Incremental innovation

From CEOpedia | Management online

There are many different types of innovation, however the three main types can be distinguished between product, process and organizational methods innovation. Within these types of innovation we can make a difference between two degrees of novelty: incremental innovation and radical innovation. This article focusses on the definition, main purpose and outcome of incremental innovation and the difference between the two degrees of novelty.

Definition

Incremental innovation can moreover be defined as an improvement than a whole new innovative idea. The innovation is made to a (non-)technological product, process or organizational method. The big idea has already been created and entered the market. (Souto, 2015) The innovation that takes place simply improves and adds value to the design, but does not change the technical skills whatsoever (Robertson, Casali, & Jacobson, 2012). This is also why it does not break with earlier products, processes or organizational methods. The innovation has a small degree of novelty, carries a low risk and low costs. In addition to these aspects it also has less potential to create a high positive impact on a company's performance (Souto, 2015).

Main purpose and outcome

The incremental innovations are made with use of internal knowledge. Incremental innovations are mainly used to generate a more favorable position against competitors. The outcome of the innovation is therefore measured in a firms competitiveness (Souto, 2015) (Robertson, Casali, & Jacobson, 2012). The idea and the process of carrying out the innovation idea is often done within the firm (Souto, 2015). When practicing the incremental innovation companies should bear in mind to share their knowledge within the firm and to protect their information from leaking to other companies. In this way they secure the advantage they earned against similar companies (Crossan & Apaydin, 2010). Research shows that the average measured percentage of turnover gained from incremental innovations is estimated at 17%.

Coo-petition

Companies can also decide to work on incremental innovations together. In this case they acquire information from external sources. While working in a kind of coopetition like this they have to make sure to protect their core knowledge and other innovations to keep them from being imitated by other firms (Crossan & Apaydin, 2010).

Comparison to radical innovation

In contrast to incremental innovations, radical innovations are unknown ideas for both the company and the market (Oerlemans et al., 2013) The innovations often require different forms and depths of knowledge. As stated before the average percentage turnover gained from incremental innovations is 17%. For radical innovations this percentage can be stated at 7%. The success of incremental innovation is higher for foreign owned firms than it is for domestic firms (Oerlemans et al., 2013)

Examples of Incremental innovation

  • Improving customer service processes: One example of incremental innovation is improving customer service processes. This could involve introducing a customer service chatbot to reduce customer wait times, or introducing a centralized customer service portal to provide customers with access to information and support.
  • Improving product design: Another example of incremental innovation is improving existing product design. This could involve making small adjustments to the product's design, such as adding a new feature or improving the product's ergonomics.
  • Improving operational efficiency: Incremental innovation can also be used to improve operational efficiency. This could involve introducing new technologies to improve production processes, or introducing new systems to streamline the distribution of products.

Advantages of Incremental innovation

Incremental innovation is an important form of innovation which focuses on making small changes to existing products, processes and organizational methods. It is a cost-effective strategy and offers many advantages, such as:

  • Improved efficiency: Incremental innovation allows organizations to make small changes to existing processes and products in order to increase their efficiency. This helps to reduce costs, improve quality, and save time.
  • Increased customer satisfaction: By introducing small changes to existing products and services, incremental innovation can help to improve customer satisfaction. This can increase customer loyalty and help to maintain a competitive edge.
  • Increased flexibility: Incremental innovation allows organizations to be more flexible and responsive to changing customer needs and preferences. This helps them to remain competitive and respond quickly to the changing market.
  • Lower risk: Incremental innovation is a low risk approach to innovation as it involves making small changes to existing products, processes and organizational methods. This can result in fewer errors, better quality products and services, and improved customer satisfaction.

Limitations of Incremental innovation

Incremental innovation is a type of innovation which involves making small, incremental improvements in existing products, processes, or services. It is a form of continuous improvement, allowing companies to maintain a competitive edge in dynamic markets. Despite the beneficial outcomes of incremental innovation, there are certain limitations that must be taken into consideration. These include:

  • Cost - Incremental innovation may require more resources in the form of time, money, and materials than radical innovation. This can be a deterrent for companies who wish to stay cost-efficient.
  • Risk - Incremental innovation is generally less risky than radical innovation as it involves making small changes to existing products, processes, or services. However, it can still be risky if changes are made without proper research or testing.
  • Reward - Incremental innovation often provides smaller rewards than radical innovation, as it is more difficult to create something entirely new. Companies may not be willing to devote resources to incremental innovation if they do not believe the rewards justify the effort.
  • Limitations - Incremental innovation can also be limited by existing technology and existing products, processes, or services. Companies may not be able to make significant improvements if current technology or products are already at their peak performance.

Other approaches related to Incremental innovation

  • Incremental innovation is closely related to other innovation approaches such as disruptive innovation, open innovation and creative destruction.
  • Disruptive innovation is a process of introducing an innovation that creates a new market or replaces an existing market. This type of innovation usually involves introducing a lower-cost product or service to the market, which often disrupts the existing market and forces competitors to adjust their products or services.
  • Open innovation is a process of sharing ideas, resources and knowledge between different organizations. The idea behind open innovation is that organizations can benefit from external technologies, resources, and ideas from outside of the organization in order to improve their products and services.
  • Creative destruction is a process of introducing new products and services that disrupt existing markets and replace them with new ones. This type of innovation is often seen as being disruptive and is associated with rapid technological advancement and change.

In summary, incremental innovation is a type of innovation that focuses on making small changes to products, processes, and organizational methods. It is closely related to other types of innovation such as disruptive innovation, open innovation and creative destruction, which all focus on introducing disruptive products and services to the market.


Incremental innovation — recommended articles
Types of innovation — Value innovation — Lateral diversification strategy — R&D project — Dominant design — Exnovation — Core process — Innovation process — Innovation in services

References

Author: Elin Andren Eriksson & Thirza Martens

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