29 Jul 2016 Incremental, breakthrough and radical innovation: deciphering the differences
Developing a common definition of innovation
Innovation is vital for any business. But over the past few years “innovation” has become a bit of a buzzword, bandied about to describe a variety of different processes and outputs.
There has been a tendency to associate innovation with only the most ground-breaking of ideas. But in actual fact it encompasses the whole spectrum: from the smallest incremental product improvements to radically different products and services.
That’s why, for us, innovation is simply:
“The act of having ideas – no matter how big or small – and
turning them to value”
Different approaches to innovation – incremental, breakthrough and radical
We tend to see 3 distinct approaches to innovation in businesses today: incremental, breakthrough and radical innovation. These can be mapped against two axes – business model newness and technology newness.
The first type – incremental innovation – is the most common. Roughly 70% of all innovations fall into this category. Why? Because it’s the easiest to execute.
Incremental innovation involves making small, incremental improvements to add or sustain value to existing products, services and processes. This can be as simple as adding a new feature to an existing product or developing a line extension. It relies on existing technology and an existing business model and as such, is low risk.
This can help organisations to remain competitive and maintain predictable revenue streams. The key to success here is in understanding the white space in the market, the fundamental customer needs and how your product or service can be adapted to better meet these needs.
The next type – breakthrough innovation – is much rarer than incremental innovation. Only 20% fall into this bucket. Why? Quite simply, breakthrough innovation is difficult as it requires the introduction of either a new technology or a new business model.
Breakthrough innovation is high risk as it requires greater investment than incremental innovation in terms of capital, time and resources. However, the rewards can be greater too: it often results in a product or service which provides significantly better value to customers than the existing market offering.
Naturally, the research you need to support it is more difficult too. Consumers are notoriously bad at foretelling their future needs so it’s not enough to simply ask them what they want to see. Instead you need to take a more innovative approach, looking further afield to adjacent industries, experts or early adopters to fuel product or service development.
The third and final type is radical innovation, which involves harnessing new technology and a new business model simultaneously.
Radical innovation is the one talked about most frequently, but in actual fact it’s the rarest of all: only about 10% fall into this category.
Radical innovation is not easy. Like breakthrough innovation, it requires a different approach to research and involves significant business change as well as investment. But if executed successfully it can be transformational; changing the shape of an existing market, rendering the competition obsolete, or creating a new market entirely.
Hear our Innovation Director, Chris Thompson, talk through the difference between the three types of innovation in this short video:
This is the first in a series of blog posts designed to equip insight professionals with the tools, frameworks and terminology to make their mark on the innovation process. Want to know more? Download our whitepaper on the subject here.