What do companies do when they are not launching groundbreaking innovations? Are they still innovating? Do they have something of value for existing or potential customers!?
The recent news about Coca-Cola’s trial of its new paper packaging made great headlines. It wasn’t disruptive, but it was still huge! A large conglomerate wants to become plastic-free by 2030, and this was a giant step. So, why did this achievement make the news? Because it was an innovation. Of a different kind, though.
Innovation is important for a company to remain relevant and competitive. However, innovations are not always loud, groundbreaking or disruptive! Did you know that the most common form of innovation is incremental innovation? This innovation is a series of small improvements that improve the efficiency of existing products, services or processes.
Why is Incremental Innovation Important?
Low-cost improvements help companies cater to their existing customer base. Thus, these do not necessarily target new customers. Consider the example of the iPhone. The first iPhone was launched in 2007. Since then, the base design of an iPhone has remained the same. However, periodically, Apple has released new models of the iPhone with better features like improved camera, graphics, better performing operating system, security and GPS.
What Incremental Innovation is Not?
The opposite of incremental innovation is radical innovation and disruptive innovation. The latter are about introducing a brand–new concept of a product or a service. Radical innovation creates a new market for itself. Disruptive innovation disrupts an existing market. For instance, cars replacing carriages or digital cameras replacing film cameras. Or tech-based disruptions like Airbnb and Netflix.
However, radical and disruptive innovations are riskier, costlier, and need more investment. Thus, many companies prefer investing in incremental innovations.
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Incremental Innovation: How Do Companies Benefit?
- They are more predictable. These are quicker and easier to implement when compared to disruptive innovation. However, the latter needs a significant amount of resources (time, money, and technology.)
- Incremental innovation is less risky as compared to radical/disruptive innovation. This is because incremental innovation uses existing technologies and increases value for existing customers.
- Multiple incremental innovations over the years create a significant difference in performance over time. Consider the example of food and beverage giant, Coca-Cola.
- Radical innovations are key to a company’s long-term strategy. But, in the shorter term, incremental innovations are essential to keep customers interested.
- Incremental innovation can reduce the time you or your organization spends on internal processes. It could be something as simple as automating a regular task.
- This kind of innovation also increases the shelf life of a product or a service.
How Common is Incremental Innovation?
Incremental innovation is more common than it appears to be.
Consider the regular software updates that you get on your smartphone or your laptop. These are examples of incremental innovations.
Let us look at some more examples of how incremental innovations are carried out:
Product and Service Improvements
What happens when you find a leaky product package or a bug in software? Many of us write back to companies informing them of the issues and seeking a rectification.
Such consumer feedback leads to many incremental changes. These changes could be the use of better quality of packaging or better user interfaces of platforms or apps. For instance, e-commerce firm Amazon minimizing the use of packaging material in India (that eventually gets dumped in landfills).
2. Process Automation
This involves improvements to a task at a company that takes up a whole lot of time. Consider a repetitive task that takes up 10 minutes per week for an employee to fill in data. 10 minutes a week – no big deal! But, wait, what if you have 100 or say 20,000 employees! That is a good chunk of time and resources that gets wasted every day.
Process automation is an incremental innovation that could do away with time-consuming, repetitive tasks.
Incremental Innovation Examples
The first mass-produced MP3 player was launched in 1997 by SaeHan Information Systems. So, when the iPod was launched in 2001, it was just another MP3 Player.
What made the iPod better was its simple design and small size. Instead of having several buttons, it had a central click and four buttons. It was easy to operate and had a shiny, appealing build.
It was an instant hit!
Initially, the iPod was only compatible with Macintosh PCs. But soon, Apple released a version of the software making it compatible with Windows PCs as well.
Despite selling 1.8 billion bottles a day, Coca-Cola is always testing and experimenting with newer ways to incrementally innovate. It goes beyond being a soft drink company, offering a wider portfolio to customers. Today, it also offers organic beverages, juices, and plant-based beverages like kombucha. This is to cater to a wide variety of customers.
Google has never created a radical innovation. However, its series of incremental innovations on its products like search engines, mail, maps have radically changed our lives. This is because of the impact they have created on technology, and the marketing and advertising industries.
Gmail was introduced in 2004. It was neither the first email nor one of the hottest ones back then. But, over the years, because of its user-friendly features, faster and easy-to-use interface, it has gained the reputation of being the best email service.