This past week I got sucked into what I thought was a pretty weak online debate. The question posed was, "Is Incremental innovation the enemy of Breakthrough Innovation?"
As expected almost everyone said "yes," (and some quite emphatically). This was pretty discouraging, because if managed properly Incremental is Breakthrough's best friend. Apparently this is a somewhat counter-intuitive position, because I got hosed by the responses of others. This usually means I'm onto something.
Here's why Incremental is Breakthrough's (we like to say Game-Changing's) best friend:
- First of all, you can't run a company without being good at incrementalism. It keeps you in the game. And if done propoerly it provides short-term (and I stress "short-term") competitive advantage. Or, for those who want to only be fast-followers (a very legitimate innovation strategy), then you must have a well-oiled Incremental process for playing catch-up. One could argue that Fast-Follower is where the money is made.
- Incremental is relatively low-risk (a statement I often get challenged on). The strategy is clear, the cost of failure is pretty low, and the rewards contribute to the short-term (there's that term again) bottom line. Incremental failures don't threaten the survival of the enterprise. This means that a strong, successful Incremental engine should throw off some funds for taking higher-risk bets, most of which will fail. Incremental not only keeps a company in the here & now game, it also keeps the company in the longer-term breakthrough game, if it chooses to play there.
So, what's the debate about? Incremental is the enemy of breakthrough when a company invests all of it's innovation budget and bandwidth on it, which is a very easy thing to do. Incremental is more comfortable. The funding and resourcing of it can be pushed down to the operating divisions/SBUs, where decision-making can be consensus-based. But the decision to pursue, fund, resource, and provide air cover for going after the game-changers requires a whole different model, and it starts at the top, which is another reason why companies stay within their Incremental comfort zones.
The problem arises when an organization that claims it wants to be a game-changer becomes totally consumed by its pursuit of incrementalism, with 100% of it's budget and resources focused only there.
Truly innovative companies must take a portfolio mentality for their Strategic Innovation Agendas. Depending on the nature of the industry/industries being served, they should be apportioning anywhere from 1/4 to 1/3 of their innovation capacity on the game-changers.
In Built to Last, Jim Collins & Jerry Porras talk about "The Genius of the AND versus The Tyranny of the OR." Healthy innovators are always pursuing both. It's absurd to think otherwise.
by Mark Sebell, Founder and CEO, Creative Realities, Inc.