Radical Innovation versus Incremental
Organisations often believe innovation is about doing big, transformational projects that create new revenue or define entirely new product categories. These are initiatives that are usually described by commentators as “radical” or “breakthrough” innovations. They’re typified as being extremely lucrative, assuming one can afford the very substantial risks. In other words, if they succeed, you have an organisation defining hit on your hands, though the chance of this happening is relatively low.
Many executives, when asking innovators to produce, do so with the expectation that they will get radical innovation, but they want it without the risk. Most of the time, this is pretty much impossible to achieve in any reliable way, and is a reason innovation teams get fired.
In contrast, incremental innovation has many fewer risks. It examines what is already being done and develops some minor improvement that delivers new value. Such improvements are usually not that earth-shaking, and will usually take out cost, or enable charging higher prices, or expand the reach of a product or service in the market. The point is not how big these gains are initially, but that when many incremental innovations are added together, they can add materially to the fortunes of an organisation.
The most sophisticated innovation programmes do projects in both categories in order to balance their risk of failing to achieve meaningful outcomes. The small, incremental innovations balance out the expense of the big failures, at least until the team is lucky enough to get a hit.
My experience suggests that innovation teams start by riding high on the expectation they will deliver astounding benefits from radical innovation. Sooner or later, though, stakeholders realise that “astounding” benefits are some time away, and are, in fact, not so astounding after all. Faced with such disappointment, they lose interest in the innovation programme.
Key note to new innovation programmes: avoid the temptation to focus on radical innovation at the start, and you will likely live to fight another day. By concentrating firstly – or at least to a large degree – on incremental innovation, you have the chance to build basic capabilities which will be important as things get more strategic.
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