Transcript Incremental vs. Radical innovation - Uni
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
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The notion of innovation (repetition) The classification of Innovation Incremental vs. Radical Innovation Radical Innovations: historic examples What influences Incremental/Radical Innovation?
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 innovation process innovation combination product/ process goods service
Degree
basic improved 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
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low uncertainty
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exploits existing technology
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key players are cross-functional teams
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business plan developed at the beginning
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process is formal
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high uncertainty
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explores new technology
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key players are cross-functional individuals
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business plan evolves through discovery-based learning
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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!