What do you think about when you hear the word innovation? For many people, it evokes brands that created something so new that it changed the way we interact with certain products or services forever: Uber. Netflix. Tesla. Disruptive innovations like these have a legendary status that is richly deserved, but it is actually incremental innovations that are more likely to provide sustainable fuel to drive ROI for your innovation programs year in, year out.
I want to dive into incremental innovation with you to unpack how and why it should be front of mind for your innovation program. We’ll explore examples, discover the key benefits of this type of innovation, and identify the best way of developing your own incremental innovation process. Let’s get started.
First Things First: What is Incremental Innovation?
Whereas disruptive innovation completely transforms the way we use or access products or services, incremental innovation refers to more frequent and iterative improvements to existing products, services, or processes. It’s a series of much smaller innovations that make sure that a product consistently evolves over time and becomes more competitive in the market. It is also known as continuous improvement.
Examples of Incremental Innovation
Incremental innovation can take a lot of forms. An electronics company might incrementally innovate its supply chain to make it more efficient, or continuously find ways to improve its products’ battery life. Incremental innovations can be broken down into three main types: incremental product innovation, incremental service innovation, and incremental process innovation.
Incremental Product Innovation: Microsoft & Coca-Cola
This means small improvements to the products that a company makes. Take Microsoft’s operating system Windows. Since its first release way back in 1985, Microsoft has released a new version of Windows roughly once a year. Each release contains new updates to user experience, security, and compatibility that have ensured Windows remains a market leader almost 40 years since its launch.
Another company that is an expert at incremental innovation is Coca-Cola. While its core product formula stays the same, the company is constantly updating its bottle design for aesthetic and sustainability purposes. It also brings new flavors to the markets such as Cherry and Vanilla to broaden its appeal to consumers with different tastes.
Incremental Service Innovation: Netflix & Starbucks
This refers to continuous improvements to a company’s services. Whereas Netflix’s streaming service is a clear cut case of disruptive innovation, its content recommendation capabilities is a great example of incremental innovation. The company is constantly improving its personalization algorithms to be able to suggest shows and movies to users based on their viewing history, and keeps its customers engaged with its core service as a result.
Another example of incremental service innovation is the Starbucks Rewards Program. Since launching the program in 2008 with a simple point-earning mechanism, over time the company has added a variety of different features, from gamification and personalized offers to mobile ordering and even NFTs. Fundamentally, the loyalty program continues to earn rewards for customers, but it is constantly evolving to become more engaging, convenient, and relevant.
Incremental Process Innovation: Toyota & General Electric
This form of incremental innovation is less about the products and services a company sells than the various processes that go into their manufacture and provision. Two leading global companies service as prime examples for incremental process innovation. Toyota is well-known for its Kaizen approach to production. Its manufacturing processes are permanently under close scrutiny by its employees to ensure that waste can be minimized, and efficiency can be optimized.
American manufacturing giant General Electric, meanwhile, is an adherent of the Six Sigma methodology for incremental process improvement, which helps companies to identify and eliminate inefficiencies in their processes and generate consistent outcomes such as reduced production costs and improved product quality.
The Benefits of Incremental Innovation
As we’ve seen from each of the examples, incremental innovation helps companies to maintain an edge over their rivals. In a competitive landscape, even small improvements to existing features can have a substantial impact on a product or service’s standing in the market. Here’s why incremental innovation should be front-of-mind for all businesses.
It’s cost effective. Whereas new product development can be expensive, incremental improvements to existing ones can achieve substantial ROI with a much smaller investment of resources.
It’s fast to market. Incremental innovation has agility baked into it. There’s no need to make sure that everything is ready to go at once, individual improvements can be rolled out as soon as they are finished, with far smaller timelines than disruptive innovations.
It’s low risk. When a company launches a new flagship product, the pressure is on: a lot rides on whether it sinks or swims. As incremental innovations require relatively little in terms of financial investment, time, and other resources, the stakes aren’t so high.
It enables continuous learning. As a result of its low risk nature, incremental innovation actually allows companies to embrace failure. Innovations that don’t work can offer insights that are just as valuable as successful ones, and so companies are able to repeatedly learn from their successes and failures
It increases customer satisfaction. If companies are always on the lookout for ways to improve their offering, they’re going to be rewarded through more loyal, satisfied customers. Companies usually achieve this when their incremental innovation is fueled by customer feedback. All of the above leads to returns that far exceed the risk and investment that goes into these innovations. As a result, incremental innovation leads to sustainable strategic growth for companies.
Developing an Incremental Innovation Process
So by now we know what incremental innovation is and why it’s such a healthy driver of ROI and growth for companies. But how can you get started with incremental innovation? The key is to establish the right process, and there are some tried and tested tips to do this successfully.
Set objectives. What do you want to achieve through incremental innovation? Consider your key challenges as a business. You may want to go on a fact-finding mission before you land on clear goals – you might ask your customers about their biggest pain points, for example.
Define your audience. All innovation starts with ideas. Who do you think is best-placed to contribute ideas to your program? Product or service improvements could involve both employees and customers, whereas increasing efficiencies in processes might be a topic suited to an exclusively internal audience.
Pick a methodology. We’ve already touched on Kaizen and Six Sigma, and there are a variety of approaches that you can take. It all depends on what suits your company and the goals it has set for itself. For more information, check out our in-depth guide to continuous improvement.
Consider continuous improvement software. Innovation at large companies is likely to involve various personnel and stakeholders and generate a lot of data. Plus, the process needs to incorporate the full lifecycle of an innovation from idea generation to implementation and performance tracking. Having a single dedicated tool to manage all this will inevitably save you huge amounts of time and effort, and lead to better outcomes.
And so concludes our whistle-stop tour of incremental innovation! If you’re interested in learning more about how dedicated software can help you to benefit from the sustainable, strategic growth yielded by this type of innovation, head to our product page where you can dive into our own solution, Q-optimize.