Monday, October 03, 2011

The Incremental Innovation trap

I'm a bit grumpy today, returning to work after a nice weekend.  When you are an innovator, it seems you never really escape your work, or perhaps your vocation.  Everything one sees or experiences seems to call into question  - couldn't this be done better, or differently?  I suppose a really committed innovator could drive himself or herself absolutely crazy wondering about all the potential improvements and new products that are possible just within the things he or she experiences.  But those experiences drive what we do and what we focus on, and are perhaps limiting the way we think about innovation.

Consider, for just a moment, my simple taxonomy about the "types" of innovation many firms will consider.  There is, of course, the innovation that improves an existing product, which many of us call "incremental" innovation.  There is, further, borrowing ideas from other industries, products or concepts that exist in one industry but not in another, which is still relatively incremental but sometimes a "breakthrough" idea.  There's a "mixing" innovation - peanut butter and chocolate - which combines two capabilities or benefits that haven't been combined before.  Again, often interesting but rarely disruptive.

Further along the "interesting and valuable" spectrum we'll find Blue Ocean kinds of innovation - spotting unserved markets with a different new product or service, for example.  Further along still is innovating around customer experiences or business models, and further still is creating a product or service completely new to the world.

I suspect that many of us who call ourselves innovators are constantly engaged with the products and services that we experience every day.  We are wondering - what, exactly, could make this product or service better, more interesting, less costly, more engaging?  This is the mental "busy work" that seems to advance the cause of innovation but I think often traps us in a dead end alley of innovation - the incremental trap, focused on improving existing products and services.  That's not to say there isn't some value in incremental innovation - just that the work is frequently contemplated by a wide variety of people.  The "winner" in this regard is often the firm that acts first.  When many people or organizations are aware of a problem or opportunity, it's the firm that understand the problem in depth, and produces a reasonable solution quickly that wins.

However, far too much of our time as innovators is spent in the incremental alley.  We're captivated by improving existing products and services, rather than focused on balancing incremental innovation with other forms of innovation.  These other forms include identifying unserved markets, innovation focused on management hierarchies or business models, creating products that combine powerful capabilities not combined previously, and so on.  These innovation "types" are implemented far less frequently, because there's less extant evidence of the need, and less "proof" of the value.  Once again, we innovators are like the drunk who lost his keys in the dark alley, looking under the street light, simply because the light is better there.  The keys are still in the dark alley, much like many good ideas simply waiting to be discovered if only we'll move out of our fascination with the here and now and explore broader ideas and opportunities.

And, yes, I know that the preference in many organizations is limited to incremental, but that's because we innovators have allowed ourselves to be boxed in to a incremental innovation ghetto.  If we can demonstrate the value and opportunity of broader innovation thinking, and the potential realities of innovation that's focused on combination, or introducing ideas from other industries, or business model innovation, then we gain credibility and the scope of innovation expands.

If we aren't careful, innovation is simply an interesting side show trotted out when the executives want a magic show and some incremental gains.  What we need to demonstrate is that we are "investing" in a range of innovation possibilities across a spectrum of risk and return.  Incremental innovation offers low risk and low return, while business model innovation and "new to the world" product or service creation is high risk but high return.  Placing these concepts in terms that financial folks understand and value improves the chances that we can innovate in more than just the incremental space - and that there's reason to do so.

Incremental innovation can become a trap.  Innovators are lured in by the promise of innovation, only to discover that the boundaries of what's acceptable are so limited that they can never do more than simple, incremental innovation, and all other types and possibilities are excluded from the scope of effort.  Innovators must define the breadth and depth of innovation opportunities and outcomes and assign risks and potential returns.  No firm places all of its investments in government bonds - financial managers spread investments across a portfolio of investment options, timeframes and risks to ensure the best possible return.  We innovators need to ensure the same method is take when considering innovation initiatives.
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posted by Jeffrey Phillips at 5:52 AM


Blogger ssswin88 said...

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2:01 AM  
Blogger Roadwarrior09 said...

Accenture recently published a very good piece on this challenge, "The Innovation Death Spiral", which based on their research has shown too many companies get trapped in the incremental and slowly die, all the while thinking they are actually being innovative....

6:33 AM  
Blogger Shivaji Singh said...

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3:23 AM  
Blogger felicity said...

It always feels good to come back here. I love it... it's just nice to see a lot of insightful ideas..
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10:33 PM  

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