2.3 Circular Economy 35
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Innovation Types
Schumpeter, J. A. (2006) subdivides innovation into five different types: product
innovation, process innovation, organizational innovation, market innovation
and input innovation.
- Product innovation is either the development of a new product or a new variant
of a product.- Process innovation is defined as a change in the usual production process.
- Organizational innovation describes either a change in a firm’s behavior or to
the current operating model.- Market innovation is the introduction of a product to a qualitatively different
group of customers.- And lastly, input innovation describes the introduction of a new raw material
or intermediate good.The extent to which an organization is impacted by changes depends on the type
of innovation pursued. The benefits reaped, success achieved and challenges faced
may be different. Therefore, an evaluation of the different types of innovation in
the context of circular economy is necessary to select which types are relevant for
the framework.
Circular economy inspires organizations to redesign their products and processestherefore the first two types of innovations play a crucial role in the implementation
of the concept. Furthermore, organizational changes may be required in order
to implement the product and process changes. Hence why the third innovation
type has to be included in the framework. Market innovation is not included in
the framework because opening up to new markets would be a second step in the
implementation of circular economy. It is not considered important in the early
stages of implementing the concept. Input innovation is also not included in the
framework. The understanding underlying this thesis is that sourcing a new raw
material is a required step towards producing a circular product and is therefore
part of the product innovation. Consequently, the following three innovation types:
product, process, and organizational innovation have been selected as the first set
of categories in the framework.
Business Models
As second step in developing the framework business models recognized as being
potentially beneficial for organizations in the circular economy implementation
process are included to give the framework more structure. The five business models