There is a distinct difference between radical and incremental change. The former endeavors to modify an element in an existing process without replacing or improving anything. Radical change attempts to alter something which is considered to be fundamentally wrong with the way things are done or the way things are structured. The old system may be discarded, changed, or improved.
Incremental change, on the other hand, starts from the fundamental structure and works backwards, constantly trying to improve upon the system and create a better solution or better working method. While it rarely takes revolutionary science, incremental change brings in extraordinary intellectual, analytical, and experience, and with time can add considerable cumulative real-world economic impact.
Most businesspeople barely recognize incremental innovation as radical innovation, even when prompted, but when forced, most can quickly identify a few incremental improvements to their existing systems, processes, or organizational structures. They tend to view these changes as positive advancements rather than as radical innovations, or mere rearrangements of existing practices. However, the fact is that all of these incremental changes, while adding value over time, also represent exploitation of the existing value network.
Radical Innovation: Better for Business
Radical innovation is a radical change to an existing business model. This can include radical changes in the way things are done, new products or services, and new production methods. It can also involve improvements in customer service and efficiency of operation. Radical innovations often have a high risk for failure due to their radical nature, but they also have the potential for radical rewards if they succeed!
This is because they transform elements of the existing core business model. For example, an innovative process that delivers a novel product within an industry incorporates novel production methods, improves customer service, and reduces operating costs can be considered radical innovation. Incremental innovations, on the other hand, tend to incorporate some of these core elements, but seek to combine them with novel new methods and techniques. A well-known example of incremental technological change is the widespread use of automated software in general, rather than just one element of the manufacturing process. Similarly, although most businesses today tend to stick to just one core technology, and use it in every aspect of the production process, more radical and incremental innovations may seek to replace, build upon, improve, or embed other technologies and practices.
As is often pointed out by commentators, however, most firms and industries are not organized around a core technological model, but rather on a series of core processes. These core processes include product development, manufacturing processes, marketing strategies, distribution, retail, financial operations, etc. In other words, the organisation as a whole is not structured on a particular set of organizational strategies, but rather on many different levels. So, whereas radical innovation can transform one part of the organization, it may not be feasible for other parts to adopt.
Organizations Resist Innovations and Here’s Why
Is this why organizations resist the adoption of radical and incremental innovations? Although it seems clear that this is the case, it is worth pointing out that sometimes organizations are prepared to embrace radical change provided it is presented in a manner that they can embrace it. After all, what would a firm do if it adopted a new manufacturing process that increased costs without any corresponding increase in quality, productivity, or reliability? Or if it adopted a new management style that resulted in poor customer relations, even though this may have brought short-term cost savings? Perhaps firms would resist these changes if their mode of operation depends on the firm’s ability to adapt to changing external conditions.
The above example underlines the need for firms to conduct a business review, and for them to analyze the technologies that they implement. They should ask themselves whether they are well-placed to exploit the value of incremental and radical innovation. If they are not, then they should look at ways of implementing an innovation strategy that involves fewer unknowns and a greater probability of discovery. Such exploration might involve setting up a working group, establishing partnerships with firms that are already operating within the same field, carrying out research into the industry where the innovative solutions will be executed, looking to suppliers of technology that is easy to access and inexpensive, setting up a mechanism for monitoring progress, establishing a monitoring mechanism, setting up a feedback mechanism, and so on.
The Economics of Investing in Technological Innovation
In addition, firms should also look at the impact of their technological strategies on the firm’s overall profits. They should measure the extent to which the innovations result in increased costs and the extent to which these costs are passed on to customers. They should also consider the extent to which the cost reductions and increased reliability result in increased customer satisfaction. Finally, firms should analyze the impact of their novel technological developments on the firm’s research and development budget. The more radical and expensive an innovation is, the more research and development budgets it needs.
Business analysis is an important part of innovation management. As firms grow and become larger, they tend to expand their focus from sales to product design, marketing, manufacturing, distribution, and even government activities. As a result, the amount of time that firms spend on innovation has significantly decreased over time. This has lead to serious inefficiencies, such as the inability of firms to meet the needs of customers in a timely manner, the inability of firms to provide consistent product designs, the difficulty of maintaining the quality of products that have been developed from innovative ideas, and the rising costs associated with innovation.
Investing in technological innovation is a decision that many companies struggle with. On one hand, radical innovations can be risky and costly but on the other hand, incremental innovations are less risky and more cost-effective. This blog post will discuss how radical and incremental innovation affects profits.