'Soft' innovation is at least as important as 'hard' innovation.
Hard innovation without soft innovation is rare, soft innovation without hard innovation is common.
The two forms of innovation − hard innovation and soft innovation − are often implemented together.
'Hard' (R&D-based) innovation is more successful when it is implemented in combination with 'soft' ('street-smart', intuitive, serendipitous) innovation.
Non-technological innovation contributes to a stronger competitiveness.

Street smart innovation is inspired by a combination of life experiences, social intelligence, awareness, cleverness, intuition and ingenuity.
Companies that create an environment where employees are encouraged and rewarded for making contributions of their street smarts in order to fuel the company's soft-innovation efforts keep inventing amazing customer experiences.

STAYING COMPETITIVE: Hard-Soft Innovation Synergy
An firm that innovates continuously maintains its competitive advantage over other firms. A firm that stops innovating is fading out in the market.
'Hard' innovations take long time to develop and thus cannot be introduced every day. 'Soft' innovations can be introduced frequently and thus help firms to maintain their competitive advantage.
The best market effect is achieved when introduction of 'soft' and 'hard' innovations are synergized strategically and tactically.

Meanings and Examples of “Hard” and “Soft” Innovation

Innovation means introducing something new or improvising on something that already exists.
Hard innovation is organized R & D distinguished by strategic and tactical investment in innovation be it high-risk-high-return radical innovation or low-risk-low-return incremental innovation.
For instance, technological innovation, market-research-based innovation and beta-testing-driven innovation are all come under 'hard' innovation.
'Soft' innovation is based on implementation of smart, intuitive, serendipitous, valuable ideas that anyone can think up.
For instance, outside-the-box ideas for a new product or brand, paradigm-breaking approaches to social networking, new ways of customer engagement, unusual strategies to promote a product or increase its sales are all examples of 'soft' innovation.

rapid innovative change of an aesthetic nature – what he terms 'soft innovation'.

Why soft innovation, conceptually, is important.
Innovation that encompasses the artistic, formal (as in the contrast between form and function), intellectual or aesthetic, has largely been ignored in the mainstream literature on innovation.
At the centre of the analysis here is a form of innovation labeled soft innovation, defined to encompass changes in goods and services that primarily impact upon these aspects rather than functional performance.
Soft innovation mainly concerns product innovation and product differentiation. The emphasis upon product differentiation means that economic analysis designed for exploring (static) models in differentiated markets can be brought to bear upon dynamic questions relating to innovation. Innovation in terms of new product launches in such markets may reflect either movements towards equilibrium or changes in the equilibrium. Two main types of soft innovation are detailed: the first involving changes in products in the creative industries; the second involving changes in the aesthetic/intellectual dimensions of products in other industries.

Cross-functional Innovation
Innovative activity is an activity with the purpose of realising new products or new production processes.
Development and selling of a new product demands both functional and cross-functional innovation.
In today's era of systemic innovation, hard (technological) innovation is more successful when it is implemented in combination with soft (non-technological) innovation. That's why successful technology innovators undertake innovative activities is a non-technological sense as well, for example in the fields of strategy, marketing, organisation and management.

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STREET-SMART INNOVATORS

What it means to be street smart in innovation and business
Street Smart Disciplines Every Entrepreneur Needs
Some people argue that street smarts are only a natural born skill, but I disagree. I believe they are disciplines that can be taught and learned.
In the urban world, being street smart means instinctively knowing how to keep yourself safe from scams and bad guys. It means you know your way around, how to handle yourself in tough situations, and how to “read” people’s intent. In reality, the startup world contains those same very risky streets, but in the business context.

Work smart. This means using discipline to get smart before you start working. Find out everything you can about the business domain you are targeting. In addition, maintain a change-oriented and future-focused mentality, with an actionable execution plan. When someone tells you they are working hard, it’s usually an excuse for not working smart.

Present everything. If you are trying to gain commitment or persuade someone, practice the discipline of thinking beyond conversational chatter. The four steps of a successful presentation always include preparation, practice, delivery, and asking for the order. Make these part of every interaction with partners, customers, and team members.

Deal with people. People do business with your people, not your startup. Finely tuned people skills make you more likeable, warm, friendly, open, and effective. Put yourself in their heads to see things from their perspective. Have patience, and listen actively before speaking. Street smart entrepreneurs practice this discipline until it is not work.

Watch your money. It’s not unusual for creative entrepreneurs to find finances difficult to understand, intimidating, or just a numbing bore. If you feel that way, find a partner who loves that critical side of the business. In reality, the discipline to manage cash does not require a financial genius. It just requires a discipline of relentless focus.

Get more business. This discipline is the art of making a constant of new business opportunities, new customers, and new revenue flowing into your startup. Develop an aggressive prospecting mentality, stay close to current and past customers, get referrals, and optimize Internet marketing. If you startup isn’t evolving and growing, you are failing.

Manage yourself. Entrepreneurs will always be wearing many hats in their business and personal life. Even the more important activities can sometimes be excuses to avoid the underlying challenge of working toward you life-changing goals. Learn and practice time management disciplines. Banish procrastination. Be decisive. Have fun.

Everybody sells. It may not be in their job descriptions, but everyone in a startup should be selling. The very first moment that you have contact with an investor, or a customer has contact with your team, an impression and a perception is created. That perception is your reality, and you only get one chance to make it a good one.

Overall, street smarts also requires that you can put all these things together for problem solving, and to dodge and weave effectively through the risky business streets. It means balancing your idealistic vision of how things could be, against the realities of the business world. Confidence and a positive attitude are also required to be a street smart and successful entrepreneur.

But attitude and problem solving are not sufficient, without the basic disciplines outlined above. No one is born with all these disciplines. These represent the knowledge and experience of many successful business people. Study them carefully and practice them religiously. The alternative is a long and painful learning curve, which neither you nor your investors can afford.