Incremental and radical innovation stem from different kinds of processes that lead up to them. Donald A. Norman and Roberto Verganti, renowned scholars and authors in the field of innovation studies, analyze these differences in their 2012 paper Incremental and Radical Innovation: Design Research versus Technology and Meaning Change [1]. The authors define the two types of innovation in following terms:
1. Incremental innovation: Improvements within a given frame of solutions; “doing better what we already do”.
2. Radical innovation: A change of frame; “doing what we did not do before”.
The authors use the metaphor of climbing a hill for describing incremental innovation processes. One can not know the shape of the hill in advance, but one progresses up through tools like rapid prototyping, human-centered design, and other iterative methods creating continuous enhancement to the product, until the peak of the hill is reached, either by running out of time or funding reserved for a specific development stage, or by reaching an appropriate stage to end the process at. Norman and Verganti compare radical innovation to locating the highest hill, as opposed to the hill-climbing procedure. However, when the hill is found, incremental innovation steps in to improve and develop the innovation to reach the top; to bring the product or service successfully into the market. By understanding and utilizing these two separate but complementary processes, innovators can unleash the maximal potential of their offering.
Incremental innovation accounts for the majority of innovation processes, translating into improvements in product performance or desirability, lowered costs, updated production methods, or the release of a new model. Moreover, successful products are generally subject to continuous incremental innovation, commonly revolving around human-centered design, a philosophy highlighting close interaction with users and observing consumer patterns to satisfy emerging needs. However, research shows that human/user-centered design processes do not lead to radical innovations, as users (and researchers) are “trapped” in the existing cultural and technological paradigms, unable to predict or imagine alternative scenarios. Without replenishing radical innovation processes, the generative power of incremental innovation eventually comes to a halt.
Radical innovation, on the other hand, is a much more unpredictable and risky endeavour, characterized by “a discontinuity with the past”.[2] Radical innovations introduce new paradigms and new domains to the product space, but they rarely live up to the expectations immediately after their release. It takes longer for users beyond early adopters to accept radical concepts, and furthermore, Norman and Verganti state that radical innovations are often initially “difficult to use, expensive, and limited in capability”. Thus, as presented by the hill-climbing procedure, incremental innovation is needed to catch the potential embodied in radical innovation, and this is how the two concepts become interdependent.
Roberto Verganti has successfully argued in his research that radical innovation results from either technological or meaning change, or in rare cases both (see Fig. 1). Technology-driven innovation is pushed forward by radical changes in technology, often first dreamed up in the minds of visionaries who identified untapped needs in the society around them. Donald A. Norman has described this process as the “technology first, needs last” -approach.
Meaning-driven innovation introduces a change in social and cultural meanings given to products, requiring “the comprehension of subtle and unspoken dynamics in socio-cultural models”. This can take place as a result of research into how the society and culture are changing, or by design research inquiries addressing “fundamental questions of new meanings and their interpretation”. Meaning-driven innovation transforms the culture of a product or a market, like the Apple iPod did to listening music; by giving it new social meaning.
In very rare occasions, such as the case of Nintendo Wii, a product constitutes a technology epiphany: an innovation on both technological and meaning level. Verganti points out the increased risks in this category in comparison to pure technology- or meaning-driven innovation, as consumers are often critically averse to such dramatic changes.[1]
Fig. 1: The two dimensions and four types of innovation. (After Norman & Verganti 2012.)
[2] Garcia & Calantone 2002. A critical look at technological innovation typology and innovativeness. The Journal of Product Innovation Management no. 19:110-132.
Sophia Amoruso started her business from her bedroom: she started selling vintage clothing on ebay because she wanted to have a job where she didn’t have to talk to anybody. Fast forward seven years, Nastygal is one of the fastest growing fashion based e-commerce sites and as the face for the company, she needs to talk about her business every single day. How did she do it?
From her book: #Girlboss, here are some quotes:
“if someone wasn’t passionate about logistics or finance, no one at nasty gal would have a job.” Here, Amoruso describes the importance of the team with complementing skill sets. Throughout the text she critically looks at herself as a creative leader, yet also succeeds in seeing the role a functional team plays in building a successful startup.
Case NastyGal is an example of how to give direction and take the business beyond what was realistic. However, as a leader, she has also faced a lot of critique about her leadership style. She might be the right person in creating something out of very little, but not the most effective leader in fostering radical innovation in an established company, and has therefore stepped down from the position of the CEO. In conclusion, the role of a creative leader needs to adapt to changes in the organization.
In total, participants are challenged to work through six stages (inception, ideate, improve, investigate, iterate, infiltrate). For instance, the task for the 4th stage is to create a fake website and to run an ad campaign. If this is getting enough traction among potential customers, employees can move into level 5 and 6 and pitch their idea to the senior management. Based on that as well as quantitative and qualitative customer feedback, it is decided whether the participant gets a mysterious and unique blue box that includes everything that is needed to get on with the idea: budget, internal teams, training, etc.
In 2015 Adobe made the whole program open-source, so every company or individual in the world can use this approach to foster the creation of new ideas and increase the potential for radical innovation.
Adobe’s kickbox website contains information regarding the implementation of the process and related workshops as well as materials that are free to download: https://kickbox.adobe.com/
You also find some articles and videos here:
http://www.forbes.com/sites/mzhang/2015/08/19/adobe-kickbox-gives-employees-1000-credit-cards-and-freedom-to-pursue-ideas/
Challenges of Radical Innovation #1: Big Corporations
Brockhaus, Kodak, Nokia - these are some of the companies that immediately come to mind when thinking about big corporations that have more or less recently missed the next big wave. However, in retrospect it is easy to say that these companies just haven’t been innovative enough, that they missed it because they only came up with incremental innovation.
Delivering something game-changing has never been easy and very likely will never be. But there may be ways that at least improve the chances of not being dethroned. One important aspect is to understand why real innovation is so hard for big corporations. Thus, in the following we present some of the main reasons according to scholars and practitioners. Although there are a lot of interrelationships and overlaps among the factors, for the sake of simplicity we here categorized them into three groups:
Uncertainty and opportunity costs
The market size of innovative products can seldom be reasonably predicted. For instance, Venture Capitalist Benedict Evans recently ended his elaboration on finding a good proxy for the market for smartwatches with the conclusion that there supposedly is not hardly one and that watches are “wide open“. [1]Â
Additionally, many relatively radical ideas don’t look very promising at the beginning - or would you agree at the first glance that the idea to build a platform where people can rent their homes to strangers is a good one? Probably not. And if yes, then your boss very likely wouldn’t agree.
However, uncertainty is something big corporations and small startups more or less equally face. What makes uncertainty a far greater factor to hinder large companies to be really innovative, is the combination of uncertainty and opportunity costs. A non exhaustive list:
existing customers: According to Samsung’s Max Shedroff “customers get accustomed to a certain type of product and interaction; that consistency and good user experience are what drives loyalty. Too much innovation within a certain product line can be dangerous.” [2] So, do you really want to risk putting off your customer base?
dead-certain other ideas: In “Innovation Killers” Clayton Christensen stated that real innovations “are initially small, and substantial revenues generally don’t materialize for several years.” [3] Thus, think twice, do you really want to forgo pursuing an idea that can be bolstered by figures and facts and very likely improves your current product line just to put your money into something relatively unpredictable that in the best case only pays off in the long-term?
existing revenues: In 1975 Kodak developed the first digital camera, but a market-entry would very likely have had diminished the constantly high profits generated by their 35mm films. [4] Of course, in hindsight it would very likely have been smart to cannibalize the existing products and to risk to diminish the revenues they bring in. But try to explain that to your shareholders in that situation at that time. It would have been much less obvious and rather be seen as a very stupid move.
careers: Employees in large companies often benefit from a lot of amenities - salary, company car, social security and status. Thus for them often it is so much more convenient to play it safe and safeguard the own career by supporting the obvious solution rather than the less predictable one. [5] For instance, in another way it is not possible to explain why so many board members of the FIFA executive committee tolerated the anti-reform attitude under the presidency of Joseph Blatter for so long.
Misused tools and processes
Many tools and processes used by big corporations rather support incremental and not radical innovation. In general that is not a problem when it comes to developing existing businesses further. However, if companies use the same tools to foster both, radical and incremental innovation, then it is not surprising that it is really difficult to push more radical innovation to market - especially when you also consider the points mentioned above. According to a study by John Nicholas that is exactly what is done: companies “are not adequately differentiating between radical and incremental innovation”. [6] Here are three tools and processes that illustrate this problem:
stage-gate innovation processes: In many larger companies new ideas have to pass many stages and layers of management until they finally get to market. In contrast to incremental innovation, really innovative ideas most of the time can’t be bolstered by hard numbers and thus are often killed at the latest when they pass the executive board including the CFO. [3] Furthermore due to the numerous management layers the idea has to pass and the time this consumes the chances increase that a rather radical idea will be “very likely killed due to political factors, other initiatives on fire in the same organization, random “allergic reactions“ or past scars from an executive” [7]
financial tools: Due to their nature financial tools are especially useful when the past can serve as a good proxy for the future. However, when it comes to radical innovation you seldom have such a proxy as we have seen above and thus an accurate prediction of the financial return is difficult. Thus in “Innovation Killers” Clayton Christensen claims that “financial tools destroy the companies’ capacity to try new things”. For example, he talks about how the use of discounted cash flow (DCF) and net present value (NPV) to evaluate investment opportunities causes managers to underestimate the real returns and benefits of proceeding with investments in innovation. [3]
human-centred design: According to Don Norman every radical innovation he investigated was done without design research, without careful analysis of a person’s or even a society’s needs. [8] However, since big corporations are often afraid to put their large user base off, they usually play it safe and rather pay too much attention on what their mainstream users say and do. [5] Over time, this leads to the addition of many useful and less useful feature to the existing products, but not to something game-changing that electrifies the old users and opens the doors to new customers by touching needs they haven’t even thought about before.
Organizational and strategic flaws
Strongly interrelated with the already mentioned factors, are the following points that particularly shed a light on how the organizational structure and some strategic decisions often made by big corporations negatively influence a company’s capacity to be truly innovative:
business definition: A too narrowed market definition often prevents companies from embracing new opportunities and dramatically increases the risk that a certain need is filled by other companies which seem to be outside the market. For instance, in the 1960s the US railroad companies were in deep trouble since the need for transportation was more and more covered by cars, airplanes and trucks. If they would have seen themselves rather in the transportation business than the railroad business they probably would have had a much brighter future and maybe even invented services such as Uber. [9]
real work time: The larger the corporation, the more rules there are and the more time is invested into communication and the plain delegation of tasks. According to BCG’s Yves Morieux employees often spend 40-80% of their work time in meetings, on writing reports and documenting information. Thus it is not surprising that really getting something done is almost impossible. [10]
capital market pressure: Publicly listed companies often face significant pressure from their shareholders. These have specific expectations about revenues, costs and earnings and usually want to make money in the short-and mid-term. To satisfy their stakeholders and therewith increase the market value of the company and secure access to financial resources, these companies usually have a strong focus on shareholder value creation. However, according to Christensen this view “diverts resources away from investments whose payoff lies beyond the immediate horizon.” [3]
complex ecosystem: In a quora thread the Vice President of Samsung’s Open Innovation Center Marc Shedroff states that “most companies are not vertically integrated and therefore have complex supplier, distributor, and customer relationships. One big complex organization is difficult enough to navigate, but doing it across an entire value chain is even more difficult.” [2] Thus, getting all these ridiculously complex interwoven stakeholders to act in concert requires time and a lot of communication efforts - time and resources that probably prevent a well thought through radical innovation or at ensure that there will be some other player who conquers the market first.
References:
[1] Benedict Evans (Andreessen Horowitz): “Ways to think about market size.”, 2015
 http://ben-evans.com/benedictevans/2015/2/28/market-size
[2] Marc Shedroff (Samsung): “Why don’t big companies innovate more”, Quora thread, 2013
 https://www.quora.com/Why-dont-big-companies-innovate-more
Ready-to-drink meal that substitutes a meal, especially targeted towards busy business people in the US. The idea can be defined as “radical” since it is changing the meaning of what a “meal” or “lunch break” can mean.
This radical innovation case is especially interesting and even controversial because of the embedded value changes. It is said that “you are only as smart as the five people you most often have lunch with” and the change towards a culture of desk-lunch might hinder a lot of creativity, collaboration and even ideas for radical innovation that could happen over shared lunches.Â
On the other hand, Ambronite is maybe looking at substituting quick lunches at the office and not looking at changing the culture of dinner time with family, so it remains to be seen how deep the impact and change in consumer behavior this and similar product lines will effectuate. Â Â
Most organizations are set-up to reward predictability and control – the exact opposites of what is required to enable radical innovation. A culture of radical innovation is embracing uncertainty and an increased risk, all for the potential of setting the rules of the game, and thus, a shot at a higher reward.
As concluded in Incremental vs. Radical Innovation, utilizing only incremental innovation will eventually make the company lose their competitive edge as new technologies and behaviors come along. Leadership plays a crucial role in creating an organizational culture that rewards for inventiveness and curiosity instead of risk-aversion, be it a giant corporation or an agile startup. As radical innovation is almost exclusively born either out of the personal vision of an inventor or a dreamer, or from ambitious design research challenging the fundamental meaning of products, [1] a purely managerial approach of preventing failure and steering strategy based on past experiences will not do.
Furthermore, as radical innovation is commonly born out of a personal vision of how things should be, the validation and critical evaluation of that idea can be very difficult. Radical innovations initially resist, by default, conventional parameters and even research efforts to validate them, so how do you know if the idea is any good to begin with? The leader steps in; self-reflects, observes and analyzes different reactions, takes in critical feedback, and when necessary, pivots.[2] For example, many radical innovations fail because their introduction ignores the social and cultural norms they challenge or embed. Without acknowledging not only the revolutionary potential but its possible implications, radical innovation leaders risk losing market acceptance.[3] The seemingly contradictory combination of self-criticism, humble attitude, and still, the courage to persevere despite critics forms the core of the radical innovation leader mindset.
A successful leader aiming at radical innovation is responsible for creating the delicate balance of great team dynamics, non-hierarchical atmosphere but an ambitious working method, and perhaps most importantly, inspire others to share their passion despite the embedded risk. This means giving utmost importance to building up a team: “Internal orientation, confusion, distrust, loss of motivation – can all result from destructive team dynamics (...). Also many startups fall apart over internal struggles about the direction and ambition level of the collective endeavor.“[2]
In addition to team dynamics, choosing the right people is also about bringing in skillsets. In radical innovation, as important as the great vision is, it’s delivery to the market is just as crucial as concept development, but in many cases overlooked.[3] Ambition and creative leadership must play a key role in the incremental innovation processes necessary to bring out the full potential of any radical innovation. In large corporations, the “genetic makeup”, or the “concentration of inventive entrepreneurs”[3] in a company is of equal importance than in up-and-coming startups. However, in big companies, recruiting and holding onto these valuable human resources is often more difficult. Robert Stringer, author of How to Manage Radical Innovation, highlights four needs typical to entrepreneurial, innovative employees that leaders of radical innovation must take into account [3]:
To compete against an internal standard of excellence
To make unique contribution to the world
To engage in activities perceived to be moderately risky
To constantly receive concrete, measurable feedback on their performance and progress
Finally, Soren Kaplan, the author of Leapfrogging, introduces a framework of five essential innovation leadership competencies which successfully summarize key insights into how to lead radical innovation:
“A Leapfrogging Mindset
A mindset focused on leapfrogging involves approaching the world with the intent of changing the game: creating or doing something radically new or different that produces a significant leap forward. And these opportunities aren’t limited to products and services, but also include reinventing business processes or revolutionizing business functions.
Boundary Pushing
When we push beyond the limits of our comfort zones, we increase our creative problem solving and strategic thinking capabilities. Leaders who live abroad, work across different functions, have a multidisciplinary education, surround themselves with diverse team members with diverse perspectives, and proactively learn new things from looking outside of their function and industry become best prepared for disruptive times.
Data-Intuition Integration
In times of disruption, (...), robust data that tells a clear story rarely exists. Leaders must use whatever information they can obtain and then use their gut for the rest. Researchers (...) found that when people were presented with an overwhelming amount of data, those who ignored the details actually made superior decisions. These same individuals were better able to identify patterns and themes in the complex data. (...)
Adaptive Planning
Leading disruptive innovation and change requires that we move forward despite great uncertainty. Adaptive planning involves celebrating successes and viewing set-backs as learning opportunities versus failures. The goal is to take action, see results, learn from them, and modify assumptions and approaches accordingly. (...)
Savoring Surprise
Leading disruptive innovation is a process fundamentally laden with surprise: unexpected technological developments, competitive moves, customer comments, economic and political shifts, and other unforeseen events. While most leaders assume surprises should always be avoided, a few companies have learned to embrace surprise as a core cultural value and tool for creating breakthroughs.”[4]
[1] Don Norman and Roberto Verganti: “Incremental and radical innovation: design research versus technology and meaning change”, 2012
Microsoft Garage - a group inside the company that has supported employee side projects, hackathons, science fairs, and general tinkering - opens up to give the public early access to various projects the company is testing right now.
