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Let's Hear it for Incremental Innovation

Tue, 05/28/2013 - 10:57 -- KevinMcFarthing

A journey of a thousand miles starts with a single step, as the saying goes.  The same is true for innovation.  Yet much of the writing on innovation is about leaps, major technological breakthroughs that transform or disrupt markets.  Isn’t it all about Apple and Edison?  I would argue it isn’t.  The bulk of progress and associated hard work on innovation is focused on incremental innovation, the small steps that over time take products and services to new levels.  No Nobel prizes, but it’s not all about the glory.

Incremental innovation is occasionally dismissed as simple, straightforward continuous improvement.  We are probably dealing with a spectrum at one end of which is a simple cost saving and at the other something like the original application of electricity.  At some point on the spectrum we move from a Kaizen-type approach to genuine innovation, which will be incremental.  As we move along, the steps become larger, the gap between new products and their predecessors becomes wider, until we get to the truly radical.

There are whole industries where innovation is almost exclusively incremental.  A friend of mine works in the soft drinks industry and maintains that there have only been two major innovations in recent generations – artificial sweeteners and plastic packaging.  Does it mean that soft drinks are an innovation-free zone?  Of course not, just that all the successful innovation involves small steps that bring small improvements to consumers, who still have lots of choice and new stuff from which to choose each year.

Many other consumer goods categories are the same.  Let’s take detergents, whether for clothes or dishes.  The performance and product presentations are several levels above those of even fifteen years ago, let alone thirty.  This has all been achieved using relatively small steps.  Of course some steps are larger than others, for example the first gel cap or the first concentrated detergent; but they have all been intended to do the same job for the same target consumer in roughly the same way, getting better in small steps year by year.

Looking on as a outsider, it appears to be the same for many other industries, even ones as diverse as cars, major software products like ERP systems and white goods, to name but a few.  The automotive industry is a good example in that there is the occasional radical leap, such as the introduction of hybrids; but the bulk of change and innovation consists of many small steps.

There are many reasons why incremental innovation dominates.  First, it’s easier to conceive and execute than more radical opportunities.  Second, it’s easier for consumers and customers to adopt.  Third, it’s often just the way a particular industry or category operates.  Finally, senior executives are much more comfortable dealing with new opportunities closer in to today’s business, where the abundance of reference points makes it easier to predict success or failure. 

It’s all about competitive advantage, delivering better products and services to your customers and consumers.  This may be a sweeping generalization, but it seems that the benefit superiority of most products and services in most industries is incremental.

Success then depends on organizing innovation to reliably and continually produce products and services that are incrementally better than those of your competitors; ensuring you have a pipeline that delivers more every year.

This is not to decry the pursuit of radical options, but to recognize that in many industries they are a relatively rare event.  Consequently, if you use a strategy tool like the 3 Horizons matrix, the split of innovation priorities is unlikely to be close to Google’s 70/20/10.  Even for a business as diverse, dynamic and leading edge as Google, most of their innovation would appear to be incremental, as judged by their 3 Horizons split.

Incremental innovation still means the deployment of all the weapons in the innovation arsenal.  Companies must still align innovation with strategy; produce great ideas; invest in the right competencies; use resource efficiently; execute with excellence; support people in taking risks; and manage a strong portfolio.

Call me an innovation nerd if you like, but I find the whole approach to incremental innovation really interesting.  It’s where the rubber of innovation management really hits the road.  It’s the bulk of innovation effort and success, and as such is the biggest source of innovation’s contribution to business survival and growth.  That’s why I’d like to see more written about managing a portfolio of incrementally innovative projects, rather than working on radical “magic bullets”.  Let’s hear it for incremental innovation.

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