Whether it is venture capitalists, entrepreneurs, or fresh college graduates, everyone has a stake in understanding the innovation process. It is a myth that innovative ideas come from a stroke of genius or a flash of brilliance. No doubt, it helps to have some of those faculties, but one can also find opportunities for successful innovation by being aware of the different types of innovations and their impact on industry participants (customers, startups vs. incumbent vendors, etc.). The key difference between innovation and invention is that unlike invention, successful innovation is judged on its ability to earn a profit. Therefore, we can have no discussion about innovation without discussing the ability to profit from it.

In this article I will focus on two different types of innovation and submit to you that upstarts or startups have a better shot at success if their innovation is architectural in nature.

Architectural vs. Component Innovation:
Architectural Innovation: Architectural innovation refers to innovation in the architecture of a product that modifies or changes the way different components of the systems interact or link with each other. The different components of the system may also be modified within the new architecture (smaller form factor, lighter weight, etc) however; the key technologies at the component level remain unchanged. Some examples of architectural innovation:
1. ‘3.5’ disk drives were an architectural innovation over the ‘8’ or ‘14’ Winchester disk drives. The ‘3.5’ disks were smaller, lighter, and lower in cost (in terms of total cost and not cost per Megabyte) than the Winchester architecture.
2. Desktop photocopiers represent an architectural shift over the big stand-alone photocopiers.
3. Multi-core microprocessor architecture is an architectural shift over single core CPU architectures.