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Incremental vs.

Radical Innovation
Bianca Backes Inga Janke
Innovation, change, and decision-making in international organizations Prof. Dr. J. Beneke SS04 11.05.2004

Overview
1. The notion of innovation (repetition) 2. The classification of Innovation 3. Incremental vs. Radical Innovation 4. Radical Innovations: historic examples

5. What influences Incremental/Radical

Innovation? 6. Conclusion

Definitions (1)
Innovation means a new combination of purpose and method. (Schumpeter)

Innovations are resulting in qualitatively new products or processes, which differ significantly from the former state however this is to be determined. (Hauschildt)

Definitions (2)
In contrast to a discovery - which is usually

made coincidently- innovation is characterized by a (preceded) systematic innovation process with a certain objective at the beginning. (Betz)

Innovation

Type
product process

Degree
combination
product/ process basic improved fake

innovation innovation

goods service

Innovation

Incremental/Sustaining

Radical/Disruptive

Incremental Innovation

Lower or first order innovations


Repairing the old Keeps large companies competitive in a short term Negatively correlated to breakthrough innovation

Incremental vs. Radical Innovation


Most innovations nowadays are incremental
Danger of getting caught unaware by

newcomers
Companies need to come up with radical

innovations

Radical Innovation (1)


If you cannot beat radical innovators, your best chance to stay relevant to your markets is to become one
(CommunityIntelligence)

Higher order or breakthrough innovations


Dramatically changes social or business

practices

Radical Innovation (2)


Creates new markets Leads to rapid growth Confronted with uncertainties:

technological market

Main Differences
Incremental vs. Radical Innovation
low uncertainty exploits existing technology high uncertainty explores new technology key players are cross-functional individuals business plan evolves through discovery-based learning

key players are cross-functional teams


business plan developed at the beginning

process is formal

process is informal

improvements in existing products/processes

development of new products/processes

Radical Innovations
historic examples
Telephone Light bulb Television Atomic bomb Computer (1st gen.) Floppy Disc Compact Disc WWW Cellphone SMS ? 1861 1883 1929 1945 1946 1950 1979 1991 Invention 1992 1994 Invention

The development of radical innovations is decreasing!

What influences Radical/Incremental Innovations?


Organization

size/age cultural characteristics (high/low risk) structure

Environment Process Management

Conclusion
The capacity to innovate and make life better

is present in each individual


Without radical innovation there is no

economic growth!

The End

thank you for your attention!

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