Incremental innovation is a succession of very small upgrades or improvements that a company makes to its products. The company makes the small improvements at regular intervals. Show The term may also apply to services, methods, or processes. Innovative companies carry out many small improvements over time to maintain brand loyalty. They may also do it to hold onto market share. In other words, they want consumers either to buy their new upgrades or keep their existing products. Customers are more likely to hold onto an existing product if there is an interesting software upgrade, for example. Incremental innovation is a strategy that helps companies maintain or improve their competitive position over time. Incremental innovation is common among high technology companies. In the hi-tech consumer market, people are always keen on new products features. Furthermore, consumer technology makers are always introducing new features to existing products. Therefore, any company that fails to introduce small improvements at regular intervals will lose out significantly. TechTarget says the following regarding the term: “Incremental innovation is a series of small improvements or upgrades made to a company’s existing products, services, processes or methods.” Innovation means thinking up and creating new ways of doing and making things. It also includes creating new products. It is a crucial part of many successful businesses. Incremental innovation is common among technology consumer companies and makers of electrical devices. Medicine and medical device makers are also well-known incremental innovators.Incremental innovation vs. other typesThis type of innovation is often a better investment than other innovation types. In today’s rapidly changing marketplace, many managers underrate the benefits of a series of small improvements or upgrades. In this context, the term ‘marketplace’ means the same as the abstract meaning of ‘market.’ According to Decision Innovation, overall innovation failure rates are extremely high, i.e., 70% to 98%. Incremental changes to existing products have a much lower failure rate. Regarding incremental and other innovation types, Decision Innovation writes: “Contending with this level of failure makes incremental changes look attractive when considering the risk associated with innovation investments.” Incremental innovation – existing productsIncremental innovation focuses on existing products. The aim is to improve an existing product’s efficiency, features, productivity, or competitive differentiation. Competitive differentiation is a positioning tactic a company undertakes to set its product apart from competing products. Companies use this type of innovation to help maintain market share and position. They may also use it to improve the product’s market position. It has become a common tactic among consumer technology producers. Smartphone and other consumer technology makers compete fiercely to improve devices with new features. Video – incremental innovationThis Innovative Medicines Canada video explains what incremental innovation is. It focuses on life-saving medicines. When people, and especially the press, talk about innovation, they usually refer to disruptive, and often technology-based, kinds of innovations. However, those are only a small part of the innovation puzzle. In fact, most of the innovation happening in companies across industries is much more mundane and incremental in nature. In our experience, incremental innovation is always a big factor behind the most successful companies we’ve seen, even when their success might have originated from disruptive innovation. Given that importance, it’s crucial to understand what incremental innovation is, how it works, when to focus on it and when not to. We’ll seek to answer all of these questions in this article and also provide you with practical tips on how best to utilize incremental innovation in your organization. What is incremental innovation?To begin, let’s take a step back and look at what incremental innovation actually is and how we can define it. In essence, incremental innovation is the process of making minor improvements to existing products, services, processes, methods, or even the organization itself. As long as a change creates value and has some element of novelty to it, it can be classified as incremental innovation. Thus, it’s quite safe to say that pretty much every organization does at least some incremental innovation. Compared to radical or disruptive innovations, Incremental innovations don’t require big leaps in technology and don’t usually have much impact on the market dynamics. On the other hand, incremental innovations are typically much quicker and easier to implement than other types of innovations, and there’s also significantly less uncertainty involved, which makes them much more predictable, and thus safer for the organization to bet on. Why is incremental innovation important?A single incremental innovation isn’t usually all that exciting, which is why incremental innovation often gets a bad reputation. Some won’t even consider it to be “real innovation”. However, when you combine the effect of making hundreds or thousands of these incremental changes every year, the difference is profound. Just like compound interest in investing, the effects of incremental innovation stack up, which can lead to a tremendous difference in performance over time. And unlike in personal finance, where the initial principal is typically quite small, most companies are already operating at a scale where the effects start to have a meaningful contribution in months or years, as opposed to decades.The faster you’re able to introduce new innovations, even if they wouldn’t individually be as big, the bigger the difference, as you can see from the chart above. This is a topic that we’ll get back to later in the post. When to focus on incremental innovation?As we discussed earlier, pretty much every organization does at least some incremental innovation, which simply makes sense. Not innovating or improving is a guaranteed way to lose any competitive advantage you may have. Thus, the real question isn’t so much if you should do incremental innovation, but instead how much effort to focus on incremental as opposed to the other types of innovations. In deciding this, there are two key considerations:
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