What is incremental innovation?
Incremental innovation is a series of small improvements or upgrades made to a company's existing products, services, processes or methods.
The changes implemented through incremental innovation are usually focused on improving an existing product's development efficiency, productivity and competitive differentiation. Many enterprises use incremental innovation to maintain or improve a product's market position. Incremental innovation has become a common tactic in the consumer technology industry, as companies strive to improve personal devices with customer-friendly features regularly.
The opposite of incremental innovation is radical or disruptive innovation. Radical innovation is when a new product, service, process or strategy is introduced to a market but is designed to make a significant impact by completely replacing existing technologies and methods. Radical innovation requires a significant investment of time and resources, making incremental innovation less associated with risk.
Although incremental innovation is more common, enterprises often use both incremental and radical innovation strategies. For example, a radical innovation can be introduced to the market, and if it's successful, the organization uses incremental innovation to improve the product and keep it competitive over time.
Innovation has become a major factor in determining modern enterprises' longevity and success. This trend has led many enterprises to focus on incremental and radical innovation strategies and how they can benefit the company's product development.
The benefits of incremental innovation
Incremental innovation benefits business growth and opportunity, product development, customer loyalty and retention, and long-term competitive advantage. The following highlights some specifics:
- Continuous product improvement. When a steady stream of improvements flows through the company's products and services, customers pay closer attention to the brand. The customer base might also expand as those improved products edge out competitors.
- Diversified product lines. Rather than gambling on big, market-shaking blockbuster products, a slowly expanding product base offers lower risk with more reliable gains.
- Customer retention. Customers don't want the products they buy to undergo radical change; they prefer the gradual, steady appearance of new features. How an organization delivers this innovation affects customer satisfaction and the company's ability to retain the customer.
- Lower risk. Incremental innovation is inherently lower risk than radical innovation, promoting stability and a well-crafted long-term vision for growth.
- Lower costs. It's less expensive to make small changes than big ones. An innovation process that focuses on gradual, modest improvements puts less money on the line, while offering steady and significant growth.
Examples of incremental innovation
Incremental innovation can be found everywhere. Many of the products most people use are incrementally improved through the steady addition of new features and functionality -- the iPhone being a prominent example. Since its release in 2007, its design hasn't changed significantly, but each new iPhone version offers a sleeker model and small improvements to features such as the camera and graphics.
In software, particularly in the cloud, improvements in user experience often represent incremental innovation, as in the N26 banking app. N26 is a completely digital bank created in 2013. As a cloud-based bank that offers personal banking through Mastercard debit cards and a mobile app, N26 has quickly gained market share across Europe. Its innovative mobile banking app has given the bank a competitive advantage over other financial institutions with brick-and-mortar infrastructure.
In the manufacturing world, Toyota's production system has been a continuous improvement crucible for many years, fine-tuning one of the world's biggest vehicle assembly operations by soliciting process improvement recommendations from its workforce. Toyota's Kaizen philosophy helps the company in its quest for continuous improvements.
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