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 Degree

product process combination basic

innovation innovation product/

improved
process
goods service fake
 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 • high uncertainty

• exploits existing technology • explores new technology

• key players are • key players are

cross-functional teams cross-functional individuals

• business plan developed at • business plan evolves through

the beginning discovery-based learning

• process is formal • process is informal

improvements in existing development of new

products/processes products/processes
 Radical Innovations
historic examples

Telephone 1861
Light bulb 1883
Television 1929
Atomic bomb 1945
Computer (1st gen.) 1946
Floppy Disc 1950
Compact Disc 1979
WWW 1991 Invention
Cellphone 1992
SMS 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!