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.
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%.
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)
- Crossan, M. M., & Apaydin, M. (2010, July 20). A Multi‐Dimensional Framework of Organizational Innovation: A Systematic Review of the Literature.
- Oerlemals, L. A. G., Knoben, J., & Pretorius, M. W. (2013, March 2). Alliance portfolio diversity, radical and incremental innovation: The moderating role of technology management.
- Robertson, P. L., Casali, G. L., & Jacobson, D. (2012, March 15). Managing open incremental process innovation: Absorptive Capacity and distributed learning.
- Souto, J. E. (2015, June 2). Business model innovation and business concept innovation as the context of incremental innovation and radical innovation.
Author: Elin Andren Eriksson & Thirza Martens