In today's fast-paced, AI-accelerated business environment, innovation is the currency for staying ahead. It drives new products and services, optimizes operations, and enhances customer experience — the edge companies need not just to lead, but to survive. The tools have never moved faster. The discipline required to use them well hasn't changed.
Defining Innovation Through Different Lenses
Innovation is defined in many ways. Steve Jobs described it as the ability to "see what everybody has seen and think what nobody has thought," intertwining simplicity with user experience. Elon Musk frames it as bold ventures into human progress — SpaceX, sustainable energy. Tim Brown of IDEO champions design thinking: a human-centered approach that keeps organizations focused on the people they're building for. And Satya Nadella's turnaround of Microsoft, replacing a "know-it-all" culture with a "learn-it-all" one, shows that a growth mindset at the top is itself an innovation strategy. Innovation transcends a single definition — it takes many forms of value creation.
Clayton Christensen's Three Types of Innovation
The late Harvard Business School professor Clayton Christensen — still among the most cited voices in management theory — outlined three types every leader should be able to name in their own organization:
1. Efficiency innovation improves your existing business model — better processes, management, value proposition. Amazon's warehouse robotics and AI are one example; each new iPhone is another. It matters, but on its own it's not enough — if the business model itself is going stale, efficiency just helps you decline more smoothly. Christensen's warning still holds: in a healthy economy, efficiency, sustaining, and empowering innovation stay in balance. Over-invest in efficiency alone and you starve the growth engines you'll need in five years.
2. Sustaining innovation upgrades and broadens an existing value proposition — think of how Kindle reshaped reading. It adapts and grows within the industry's current framework.
3. Empowering (market-creating) innovation — Christensen's own term, not "transformative," a common misnomer — takes something complicated and expensive and makes it simple and affordable enough for an entirely new population to access. The Ford Model T did this for the automobile; AWS did it for enterprise computing. Generative AI may be this decade's clearest example: capability that once required a data science team is now available through a chat window. Safi Bahcall's "loonshots" — ideas initially dismissed as absurd — capture this category at its most ambitious, from curing cancer to the moon landing.
Measuring Your Company's Innovation
To learn where your company is, try this with your leadership team: have each person write down five favorite innovations from the last three years, one per sticky note, then sort them into the three categories above. In my experience, a pattern shows up almost every time—most people believe they're generating market-creating ideas, but most of what lands on the board is sustaining work, with a large share of efficiency work wearing an innovation costume. That's not a failure; it's information. If most of what you call "innovation" is really optimization, and your industry is shifting beneath you, you risk executing the old model more efficiently until it stops mattering.
Innovation Challenges & a Model for Sustained Innovation
Most companies recognize innovation's importance; far fewer implement it well. The stakes are real: research firm Innosight has tracked a steady contraction in corporate lifespan for decades — the average S&P 500 tenure fell from roughly 33 years in 1965 to well under 15 today, with close to half of the current index projected to turn over within ten years. There's a 2026 twist, too: adoption isn't the same as maturity. McKinsey's 2025 State of AI survey found 88 percent of organizations now use AI in at least one function, yet only about 1 percent call their deployment mature. Many companies are using AI to improve efficiency right now without doing the sustaining or empowering work that would actually change their trajectory.
The 70:20:10 model, popularized by Google's approach to innovation investment, offers a balanced allocation: roughly 70 percent to optimizing the core, 20 percent to adjacent bets, 10 percent to genuinely transformative ones. Very few organizations actually hit that 10 percent — which is exactly why so few land in the empowering-innovation column.
Innovation is more than a buzzword; it's the heartbeat of business longevity. Embedding it deeply into your strategy — the kind of Lead for Impact work I do with executive teams — ensures your company doesn't just adapt, but thrives.
Quote of the Day. "Creativity is about pairing the familiar in novel ways, and the novel in familiar ways." — Karl Weick
Reflection Question. How does your company embrace innovation — and if you ran the sticky-note exercise above, where do you predict the ideas would land?
As an executive, leadership, and team coach, I work with leaders to cultivate a culture of innovation, contact me to explore this topic further.
The next article in this series (2/6) explores why innovation begins with better problem-defining.
How does your company innovate?