typology, from incremental innovation of

the same product or service to radical innovation of a

new product or service.

Taking radical or revolutionary innovation

together with incremental innovation, as one area of

sustaining innovation, implies the need to establish a

criterion for distinguishing between these two types

of innovation in a single spectrum. Thus, the question

arises whether these boundary values can be set

separately for the input or output values of the

innovation process.

An example of the concept of introducing tangible

boundary values as demarcation lines between

incremental and radical innovations is exemplified in

Richard Leifer's proposal Figure 4).

This concept proposes two criteria for

distinguishing between incremental and radical

innovations Leifer, et al., (2000, pp. 4-5):

 novelty of used technology:

 learning about new capabilities that

technology offers, which leads to

improvements in the existing products;

 applying new technology, which leads to

the development of new products;

 effects achieved by incremental and radical

innovations:

 incremental innovation highlights the

issues related to the reduction of

production costs and / or development,

amendment, or extension of existing

product functionality with new

capabilities, which requires a deepening of

competences within existing technology;

 radical innovation highlights the creation

and development of new types of

businesses (or permanent changes in the

way they are carried out) and the

emergence of new product lines, which is

possible to achieve on the basis of new

ideas, technologies, or significant cost

reductions.

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The distinctions were made based on the example

of technological innovation (Figure 4):

 criterion for the application of technology,

belonging to the input quantities, where:

 incremental innovation, as learning and

applying new capabilities of known

technologies;

 radical innovation, as the introduction of

new technology, which leads to obtaining

a new product;

 the criterion of achieved results, belonging to

the size of the innovations output quantities,

where:

 incremental innovation:

 lowering production costs;

 change or extension of existing

product functionalities, requiring

deeper competences in current

technology;

 radical innovation:

 creation and development of new

business (or permanent changes in

the way it is run);

 creation of new product lines, which

is possible to achieve on the basis of

new ideas, technologies, or

significant reduction of production

costs.

Both types of innovation are achieved as part of

projects, which results in the process of systematic

development. On the basis of differences in the

implementation of innovation development projects,

it was determined that, unlike projects bringing about

incremental innovation, projects involving radical

innovation have the following characteristics Leifer,

et al., (2000):

 completely new set of functionalities designed

to be achieved;

 improvements to the existing functionalities,

only in the event they achieve five times better

results than the previous ones;

 significant cost reduction, amounting to a

minimum of 30% of current costs.

This kind of quantitative and qualitative specification

makes it possible to unambiguously distinguish

between incremental and radical innovations, thus

determining the demarcation line without drift in the

continuous innovation development spectrum (Figure

4).

Figure 4: Spectrum of innovation typology based on

concepts of Richard Leifer et al.

Therefore, from all the presented concepts, this

seems to be most appropriate for use in the innovation

measurement model. It seems that it is also possible

to use this concept as a starting point for building a

model for measuring innovation.

The development of knowledge, creativity, and

need, which are the sources of innovative ideas, are

not the exclusive domain of companies today. The

development of ICT, the increasing availability of

technology, and the presence of ideas outside the

internal structure of the company leads to the opening

of the innovation process to the economic

environment. This leads to the concept of open

innovation, which (unlike closed innovation) is

defined as a process where valuable ideas can come

from within or outside the country, region, or

enterprise. This approach means treating equally the

significance of external and internal ideas, inventions,

or patents Chesbrough, (2005), Wisła, (2012),

Sierotowicz, (2015, 2017).

3 MATERIALS AND METHOD

There is no doubt that innovation is a process not only

complicated but above all complex. The traditional

scientific approach used to describe new and

unrecognized phenomenon was based on

reductionists methodologies. Such approach, used

commonly in XX century, mainly consisted in

searching for the most important components of the

Ambiguity of Innovation Typology in Innovation Measurement: Towards a Uniﬁed Typology of Innovation and Measurement Model

complicated phenomenon, and then reducing its

description to elements considered to be common.

This approach raised discussion what are the common

elements which describe in a very limited particular

phenomenon taken under research. Different

arguments and experience provide not only common

characteristic, but many different concepts,

typologies and approaches to the same phenomena.

Discussion continues over three decades and still

there is no way to achieve the consensus. There is no

issue related to methodology, but rather inadequate

methodology used to describe not only complicated

but complex phenomena as the innovation

development process is. According to complexity

theory, Richardson (2008), Cimini et al., (2017), the

phenomenon is not only complicated but complex

when consists of elements, where each of these

elements is also complex. The innovation

development process is definitely complex

phenomenon, since people, (scientist, researchers,

engineers and entrepreneurs) taking part of it

Espinosa et al., (2017). That is the point of novelty

presented in this paper. If innovation development

process is complex, then in order to describe it more

deeply and in constitutive way, the complexity theory

paradigms, Cicmil et al., (2017), Espinosa et al.,

(2017), along with mutatis mutandis methodological

approach was used. There is no reason to identify

common components, because each innovation

development process is different. In the complexity

approach, it should be rather identified those, which

constitute innovation development process, which

satisfy the condition sine qua non of the studied

phenomenon. In the theory of complexity, it is clear

that a comprehensive description of the complex

phenomenon is not possible. However, without

reducing the phenomenon to several elements, it is

possible to indicate the ones that constitute this

phenomenon and create unifies spectrum of

innovation development process and innovation

measurement model.

4 RESULTS - TOWARDS A

UNIFIED TYPOLOGY OF

INNOVATION AND

INNOVATION MEASUREMENT

MODEL

A properly designed innovation measurement system

(to which analysis of patent data belongs) cannot rely

solely on commercialization output values, but must

also include input values. Two main stages need to be

distinguished while preparing the innovation

measurement system:

1) an analysis of the potential inputs and benefits

that can be gained as a result of the achievement

and commercialization of the generated added

value; and

2) measurement and analysis of inputs and benefits

gained in real time, when implementing a

specific innovation development project.

In the first stage, the potential value of innovation

requires analysis for the two phases of the planned

innovation development project:

 investments, expenditures, and costs, often

incurred over many years, relating to the ex ante

phase in the area of commercialization; and

 the benefits that can be achieved in various

forms of commercialization of the generated

added value, and therefore taking place in the ex

post phase.

This stage of analysis should take into account all

possible forms of ex ante analysis, enabling as

precisely as possible the prediction of various

scenarios for the development of innovation. There is

therefore room for appropriately selected

econometric analyses, foresight analyses, SWOT

analyses, as well as analyses aimed at indicating the

sources of financing for the project, the ways and

costs of acquiring the sources, the risk of innovation

development failure, the needs and expectations of

the market concerned, the absorption capacity of the

target market, and many other methods

and techniques known in the field of

project management (PMI, 2013). It should be noted

that commercialization is also a cost factor for the

Figure 5: Two stages of innovation measurement model.

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innovation development process (Figure 5). This is

the input value of the innovation measurement model,

which belongs to this model (Figure 5). In order to

achieve the highest level of efficiency, script variants

of commercialization should be developed for both

radical and incremental innovation. Therefore, the

demarcation line between the ex ante and ex post

stages, in this analysis, is not located on moment of

implementation but before choosing the most

effective form of commercialization (Figure 5).

It may turn out that the launch of a new innovation

development project on the basis of invention,

combined with patents already owned, enables the

development of radical innovation, whose effects,

after analysis, show an achievable, and many times

higher efficiency level than simple implementation of

the final product constituting incremental innovation.

Hence, in this case, it seems necessary to analyze the

patent gap Okoń-Horodyńska et al., (2012).

In the second stage, the innovation measurement

model is used to analyze, on the basis of real data, the

actual projects (or portfolios) of the innovation

development. At this stage, the criterion of division

into ex ante and ex post stages is the area of

commercialization. It seems useful in this case to

periodically carry out an analysis of the trajectory of

innovation development, which, in the ex ante phase,

has to answer the following question: is the goal that

was set at the start of the project still achievable in the

same form? This is the question pertains to both

competition activities, and thus the early

implementation of the assumed innovation by

competition, as well as the estimation of the

achievement of the goal. In addition, when measuring

and analyzing in real time, the specificity of the

measurement is different. In the Oslo Manual (2018),

the difference is defined as a subjective and objective

approach. The measurement based on actual data is

obviously stretched, because it covers the life cycle of

a given innovation in a socioeconomic environment.

The demarcation point that marks the end of this stage

is dependent on the form of commercialization. It will

be designated differently while licensing and when

the product (or service) is deployed to the target

market.

In both the ex ante and ex post stages of the

innovation measurement model, where

commercialization is the demarcation area, it is

possible to determine the type of innovation as the

objective to be achieved within the project of

innovation development. In the presented concepts of

innovation typology, the main difficulty was in

unambiguously defining the division criterion which

determine position of demarcation line without

deprived of the significative drift between the

different types of innovation. Moreover, the vast

majority of the presented concepts are based on ex

post factors in relation to the implementation. In the

presented concept of innovation typology, it is

proposed that the demarcation criterion be unified in

order to distinguish between radical and incremental

innovation, both ex ante (in the stages of initial

analysis, where the goal to be achieved is set within

the design of the innovation development project), as

well as ex post related to the fact of

commercialization, with the distinction between these

as follows:

 radical innovation is the introduction of a new-

i.e. absent so far-type of product, service,

method, process, or model (including business

model) to the socioeconomic environment,

regardless of the form of this introduction

(commercialization) or the geographical area

concerned;

 incremental innovation is the introduction of a

new, improved version of an existing product,

service, method, process, or model (including

business model) to the socioeconomic

environment, regardless of the form of this

introduction (commercialization), the

geographical area concerned, or the nature of

improvement (single or cumulative).

In addition to the proposed demarcation line

between types of innovation, the proposal includes a

demarcation line that allows for the distinction

between incremental innovation and minor changes,

modifications, and improvements that may be

cumulative. The criterion for this distinction is that

minor changes, modifications, and improvements

belong to the kaizen sphere, and, even being

cumulated, do not lead to the introduction of a new

version of an existing product, service, method,

process, or model (including business model) to the

socioeconomic environment. In other words, the

demarcation line, which is the boundary between

what is innovation and what is not yet, is outlined by

the kaizen concept Imai 1986), Ortiz (2009) and

Maurer (2012). Where kaizen ends, incremental

innovation begins. On the other hand, on the other

side of the innovation area, radical innovation is not

limited, except by the level of possessed knowledge,

technical and technological capabilities, and

imagination of the creators. The presented proposal

makes it possible to clearly identify the type of

innovation (Figure 6):

 radical, and

 incremental.

Ambiguity of Innovation Typology in Innovation Measurement: Towards a Uniﬁed Typology of Innovation and Measurement Model

The introduction of the presented typology with the

ex ante and ex post stages constitutes the unification

of considerations concerning the type of innovation.

It forces a clear definition of the type of innovation

that is to be developed as added value, at the early

stages of planning and designing the innovation

development project, which will remain relevant

during project implementation.

Figure 6: Two stages of innovation measurement model.

At the same time, the innovation measurement model,

being a part of the presented innovation measurement

model, must be flexible, which should be reflected in

the systematic analysis of the socioeconomic

environment for the presence of such or similar

innovations, and including the analysis of patent-

related gaps. It seems that, in the age of globalization,

and with the increasing availability of information,

the inclusion of the geographical factors in the

innovation typology systematically loses its

importance.

5 DISCUSSION, CONCLUSION

AND FUTURE RESEARCH

The definition of innovation shows that

implementation is a sine qua non of innovation Oslo

Manual (2018). The fact it has been noted allows you

to move onto the next stage, which is the

identification of the innovation type. Hence, the

presented typologies of innovation are built on the

basis of the ex post stage in relation to the

implementation. The exception to this rule is the

division into areas that relate to innovation, that is, the

product, process, organization, and marketing areas

Oslo Manual (2018). This kind of typology can be

used both in the ex ante and ex post stages of the

multidimensional development of innovation.

However, this kind of typology does not help to carry

out an analysis of the expected ex post effects that

should be made in the ex ante phase, which is

essential at the stage of planning and designing of the

innovation development project Cicmil et al., (2017).

It does not answer the question: what kind of impact

will the innovations planned in the strategy have on

the economic and social environment? At the same

time, modern companies, both small and global, are

developing innovations within individually designed

innovation development projects, which comprise the

innovation process as a whole, and therefore consist

of ex post and ex ante stages in terms of

implementation.

Within the typology of innovation,

implementation is a hotly debated form of

commercialization of innovation. Innovation also

takes place when the intellectual property value

developed in the course of a project has been

protected by law, and then, for example, licensed.

Hence, when talking about innovation, it should not

be linked to implementation as a specific demarcation

line between what is ex ante and what is ex post. In

fact, design work is about generating value that

resembles a growing wave of values, where some of

it is isolated and restricted by patent regulations, and

then commercialized, for example, by licensing. The

phenomenon of incremental wave of added value

pertains to any type of innovation development

project. This is evidenced by the fact that such

projects are one of the most important sources of

generating innovative ideas Drucker (2006), Bessant

et al., (2015). On the other hand, not every value is

used in the further design work. Therefore, it is

important to discuss the area of intellectual property

commercialization, since, for example, patents can be

commercialized in various forms and times, not

necessarily in the form of a final product. Hence the

proposed demarcation area between ex ante and ex

post stages in the innovation process.

Commercialization should be professionally

managed Govindarajan et al., (2010). Hence, at

leading global corporations, you can find a separate

intellectual property management department that has

its own strategy. The tasks of this department relate

not only to the commercialization of intellectual

property, but also to their acquisition from external

sources through acquisitions, mergers, acquisition of

patent rights to selected inventions, transfer of

completed technologies, and development processes

in progress IBM (2001, 2005, 2010, 2016). The

processes of acquiring and commercializing

intellectual property, and indeed intellectual property

management strategies, are therefore part of the

routine functioning of the corporation.

In practice, the proposed typology of innovation and

the innovation measurement model means that the

complex and systematic (sustaining) development of

FEMIB 2020 - 2nd International Conference on Finance, Economics, Management and IT Business

incremental innovation seems to be faster to achieve,

to require less investment, and, in combination with

the patent gap analysis, seems to serve as a tool

offering competitive advantages to both the enterprise

and the national economy. The conceptual framework

of the innovation measurement model arose from the

proposal of one consistent typology of innovation.

Both a consistent typology of innovation and a

conceptual framework of the innovation

measurement model are the results achieved in the

first phase of the conducted research. The future

research will be the second phase of the design

process, where the most suitable mathematical

analysis will be selected and performed based on

empirical data related to the innovation development

processes.

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