MBS e-Course:

Sustainable Growth

Radical Innovation versus Incremental Innovation

High-Risk-High Return versus Low-Risk-Low-Return Projects

By: Vadim Kotelnikov, Inventor, Author, and Founder of:

Ten3 Business e-Coach – Inspiration and Innovation Unlimited, Fun4Biz.com – Entrepreneurial Creativity Paradise, VVV1 – Global Virtual Venture Valley #1

"Economic success comes not from doing what others do well, but from doing what others cannot do, or cannot do as well."

– John Kay

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Radical Innovation vs Incremental Innovation

Uncertainty Levels

 

Incremental

Radical

Technical

Low

High

Market

Low

High

Organizational

Low

High

Resources

Low

High

Kaizen and Innovation New Product Development Synergy Sustainabe Competitive Advantage US ans Japanese Firms Radical Innovation Kaizen Continuous Improvement Firm (CIF) Radical vs. Incremental Innovation Kaizen Radical Innovation New Product Design Technology Innovation Lean Production Kaizen and Radical Innovation

Incremental versus Radical Innovation1

 

Incremental

Radical

Emphasis

Cost or feature improvements in existing products, services, or processes

Development of new businesses, products and/or processes that transform the economies of a business

Technology

Exploitation of existing technology

Exploration of new technology

Prototyping

Ironing out wrinkles near the end of the design phase

Teaching the market about the new technology and learning from the markets how valuable that technology is in that application arena

Trajectory

Linear and continuous

Sporadic and discontinuous

Business Case

Detailed plan can be developed at the beginning of the process

Business model and plan evolves through discovery-based learning

Idea Generation & Opportunity Recognition

Occur at the front end; critical events are largely anticipated

Occur sporadically throughout the life cycle, often in response to discontinuities in the project trajectory

Key Players

Formal cross-functional teams

Cross-functional individuals, informal networks

Process

Formal, phase-gate model

Informal, flexible model at early stages due to high uncertainties  → formal at later stages after uncertainties have been reduced

Organizational Structures

Cross-functional project team operates within a business unit

Project starts in R&D → migrates into an incubating organization → transitions into a goal-driven project organization

Resources and competencies

Standard resource allocation; the team has all competencies required to complete the process

Creative acquisition of competencies and resources from a variety of internal and external sources

Operating Unit Involvement

Formal involvement from the very beginning

Informal at early stages  → formal at later stages

Traditional Strategy versus Strategic Innovation

Traditional approaches

Strategic Innovation approach

Focus on incremental innovation

Seeks breakthrough, disruptive innovation – while continuing to build the core

More

 Discover much more!

Innovation

4 Categories of Innovation

DOs and DON'Ts of a Successful Innovator

Deciding If Your Innovation Portfolio Has Enough Stretch

3 Criteria To Assess Your Innovation Portfolio

7 Dimensions of Strategic Innovation

Entrepreneurial Creativity

The Jazz of Innovation

11 Practicing Tips

Innovation-friendly Organization

Organizing for Innovation: Organizational Models that Support Innovation

How To Transform Your Business Into an Innovative and Creative Culture

Guiding Principles To Liberate Employees from the Fear of Trying New Things

Google: 10 Golden Rules

Smart Corporate Leader

Systemic Innovation

Project Management

3 Strategies of Market Leaders

Global Business Learning Report

Innovation Management     Market Leadership

Free Ten3 Micro-courses

Smart Innovation

  Ten3 Mini-Courses   Presentation:    View    Download

SMART Innovation  (125 slides)   ► Demo

Innovation Strategies  (40 slides)

Managing Radical Innovation  (100 slides)

Competitive Strategies

Two Different Patterns

 

"Because much of the innovation taking place today is incremental, so is its impact on growth. Little ventured, little gained. Other firms, after years of incremental innovation, suddenly throw millions or even billions of dollars at ideas that are poorly conceived, poorly timed, and poorly executed, only to have near-catastrophic consequences."5

There is practical value in understanding the patterns in and the differences between evolutionary incremental innovation projects and revolutionary radical innovation projects. This understanding can help you apply right management practices to different types of innovation projects and make the course of radical innovation shorter, less sporadic, less expensive, and less uncertain.

High level of uncertainty is a hallmark a radical innovation projects, especially at early stages. The criteria used to evaluate a radical idea and concept should differ from those applied to evaluating incremental innovations. Viewing radical ideas - associated with high uncertainties - from the perspective of the mainstream business and applying traditional evaluation methods and criteria to them is inappropriate and counterproductive.

 

Either these methods give a false sense of security, or they lead to premature rejection of good ideas. "It is easier to say "no" or to require more detailed information than to defend a decision to invest resources in the absence of "hard data."1

Down the road, uncertainties influence the course of radical project development that requires flexibility and creativity in resource and competency acquisition, while incremental projects follow more formal and predictable route.

The Art of Innovation: 9 Truths

By: Guy Kawasaki

  • Jump to the next curve. Too many companies duke it out on the same curve. If they were daisy wheel printer companies, they think innovation means adding Helvetica in 24 points. Instead, they should invent laser printing. True innovation happens when a company jumps to the next curve – or better still, invents the next curve, so set your goals high... More

Innovation Project Management: Two Approaches

Incremental innovation projects, due to low levels of uncertainties, are usually follow the orderly process:

  • A potential marketable improvement to an existing product/service/process is quickly placed within a clearly defined, time-tested process designed to prove or disprove its value to the company

  • The process has organizational sponsorship, funding, and the assignment of a development team

  • Development and commercialization are directed along a formal phase-gate process

 

Radical innovation projects, due to high levels of uncertainties, cannot be described by this orderly process. "Even though the radical innovation life cycle includes many of the same sets of activities and decision points, the reality of managing the process is strikingly different for radical versus incremental innovation."1

General characteristics of the radical innovation life cycle:

  • long-term, highly uncertain and unpredictable

  • sporadic - starts and stops, dead ends and revivals

  • nonlinear - detours, recycling back through activities in response to discontinuities and setbacks

  • stochastic - waxing and waning of interest and funding, key players come and go, priorities change

  • context dependent - corporate culture, history, personalities, informal relations, and experience all create a mix of accelerating and retarding factors.1

Strategic Innovation

Strategic Innovation is the creation of growth strategies, new product categories, services or business models that change the game and generate significant new value for customers and the corporation...  More

 Case in Point  General Electric (GE)

"Shun the incremental, and look for the quantum leap," taught Jack Welch, the former legendary CEO of GE, other leaders at the company. Live productivity and quality, but also make surprise moves - shock your rivals. Shake things up while other look on from the sidelines, sitting idly by while you knock your competitors for a loop. The three critical ingredients of the quantum leap are surprise, boldness, and shock...More

Using an Innovation Portfolio

The innovation portfolio provides visibility that allows your firm pace the introduction of new products and services. You should balance the introduction of revolutionary products with incremental improvements in others so as to maintain a steady flow. By having a comprehensive view of your initiatives over time, you can avoid either overwhelming or underwhelming the marketplace.

Market Leadership Strategies

The market leader is dominant in its industry and has substantial market share. If you want to lead the market, you must be the industry leader in developing new business models and new products or services. You must be on the cutting edge of new technologies and innovative business processes. Your customer value proposition must offer a superior solution to a customers' problem, and your product must be well differentiated... More

 Lessons from Silicon Valley Firms  

Deciding If Your Innovation Portfolio Has Enough Stretch

Adapted from Relentless Growth, Christopher Meyer

  1. Balance between revolutionary and evolutionary initiatives. First, Silicon Valley companies assess the overall balance between revolutionary and evolutionary projects. The ultimate arbitrator of portfolio stretch if the innovation leaders’ judgment, experience, intuition, and luck... More

 

10 Ways To Murder Creativity

  1. Ask for a 200-page document to justify every new idea... More

 

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Bibliography:

  1. "Radical Innovation", Harvard Business School

  2. "Venture Catalyst", Donald L. Laurie

  3. "A Manager's Guide for the New Millennium:, Ken Matejka & Richard J. Dunsing

  4. "Relentless Growth", Christopher Meyer

  5. "Driving Growth Through Innovation", Robert B. Tucker

  6. "Systemic Innovation," Vadim Kotelnikov

  7. "The Jazz of Innovation," Vadim Kotelnikov

 

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Inventor, Author & Founder – Vadim Kotelnikov

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