In the business world, the term ‘innovation’ is often thrown around like confetti, but what does it really mean? And what’s the difference between incremental innovation and your everyday, garden-variety innovation? Allow us to explain…
In simple terms, innovation is the process of creating something new. This can be a new product, a new service, a new process, or a new business model. Anything that hasn’t been done before could be considered a form of innovation.
There are two main types of innovation: incremental and radical. Today, we’ll take a closer look at incremental innovation and explain how small changes can pack a punch.
What’s the difference between incremental innovation and radical innovation?
Incremental innovation is the process of making small, gradual improvements to an existing product, service, or process. These changes can be anything from minor tweaks to the design or functionality of a product to new features that make it more user-friendly. The latter is the most common type of innovation, and it’s often seen in products that have been on the market for a while.
For example, a car company may release a new model of a car that’s slightly different from the previous year’s model. The changes are usually subtle. They’re designed to appeal to customers looking for a slightly different product from what’s currently available or customers who pride themselves on always having the most up-to-date model (think Apple fans rushing to buy the newest iPhone update).
Radical innovation, on the other hand, is the process of creating something completely new. This could be a new product, a new service, or a new business model. Radical innovation is much rarer than incremental innovation, but it can have a much bigger impact on the market. For example, when Apple released the first iPhone, it completely changed how people think about and use cell phones.
Incremental innovation is often seen as the more safe and more reliable option since it builds on existing products, services, or processes. Radical innovation is riskier, but it can lead to much greater rewards.
The benefits of incremental innovation (with examples)
Let’s take a closer look at incremental innovation, including what it is, why it’s useful, and how to do it.
The goal of incremental innovation is to make a good product even better. It’s about taking something already on the market and making it appeal to even more customers — often by addressing a specific customer pain point.
Let’s say you have a popular product with customers, but there are some complaints about the design. In this case, you might use incremental innovation to improve the design and deliver a better product experience. Consider, for example, a kitchen knife with a handle that doesn’t have enough grip. There’s no need to reinvent the whole thing; just add texturized rubber to the handle.
Another example is a product that’s losing market share to competitors. In this case, you might use incremental innovation to add new features or improve existing ones, making your product stand out from similar offerings. Going back to the kitchen knife example, you might switch from steel to titanium so that the knife is lighter and sharper.
Why is incremental innovation important?
So, you’re probably wondering why you should even bother with incremental innovation. Let’s look at the most compelling reasons.
1. It’s less risky than radical innovation.
When you make small changes to an existing product, there’s less risk involved than completely overhauling the product. After all, you already have a customer base that’s familiar with your product/business and how it all works.
2. It’s less expensive than radical innovation.
Making small changes to an existing product is usually cheaper than starting from scratch and developing a new product. You won’t have to go through lengthier research, testing, or design phases, and the existing product will continue to bring in revenue.
3. It can be just as effective as radical innovation.
Even though incremental innovation is less risky and expensive, it can still be just as effective as its more radical counterpart. Why? Because small changes can often have a big impact on customer satisfaction. Organizations that consistently listen to feedback and make improvements strengthen their brand loyalty and sell more products.
4. It’s a great form of customer retention.
By making small improvements to your product, you can keep current customers happy and prevent them from defecting to a competitor who offers more.
5. It can help you gain market share.
In some cases, incremental innovation can help you take market share away from a competitor. Customers are always looking for the best possible product on the market, and if your product is slightly better than someone else’s, they may be more likely to choose yours. No one likes FOMO…
6. It can strengthen customer relationships.
When you use incremental innovation to improve your product, you’re sending a message to your customers that you’re always looking for ways to make their experience better. This can help to build loyalty — not to mention give your community things to talk about. Bonus points if your changes are in response to customer complaints/feedback.
7. It can help you stay relevant.
In today’s fast-paced market, it’s important always to be ahead of the pack. If you aren’t constantly making improvements to your product, you run the risk of being left behind by a competitor who is.
Incremental innovation in action: real-world examples
Incremental innovation is for all businesses, big and small. Here’s how some of the giants did it.
One of the most famous examples of incremental innovation is the Apple iPhone. Every year, Apple makes small but significant changes to the iPhone to improve it. Over the years, innovations have included various new cameras, touchID, visual voicemail, a multi-touch interface, low power mode, Siri personal assistant, and more. Many iPhone innovations feel commonplace now — but that’s because Apple led the way, and others followed suit.
Another company that’s well-known for its incremental innovation is Nike. Every year, Nike releases new and improved versions of its popular sneakers. For example, the Nike Air Max 97 was a significant update on the Nike Air Max 96 because it included a full-length airbag in the sole for extra comfort.
3. Amazon Alexa
Every year, Amazon makes small changes to its services to improve the customer experience. For example, in 2017, Amazon added takeout services to Alexa, allowing customers to shop at Domino’s, Grubhub, Pizza Hut, Seamless, and Wingstop using only their voice.
In 2018, Google rolled out a new feature to Gmail called ‘Confidential Mode,’ which allows users to send self-destructing emails.
From Cherry Cola to Lime to Coca-Cola Life, regular flavor and formula innovations have enabled the 130-year-old brand to stay relevant, channel emerging trends, and keep up with the competition.
Why some companies don’t do incremental innovation
Incremental innovation isn’t for everyone (or so they think). Here are the reasons why some companies hold back.
- They’re not aware of it. Some companies simply aren’t aware of the concept of incremental innovation. They’re so focused on radical innovation that they don’t even consider making small changes to their products.
- They think it’s not worth the effort. Some companies believe incremental innovation isn’t worth the effort because the changes are so small. They think it’s better to focus on radical innovation because it will have a bigger impact.
- They’re afraid of change (or don’t want it). Some companies are afraid of change and resist any type of innovation, whether it’s incremental or radical. They’re afraid that making even small product changes will upset their customers and cause them to defect to a competitor. In some cases, this holds a company back; in other cases, it’s a unique selling proposition. Consider a bakery that has used the same beloved bread recipe for generations. Why change perfection?
- They don’t have the resources. Some companies simply don’t have the resources to invest in incremental innovation. They may not have the money or the manpower to make even small changes. Keeping up with current demand is only just achievable.
- They’re not agile. Some companies are not agile enough to implement incremental innovation. They may have a lot of bureaucracy that slows decision-making and makes it difficult to change.
When to use incremental innovation
Think you’re ready to make some small changes? Here’s how to know the time is right.
- When you want to improve your customer experience. By making small changes to your product, you can gradually make your customer’s experience better without rocking the boat too much (or hemorrhaging cash/time).
- When you want to stay relevant. Worried about competitors snapping at your heels? If you want to stay relevant, incremental innovation can help you keep up with the latest trends and technologies.
- When you want to save money. Need to upgrade but don’t have the funds for a big overhaul? Making incremental changes to products allows you to avoid the high costs associated with radical innovation yet reap many of the benefits.
- When you want to reduce risk. Small changes = small risk. By rolling out small improvements one increment at a time, you can gather feedback and figure out how to invest future resources.
- When you want to test new ideas. By making small changes to your product, you can test new ideas without investing major time and money in a complete overhaul. A/B testing and MVPs are good examples of this.
How to do incremental innovation the right way
There are a few things you need to keep in mind if you want this to go off without a hitch.
1. Know your customers
The first step to any successful innovation is understanding your target market. You need to know who your customers are, what they want, and what their pain points are. This will help you identify areas where you can make changes that will have the biggest impact. If you’re creating an app or website, customer journey mapping is a must here.
2. Identify your competitors
The next thing to do is evaluate your competition and what they’re offering. This will help you ensure your product differs from the rest of the market’s offerings.
3. Set realistic goals
When you’re making changes to an existing product, it’s important to set realistic goals. Don’t try to bite off more than you can chew. Instead, focus on making small changes that will have a big impact.
4. Test and iterate
Once you’ve made changes to your product, it’s important to test them out and see how they impact your customers. This will help you fine-tune your changes and make sure they’re having the desired effect.
- Top tip: Cognitive walkthroughs are a great way to find out what your users think of your product.
5. Be prepared to pivot
Finally, it’s important to be flexible and willing to pivot if your changes aren’t having the desired effect. Sometimes, what you think is a small change can end up having a big impact — for better or for worse. So, prepare to make adjustments as needed.
Good communication — is there ever a time when it’s not important? When you’re making changes to something, whether it’s your business or a product line, keeping everyone in the loop and hearing their thoughts is a must. That includes making sure everyone on the team is fully briefed and working together (project management software is the gold standard here), keeping stakeholders informed of any changes, and using the right tech for things like continuous integration and AB/testing.
At its heart, innovation is about change. It’s about taking something that already exists and making it better. Whether that means making small improvements or completely reinventing the wheel, innovation is what drives businesses forward. And without it, companies would be stuck in the past.
To make sure everything runs smoothly, make communication a priority. Change has a habit of causing chaos if not managed correctly.
Change management encompasses everything from keeping stakeholders in the loop to providing your team with a range of collaboration tools to help them work together flawlessly — whether they’re hybrid, remote, or sitting next to you. Once you’re all on the same page, you’ll be in the best possible space to make changes, big and small.