Most organisations imagine innovation to constitute transformational initiatives that create brand new revenue or define new categories. These innovations, typically, are termed radical or breakthrough by most commentators. They’re typified as being extremely speculative, but with high returns. In other words, the chance of them working is pretty low, but when they do, you have a hit on your hands.
When setting up an innovation programme, executives tend to do so with the expectation they will be getting radical innovation, but usually they don’t want the risk. Practically speaking, this is impossible to achieve in any way with much reliability, and is a principal cause innovation teams get fired.
Incremental innovation has none of these characteristics. It takes what is already being done in some way and improves it. The improvement needn’t be especially earth shaking, and will usually have the characteristics of enhancing the market reach of a product or service, or making it possible to charge higher prices. In this respect, incremental innovation, done at scale, can add materially to the growth of a particular enterprise.
More sophisticated innovation programmes quickly work out they have to have a balance of projects in both categories if they are to be successful. The fact is, many small incremental innovations have the ability to balance the expense of having a few radical failures, something that is critical until the innovation team strikes it lucky with a big hit.
In my experience, innovation teams start with “radical” innovation on the expectation they will deliver spectacular benefits in a short time. It quickly becomes clear to stakeholders though that such spectacular benefits are not so close, and may, in fact, not be so spectacular after all. Faced with significant disappointment, they cancel 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.