Innovation always involves risk. Sales revenues might not balance the investment cost. Customers might not like the design or features of the new product. Competitors might not perceive a product advantage.
There are several strategies to address innovation risk. Of course, following a well-established new product development (NPD) process increases the odds of repeatable success within a firm. Likewise, ensuring productive innovation leaders build successful product and service development through effective and efficient decision-making requires training. However, the type of innovation is often overlooked by firms as managers try to balance risk with market share.
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Sexy Gets the Press
Social media and the press, in general, tend to promote sexy, new ideas. Yet these radical innovations fail more often than incremental innovations. Sexy innovations often do not live up to customer or corporate expectations. The vast majority of new products and services launched by firms include small improvements in features and functionality. Enhancements are more predictable and stable innovations.
Sexy new product ideas grab our attention but rarely live up to the hype. Think about laser discs, the Segway, Google Glass, and the Apple Newton. All of these were great ideas hailed as technology marvels. Yet these inventions were expensive to design and difficult to use for customers creating losses instead of profits for the developers.
Benefits of Incremental Innovations
There are several benefits to incremental innovation innovations. First, you know the market. Second, you know the competition. Third, you know the technology. And finally, you know the product.
Knowing the market is incredibly valuable for successful innovation. New markets require a lot of investment to educate customers and to explain product advantages. Existing markets are easier and cheaper to test with prototypes and to gauge feature attractiveness for new, incremental product development.
incremental innovations are successful because you know the competition. Customers have brand loyalty based on past experiences. Knowing the competition allows a firm to innovate for differentiation as well as to take advantage of inexpensive, incremental new product development. For example, packaging changes make a difference to consumers yet are simple, incremental innovations.
R&D and technology development are long-term investments that involve substantial risk. Fundamental research may or may not apply to multiple product lines. And it can take years to work out the bugs of a new chemistry or other technology while simultaneously working on regulatory approvals. Knowing the technology and advancing it just a little allows incremental innovations to cost less than radical product development efforts. Lower cost means higher profit for the business.
Radical innovations are sexy and newsworthy. Yet, they fail because the product does not solve a consumer’s real problems. Building incremental innovations from existing product lines brings depth and richness to the solution. Creating ancillary services and complementary products enriches the brand and supports the core product. Consider Gatorade™. With a core product and a number of spinoffs designed for various market segments, an aging and established brand has maintained and grown market share in a highly competitive market through incremental innovation.
Winning with Incremental Innovation
While much of social media and the press focus on sexy new ideas, companies that sustain focus on core products can win at innovation. Incremental innovations offer advantages in cost-saving and development time since the firm knows the markets, understands the competition, and can leverage the technology. Moreover, building complementary incremental innovations around a core product family differentiates the brand and strengthens consumer loyalty.
Do You Want to Win at Innovation?
I am inspired by writing, teaching, and coaching. I tackle life with an infusion of rigor, zeal, and faith. It brings me joy to help you build innovation leaders. I am an experienced professional with a passion for lifelong learning with a PhD in Chemical Engineering and an MBA in Computer and Information Decision Making. My credentials include PE (State of Louisiana), NPDP, PMP®, and CPEM, and I am a DiSC® certified facilitator. Contact me at email@example.com or area code 281 + phone 280-8717 for more information on coaching for entrepreneurs and innovators.
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