Incremental vs. Radical Innovation

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Incremental vs. Radical Innovation

• Bianca Backes
• Inga Janke
• Innovation, change, and decision-making in
  international organizations
• Prof. Dr. J. Beneke
• SS04
• 11.05.2004

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Overview

• The notion of innovation (repetition)
• The classification of Innovation
• Incremental vs. Radical Innovation
• Radical Innovations historic examples
• What influences Incremental/Radical Innovation?
• Conclusion

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Definitions (1)

• Innovation means a new combination of purpose
  and method. (Schumpeter)
• Innovations are resulting in qualitatively
  new products or processes, which differ
  significantly from the former state however
  this is to be determined.
• (Hauschildt)

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Definitions (2)

• In contrast to a discovery - which is usually
  made coincidently- innovation is characterized by
  a (preceded) systematic innovation process with a
  certain objective at the beginning. (Betz)

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Innovation
Type
Degree
basic
product innovation
process innovation
combination product/ process
improved
fake
goods
service
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Innovation
Incremental/Sustaining
Radical/Disruptive
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Incremental Innovation

• Lower or first order innovations
• Repairing the old
• Keeps large companies competitive in a short term
• Negatively correlated to breakthrough innovation

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Incremental vs. Radical Innovation

• Most innovations nowadays are incremental
• Danger of getting caught unaware by newcomers
• Companies need to come up with radical
  innovations

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Radical Innovation (1)

• If you cannot beat radical innovators, your
  best chance to stay relevant to your markets is
  to become one (CommunityIntelligence)
• Higher order or breakthrough innovations
• Dramatically changes social or business practices

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Radical Innovation (2)

• Creates new markets
• Leads to rapid growth
• Confronted with uncertainties
• technological
• market

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Main DifferencesIncremental vs. Radical
Innovation

• low uncertainty

• high uncertainty

• exploits existing technology

• explores new technology

• key players are
• cross-functional individuals

• key players are
• cross-functional teams

• business plan developed at
• the beginning

• business plan evolves through
• discovery-based learning

• process is formal

• process is informal

improvements in existing
products/processes
development of new products/processes
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Radical Innovationshistoric examples

• Telephone 1861
• Light bulb 1883
• Television 1929
• Atomic bomb 1945
• Computer (1st gen.) 1946
• Floppy Disc 1950
• Compact Disc 1979
• WWW 1991? Invention
• Cellphone 1992
• SMS 1994? Invention
• ?
• The development of radical innovations is
  decreasing!

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What influences Radical/Incremental Innovations?

• Organization
• size/age
• cultural characteristics (high/low risk)
• structure
• Environment
• Process
• Management

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Conclusion

• The capacity to innovate and make life better is
  present in each individual
• Without radical innovation there is no economic
  growth!

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The End

• thank you for your attention!