Growing Your Profits Through Radical Innovation
Differences Between Radical and Incremental Change
Every business and every product or service is open to competition. This competition can now come from anywhere in the world and it is not always easy to recognize until it is significant. To compete effectively in today's marketplace and grow your business, you must innovate - not just once, but consistently, in all your products, services, and business functions.
A good way to counter the effects of change and competition is through technological innovation. In a recessionary time, such as now, business failures increase. Experience shows the main causes to be loss of markets, lack of finance, bad debts and management shortcomings. A business that is not growing through new or improved product and service introduction is likely to be more vulnerable.
Technological innovation may be classified in several ways: product vs. process, disruptive vs. sustaining, radical vs. incremental. Of all the different types of technological innovation, radical innovation holds the key to the most long-term success and business growth. Although corporate investment in improvements to existing products and processes does bring growth, it is new, game changing breakthroughs that will launch a company into new markets, enable rapid growth, and create high return on investment.
What is Radical Innovation?
Radical innovation, concerned with exploration of new technology, is a product, process, or service with either unprecedented performance features or familiar features that offer potential for significant improvements in performance and cost. It creates such a dramatic change in processes, products, or services that they transform existing markets or industries, or create new ones.
Radical vs. Incremental Innovation
Radical innovation is fundamentally different from incremental innovation. Incremental innovation is concerned with exploitation of existing technology. An incremental innovation (also called an improvement, sustaining, sequential or complementary innovation) would lead to an improved product over its ancestor in terms of quality, reliability, ease of use, environmental protection, raw material use, labor cost, and so on. It may also include the application of new and better production processes or techniques that allow old or new products to be made more reliably, of better quality, or simply in larger quantities, or at a lower price.
A new or improved product that meets customer expectations offers a new business market without competition for so long as it retains its innovative advantage. In the case of an incremental innovation, not only are competitors for the class of product already in place, but since the improvement innovation typically amounts to a better, faster, or cheaper way to build the product, its advantages are far more quickly understood and replicated.
As a consequence, the competitive edge that an entrepreneurial business may gain with a radical/disruptive innovation is likely to be longer lasting than that obtained merely from an improvement innovation.
Managing innovation better than your competitors is one of the main objectives of a business that wishes to survive and thrive in today's economy. Most businesses innovate without necessarily realizing that they are doing it. A planned approach to innovation - one that focuses on your strategic purpose and direction, capability, market understanding and the amount of finance available - will generate more growth and profits.
The evidence shows that businesses who focus on innovation deliver above average sales growth and profitability. These businesses typically operate with targets such as 30% or more of sales from new product/service introductions made in the last 3-5 years. Therefore, in order to grow your business, systematically innovate to create waves of advantage.
MechoTech is a leader in the design and product development of innovative technology and medical device products. Contact MechoTech at (949) 215-7270, by email at Sales@MechoTech.com or visit www.MechoTech.com for more information.