Incremental vs Disruptive Innovation: Why an Organization Needs Both

In the ever-changing global marketplace, the practice of innovation is a major factor in determining a company’s success.

Innovation can refer to tweaking a small detail of an existing product. It can also be creating a whole new market and revenue stream with a unique product or service. Because it encompasses such a broad spectrum of activity, it is useful to distinguish between incremental innovation and disruptive (radical) innovation. Both strategies are necessary for any business to thrive.

Good companies are engaged in incremental innovation all the time in order to stay competitive. They are responding to customer feedback, societal changes, fluctuations in market share and other inconstant circumstances. Small improvements and tweaks can help evolve brands and take advantage of trends.

Disruptive change, on the other hand, breaks the mold. Disruptors go beyond tweaks and upgrades to introduce game changing new approaches to a product or service. This type of innovation, however, involves risk and doesn’t always show results immediately. An example is the case of Netflix. They started out modestly with their mail order DVD business, but grew to dominate the market when it took advantage of streaming technology.

Sometimes change innovators need to hold themselves back to gain the confidence of senior leaders and stakeholders before launching radical initiatives. Big organizations are reluctant to risk damage to their reputation or profit margins. This is understandable, but it also means they can be caught off guard by under-the-radar companies and start-ups that use disruptive technologies with zeal to gain a foothold in various industries.

Some sectors are more suited to disruptive innovation than others. Advanced technology, for instance, relies on research and development, upgrades and new products. Low technology industries such as the metal, raw materials and food production sectors are more stable and take more incremental steps. In both cases, regular innovation initiatives will allow companies to grow and prosper.

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The topic of this article is covered in the curriculum for the Schulich ExecEd program Masters Certificate in Innovation Leadership. The program is designed to help managers and innovators to lead systematic innovation to consistently develop and implement better solutions. Speak to an advisor today to learn more.