In today's rapidly changing business landscape, incremental innovation can often be underrated when compared to other innovation types. Business leaders often assert high overall innovation failure rates, varying anywhere between 70 to 98%. Contending with this level of failure makes incremental changes look attractive when considering the risk associated with innovation investments.
Change impact or scope is the key aspect used to differentiate incremental from radical, breakthrough, or transformational types of innovation. Incremental innovation is characterized by:
In some cases these incremental improvements may provide advantage to existing industry players as they capitalize on existing knowledge, resources, and processes. This type of innovation can also reconfigure current capabilities to serve a new use or need.
Incremental innovation most often moves along the established innovation framework for the business. In many cases, the business will have an established pipeline that evaluates new concepts and ideas that can move through the service or product innovation process within a defined level of risk. Factors that can establish viability as an incremental improvement include:
An attractive source of incremental innovation can also be found through established suppliers and partners where their technology improvements can be used as potential components in a new offer to customers.
There is an abundance of information available that can influence decision making on where best to innovate. We often experience conflicting motivations to consistently improve existing products and services while also trying to be vigilant for "game changing" innovation opportunities. Ultimately, innovation investments must find the critical balance of short term, medium term, and long term ventures that provide needed growth while preparing for long term survival.
Finding this balance is a key goal in managing innovation and should be guided by the strategy for the business. Investments in incremental innovation should take the largest portion of the innovation budget as they fuel the low risk near term growth, typically in the zero to two year time horizon. However, discipline in the portfolio decision analysis must ensure that the incremental enhancements are generating the projected returns on innovation, particularly when base innovation diffusion (per Everett Rogers) has moved past the early majority adoption phase. Investments in incremental changes that exceed 90% of the allocation for innovation may be pointing to a problem, particularly if it is happening consistently.
At some point in a category lifecycle there will be signs that incremental changes are not enough to sustain viability for your business. Here are some of the warning signs:
We can become absorbed with radical or disruptive innovation but, most growth is achieved through a steady stream of incremental innovation that is more frequent and economically predictable. The success rate of radical innovations is amazingly small, likely less than 10%.
Small improvements can add up to significant change over time, and represents continuous learning by researchers, managers, developers, suppliers and customers. Incremental change is the key source for low risk growth and successful innovation management must establish the balance between evolutionary and revolutionary initiatives that will grow and sustain the business for the short and long term.