Global
08 April 2021

Incremental Innovation: What It Is, Benefits and Best Practices

Written by Robbie Richards

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Innovation isn't always a groundbreaking spectacle. More often than not, change within a market or business results from consistent yet relatively cautious steps forward. Known as incremental innovation, this strategy may not get the spotlight of the more daring alternative, disruptive innovation, but it is no less important.

According to Entrepreneur, 98% of innovations are incremental, but we hear very little about these small improvements. Instead, the headlines focus on the revolution driven by digital disruptors and category designers.

But the truth is, incremental innovation is the vital pillar behind the longevity of many of the oldest, most recognizable brands in the world. 

Read on as we explore the benefits, best practices, and real-world incremental innovation examples to help you learn why and how you should implement this strategy in your own business. 

What is Incremental Innovation?

Incremental innovation is the concept of growing or improving a company by making a series of minor improvements to existing products, services, processes, and tools.

These small changes focus on improving the productivity and performance of the company, as well as the efficiency and user experience (UX) of the products and services. Companies can use incremental innovation to save costs and differentiate from competitors. 

Over time, businesses can use incremental innovation to improve their market position and build a bigger audience that gravitates to the new and improved product features. 

Goals of Incremental Innovation

According to Harvard professor Clayton Christensen, rising consumer demand for new products and better results is a major driving force behind the release of new products—most of which have been rushed to market. In fact, 95% of new products fail

Incremental innovation safeguards against risks by setting out three clear goals:

To grow sales and profits for existing products and services.

By focusing on modifying the functionality and features of existing products and services, companies can keep their products aligned with current trends, cultural moods, and evolving desires within their market. 

To protect current business models.

This strategy may not present the massive opportunity for returns that some other forms of innovation do, but it’s a low-risk approach that strengthens the company’s existing position. 

To create new business models without cannibalizing current ones.

Incremental innovation has a powerful cumulative impact on the internal processes and productivity of a company. This approach delivers constant efficiency gains, helping stabilize existing business models before you launch new ventures. Moreover, it helps discover and nurture new ideas that can work in tandem with the current business. 

Incremental Innovation vs. Radical Innovation 

Incremental innovation is widely accepted as the alternative approach to radical innovation. And that begs the question, what’s the difference?

A radical innovation, or disruptive innovation, is a significant breakthrough from a new business model, technology, process, or concept that disrupts the existing market. By comparison, incremental innovation is a significant improvement or upgrade to the performance or functionality of an existing business model, product, service, or process. 

Radical innovation is a complex, ambitious process sometimes referred to as a blue ocean strategy" due to its aims of stepping out into uncharted territory to create new products, concepts, and market demand. For example, when Dyson launched bladeless Air Multiplier fans, they were completely different from anything else in the market.

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Incremental innovation doesn’t create new concepts or products, as it focuses on marginal improvements to what already exists. For example, Gillette constantly upgrades its razors, adding new features, like extra blades, heated razors, and a pivoting head.

Benefits of Incremental Innovation

So, why is incremental innovation important?

Quite often, people overlook the value of incremental innovation or dismiss its slow and steady approach. However, as hundreds and thousands of small changes add up, this strategy causes a massive impact. 

In a way, incremental innovation is similar to investing, where the compound interest amounts to huge gains down the line. But whereas personal financial growth can take years (or even decades), companies can introduce innovations that make meaningful contributions much sooner, potentially within months. 

Here are five benefits of incremental innovation:

Reduce risk

As noted earlier, innovation failure rates are high, especially in a rapidly changing market. Many businesses can’t afford to take major risks with any long-term investment, like developing new technology or R&D projects. 

Although well-established processes can help ensure higher success rates, they will still require training and investment. Quite often, managers are too concerned with balancing risk with market share.

However, with an incremental strategy, making small, continuous advances without putting the company's budget or sustainability on the line is possible. 

Increase product diversification

Typically, radical innovation is a tougher sell because the ideas are so different that many people are wary or unwilling to adopt the new concepts, products, or services. While people want new things, they aren’t as keen to learn new things. 

If a business focuses more of its efforts and R&D budget on incremental innovation, the shift towards new concepts is more gradual. Consumers are more open to adopting familiar products with new upgrades. 

Not only does this approach expand the company's product line and the consumer's tastes, but it also sustains the business cash flow while they develop more revolutionary ideas.

Stay competitive

A critical advantage of incremental innovation is how it facilitates ongoing competitiveness that would otherwise be lost if the business focuses solely on more ambitious, long-term innovations.  

By continually iterating on existing ideas, you can develop newer, better versions of your products while simultaneously generating profit from the current versions.

This incremental innovation strategy enables companies to retain their market share and current customers by always staying top-of-mind in the industry with another update or new feature.

Sell into existing markets

As mentioned before, it’s much easier to innovate with a recognizable product than a completely new product. While disruptive or radical innovation requires companies (and customers) to take a huge leap that upsets the status quo in the market, incremental innovations integrate seamlessly with the market dynamics.

With less uncertainty and risks involved, companies can pitch their ideas for upgrades and novel features into the existing market and be confident that they're still offering customers a high level of accessibility.

Lower innovation costs

Lastly, one of the most apparent benefits of incremental innovation is its relatively manageable impact on the company budget. An incremental strategy won't break the bank, as it offers a degree of affordability that allows a business to make minor enhancements without allocating a considerable amount of financial resources.

When Should Companies Deploy an Incremental Innovation Strategy?

Sitting still is not an option. It doesn't matter what industry you're in or how you've been established—you must always be innovating. But that doesn't mean you must reinvent the wheel or launch a new disruptive innovation strategy every month. With incremental innovation, your business can take small yet significant steps to maintain a competitive advantage.

Essentially, this process should be ongoing. When deciding just how best to allocate your resources to incremental innovation, you must consider two critical factors—scale and maturity.

Let’s take a closer look.

Scale

Let’s say you want to automate an internal process, but it will only affect a small group of employees. In this case, there may not be enough return on investment (ROI) to make the change worthwhile. 

You might spend a week or two to implement the new automation, saving your employees five minutes every day. If you only have ten employees benefiting from the change, it could take months before savings outweigh the investment. 

However, when you apply the same automation to impact 1000 employees, the ROI yields a much faster pay-off, potentially in under a day. Therefore, the bigger your scale of business operations, the more sense it makes to use incremental innovation. 

Maturity

The maturity of a business, or its product and services, will vary depending on what stage of development it is currently in. 
Whenever you launch a new business, product, or service, there will always be unanswered questions. New concepts always need more changes, and minor tweaks are normal in the early stages as the company tries to optimize the concept.

Conversely, if the product or service is well-established, it will have more maturity. In this case, incremental innovation is an effective practice to help the concept evolve.

Incremental Innovation Examples

From new startups to dominant enterprises, incremental innovation benefits businesses of all sizes. And yet, this strategy for growth does not get the limelight it deserves.'

Here are a few real-world incremental innovation examples that you may be familiar with:

Product and service improvements

The most basic type of incremental innovation is to make minor improvements to existing products by learning from customer feedback and leveraging technological advancements. As companies fine-tune the features to cater to the customers' expectations, this low-risk strategy helps them save money and grow the business with repackaged products and services.

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Apple is one of the best examples of this approach. Although the tech company’s reputation is forged on disruptive innovation, the flagship product—the iPhone—is a gradually evolving concept that thrives on incremental technology updates. Since its launch in 2007, the iPhone has undergone multiple iterations, with each new model offering a sleeker model, better camera, or improved speed or graphics. 

Process improvements 

Automation is an integral aspect of innovation today, enabling companies to turn repetitive, tedious processes over to machines and computers, so they can free their resources and employees to focus on other tasks. In doing so, automation reduces costs, saves time, and eliminates human errors.

The car manufacturer, Toyota, has built a global reputation for incremental innovation. At the heart of The Toyota Production System is the Kaizen philosophy, which empowers the workforce to embark on a quest for continuous improvement. Employees constantly seek out ways to maximize quality and efficiency in everything they do, from the work processes to how they use equipment or dispose of waste.

Waste reduction

Speaking of waste reduction, incremental innovation is the key to solving this global issue. In the retail and manufacturing industries, waste is a perpetual problem. Because margins are low, small changes in waste costs can deliver a massive impact on profits.

Internally, companies can experiment with more efficient ways of managing their waste, from recycling to data-based demand forecasting to ensure they only order and use the essential amount of materials. 

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For enterprises with bigger budgets—and bigger waste challenges—they could partner with a company like Compology. This camera-based dumpster monitoring technology is on a mission to move the world's raw materials, finished goods, and waste products with the smallest footprint possible. Compology uses AI technology and an integrated IoT system to optimize efficiency in the waste and recycling industry.

Internal process and tool improvement

In B2B, sales are often a bottleneck, with many leads taking longer to close than expected. With small improvements, companies can shorten the sales cycle and increase conversions, profits, and growth.

You can make improvements throughout the organization, from training your sales reps, to how you market to new prospects. Another key area is distribution, which Walmart tweaked to drive sales volumes from $44 million in 1972 to $44 billion by 1974

This incredible growth came down to a shift in logistics. Walmart introduced a cross-docking strategy to transfer products from third-party trucks to Walmart trucks at a central distribution center. Instead of products sitting in storage, all inventory was promptly moved onto Walmart stores.]

Incremental Innovation Strategies & Best Practices

You know by now that incremental innovation can help your business grow and remain competitive while taking minimal risks. But before you can leverage this philosophy to maximum effect, it's important to know the best practices for incremental innovation. 

Here are six strategies to keep in mind:

Understand your customers

You won’t get far in any business if you don’t know your audience. Even a small change to your existing product could cost you sales and customer loyalty if it’s not aligned with your customers’ expectations.

Before implementing any changes, conduct research to understand what improvements people want. You can gather feedback in multiple ways, including:

  • Surveys
  • Customer interviews
  • Focus groups
  • Idea management software

Communication is imperative throughout the innovation process. As you engage with customers, you can collect more feedback and understand more about their pain points with your products and services. These insights help you learn how to develop your models in line with their vision to improve the user experience.

Identify immediate opportunities

For the most part, incremental progress is intuitive and easy for companies to implement. The challenge is deciding where to focus your attention, as there is usually a plethora of ideas for incremental innovation. 

Look for the bottlenecks in your company. By scanning internal processes and customer-facing channels, you can identify flaws and challenges that offer low-hanging fruit for quick and easy innovation.

This approach facilitates faster results, which has the knock-on effect of encouraging more people in the organization to get on board with the innovation campaign. This momentum can be instrumental in dispelling skepticism.

Assign innovations owners

As you earn more support within the organization, you’ll have more people willing to take on bigger roles to drive change within their department. You can nurture the growing culture of innovation by assigning specific innovative responsibilities to people throughout the company. 

By distributing the workload and making it a collaborative effort, you can create predictable pipelines for incremental innovation. This approach is essential in larger companies, as a single department can't assume responsibility for driving innovation across the entire enterprise. 

Augment with radical innovation

Here’s a hard truth:

Incremental innovation on its own is rarely enough. 

Of course, an incremental strategy is a crucial driver for business efficiency and sustainability, but if you only use incremental innovation and nothing else, you may lose your edge.

Kodak was the dominant power in the photography market for decades. Now, its legacy is that of an unfortunate case study in the perils of ignoring innovation and market evolution. When digital cameras hit the market, Kodak stood still, choosing to focus solely on incremental updates to its traditional film products. Soon enough, the disruptive new concepts took over, and Kodak became obsolete.

Don’t ignore radical innovation entirely, as it may be the death knell for your business. 

Connect with innovation partners

Sometimes, the best ideas come from outside your business. With open innovation, your company can find innovation partners who will bring new perspectives and skills. 

As you gain access to new technologies and subject matter experts, your company can discover new approaches to solving existing market problems. Even if you only want to make incremental changes, and innovation partner can help generate exponential growth. 

MassChallenge offers enterprises a platform where they can connect with innovation partners who can lend valuable expertise and resources.

Test and pivot

Trial and error is the name of the game in innovation. You must always be testing something. Moreover, you must test new concepts early and pivot based on the results.

The feedback you get from beta testers and early adopters may invalidate some of your initial assumptions about the product and market. With an open mind and agile approach, you can pivot to find a better product-market fit.

Ultimately, any new concept development must accurately reflect the needs and desires of your customers. If you make a big change that is off-the-mark, it could turn customers away. By establishing a continuous cycle of testing and pivoting, companies can refine their business model or products by retaining and iterating only the best ideas.

Wrap Up: Harness the Power of Incremental Innovation

In our experience, incremental innovation is always a significant factor behind the most successful companies we've seen, even when their success might have originated from disruptive innovation.

Radical innovation with the latest technology and trends may seem like a more exciting and lucrative realm for business growth. However, the foundation of long-term business stability and longevity rests on a culture that embraces continuous development with minimal risks. 

MassChallenge offers corporations a ready-made network of innovation partners that can help you maintain or gain a competitive edge through incremental innovation practices, as well as entirely new ideas.

Join the MassChallenge platform today, so you can accelerate your incremental innovation results and keep your business growing.
 

About the Author

Robbie Richards is an expert contributor to the MassChallenge blog for over two years. He writes on innovation approach, entrepreneur resources, and business and marketing trends. He has been published in Forbes, Ahrefs, WordStream, and more.

 

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