How focus on incremental improvements can have a massive effect
Why are innovation managers so obsessed with flashy projects, while there is so much real stuff going on today? That’s because they believe only radical innovation will make a huge difference. That means innovation leaders often think the only way to make progress is to chase after big dreams. They are wrong.
A lot of value is to be found in the little day to day improvements. Perhaps, the real problem is that most people think it is boring to explain how they made something 2% better last quarter.
To be fair, that rarely gets you the cover of the internal company magazine.
Types of innovation: radical, disruptive, sustaining and incremental innovation
In the world of business, innovation is often categorized into four main types: radical, disruptive, sustaining and incremental. Each has its place and value, but it's the quiet power of incremental innovation that often goes unrecognized and underappreciated.
Disruptive Innovations change - or disrupt - existing products and industries. This type of innovation changes the status quo and makes existing products or services obsolete. Cars disrupted horse carriages. Lightbulbs disrupted candles. Tesla and EVs are disrupting traditional ICE cars. COVID19 driven remote work is disrupting offices.
Radical Innovations introduce fundamentally new technologies or concepts that create new industries or transform existing ones in big ways. Online banking radically changed how we interact with banks. E-ink displays radically changed how we consume books. Contactless pay systems radically changed how we buy our latte macchiatos. (Yes, radical innovations can be disruptive and vice versa, but that doesn’t have to be the case.)
Incremental Innovation, on the other hand, is about making small improvements to existing products, services, or processes. These might not seem newsworthy on their own, but their cumulative effect can be enormous. Incremental innovations make things better, cheaper, faster, and more efficient, often leading to significant competitive advantages and customer satisfaction. Examples are increasing battery life of phones, continuous software updates, or manufacturing improvements.
Sustaining Innovations are the types of innovations that are required just to be able to continue in a market. These are a bit like running on a treadmill: you are spending energy to stay where you are. Many regulation driven sustainability improvements are an example, or mandatory safety requirements on cars.
So, why does incremental innovation deserve more attention in the AI-era?
Many company leaders have no clue how hard radical innovation is
We spend a lot of time talking to business leaders about their AI strategy, Nine out of ten times they want us to implement a whole new AI system to:
Connect all their existing systems, and
Prevent all errors, and
Reduce all manual work, and
Get rid of all Excel sheets, and
Develop new markets, and
Make current customers happy, and
Make employees happier, and
… and the list goes one.
Usually, these leaders expect us to implement radical or disruptive innovations in a few months, with a budget that doesn’t even buy you a nice sports car. They have no clue how delusional they are. Almost by definition radical innovation is unpredictable, costly, time-consuming and internally disruptive. Going all-out with radical innovation is not for wimps.
At first glance it is somewhat ironic that the less innovation experience a leader has, the more radical the innovation he or she seeks. We think it makes sense, because they simply have no idea of the difficulties involved. They don’t yet understand that radical innovation is the domain where you can spend insane amounts of money and still have no guarantees that it will turn out well.
In AI this is even worse, as the “big guys” are innovating so fast and with such large budgets. We believe that an AI innovation strategy should be grounded in reality and incremental innovations, especially at the start.
Build yourself a snowball of incremental innovations
Incremental innovation is the backbone of continuous improvement. It's about making small changes that, over time, lead to big impacts. These improvements might be as simple as enhancing a product's design for user convenience, streamlining a process to save time, or adopting new software to increase efficiency.
The great thing about incremental improvements is that they are rather safe. They don't require lots of capital, in-house R&D teams, or the risk of venturing into the unknown. Instead, it leverages the knowledge, skills, and creativity of existing teams to make improvements that add up over time.
With regards to innovation in the AI-era, our advice is simple and unchanged: start by focusing on incremental improvements to the way you work. Don’t try to fix and change everything. Just use artificial intelligence to do your daily job a little bit better.
Examples of incremental improvements powered by AI:
Automatic meeting notes
Scanning outgoing reports for completeness and tone of voice
AI-powered company knowledge base
Customer support assistants
Fraud detection AI
Creating a culture of continuous improvement
To benefit from the power of incremental innovation, leaders must develop a culture that encourages continuous improvement. This involves:
Encouraging employees at all levels to contribute ideas for improvement.
Implementing systems to capture, evaluate, and implement these ideas effectively.
Recognizing and rewarding improvements, no matter how small.
Conclusion: embrace the incremental
While the allure of flashy radical and disruptive innovation is obvious, incremental innovation is often a more effective way to achieve long term success. By focusing on the small, day-to-day improvements, organizations can achieve gains in efficiency, customer satisfaction, and competitive edge.
Remember, you have two hands!
As innovation managers we often talk about “ambidextrous innovation strategy”. (Ambidextrous is a fancy word for people who are not right-handed, or left-handed, but can use both.) The idea is that companies should split their resources between short-term low-risk incremental innovation and long term high-risk radical innovation.
When we help leaders develop their innovation strategies, we like to keep in mind their Futuristic Frontier projects (more on the TMT. Innovation Framework) when we select incremental innovations to pursue. Ideally, the short-term small-risk projects we work on today, bring our clients closer to more ambitious long-term goals.
Together we turn ambitions into achievements
If you also believe that your road to AI innovation should start with incremental, sure-fire innovations with great odds of success, reach out to us. At TMT. we understand the power of the snowball effect that incremental innovation will bring your firm.
Our collaboration is clear:
YOU know your company, industry and customers like no other
WE know strategy, execution, communication and team dynamics
TOGETHER, we turn ambitions into achievements.
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