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Incremental Innovation Key to Competitiveness, Ernst & Young Study

Posted on Thu, May 26, 2011
  
  
  
  

What do winning companies do in tough economic times? Innovate continuously. So concludes an Ernst & Young study of 400 global C-Suite, board directors and marketing professionals.

According to the Ernst & Young Competing for Growth report, 87% of companies have grown their product offerings over the past few years. Companies, says Ernst & Young, have grown their portfolio of products in order to more fully exploit the market potential of their existing customers. Companies surveyed aren’t just increasing their number of product offerings, they are also accelerating the pace of innovation; 72% of survey participants claim to be developing incremental innovationproducts and services at a faster pace.

Much of this innovation comes from incremental innovation.  And, in a separate Ernst & Young report, 63% of survey respondents reported that incremental product and/or service improvement has been more successful than transformational innovation.

Incremental innovation seeks to improve the cost or functionality of an existing product. Incremental innovation is about staying competitive and responding to feedback from the market place. And, over time, incremental innovation also contributes to disruptive or radical innovation.

But beyond the short term impact to the business, incremental innovation also offers long term benefits in developing an organization’s innovation capabilities.  By applying the same disciplines and best practices one would use in approaching radical innovation, organizations will help hone the innovation skills and readiness of innovation workers while also ensuring that incremental achievements deliver to their highest value potential.

Clearly, winning companies embrace incremental innovation as the way to deliver ever-increasing value to customers and the market.

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Comments

Beware the teachings of those who cannot do! 
 
Neither E&Y nor its survey population of C-suite, board members or marketing professionals are likely to be particularly well-informed sources of how to achieve sustainable, profitable innovation. And 87% of any population is never going to provide insights into how to be a leader in any environment.  
 
When was the last time you saw a large committee provide superior results compared to a tiger team of highly-skilled and experienced professionals? When did you last see a bunch of accountants, like E&Y, do anything even remotely innovative? 
 
There’s good reason why so few companies are successful with business innovation – it’s hard to do, requires very different skills and processes compared to standard product lifecycle management, and has little to do with incremental improvement. Incremental improvement becomes the refuge of timid and non-visionary senior management who are unable or unwilling to leave their comfort zones. This is where innovation most often dies. 
 
Incremental by definition means growing by unitary measurements or augmentation. Nothing bold, differentiated or unobvious about it, which is why incremental improvements are so readily matched by the competition and quickly become industry table stakes rather than sources of prolonged competitive advantage. 
 
This is not to say that managed incremental improvement should never be done; it’s a core component of standard product lifecycle management process. But it’s no substitute for real innovation which leads to long-term strategic advantage. 
 
Our notion of innovation suffers from the same syndrome that leads us to believe that all of our children are above average – but the reality is that Johnny can’t read. In over 25 years of providing strategic innovation leadership and support services to hundreds of clients, I can identify perhaps a dozen companies that knew how to do innovation successfully, rapidly and sequentially -- not just one-hit wonders. Frankly, most companies despite their rhetoric are not managed in a manner conducive to fostering and rewarding truly innovative thinking… despite what 72% of survey participants might think! 
Posted @ Thursday, May 26, 2011 11:14 AM by Peter Balbus
Peter --- 
 
 
 
Right on!!! 
 
 
 
Sometime studies are biased to generate the results to suport the business seervices...this looks like one of those. 
 
 
 
One must admit though that innovation is the management buzzword of 2011 and about as well understood as previous buzzwords that lead to generous consulting contracts. 
 
 
 
Francis Criqui 
 
Principal and PMO 
 
TEchnology Highway L3C
Posted @ Thursday, May 26, 2011 1:17 PM by Francis L Criqui
To extend the perspective from my earlier posting ... 
 
Given the reality that most companies are not inherently good at innovating, lack the right processes and senior management expertise, and often don't even know where to look for potential sources of sustainable strategic innovation, virtually all companies would be well-advised to look to implementing an innovation management platform like Goldfire to profitably accelerate and bolster their innovative capacity. Note that this is very different from an idea management platform! 
 
What companies lack in terms of proven methodology and ability to foster the critical element of collaboration into their innovation efforts, Goldfire provides literally "out of the box". No point in re-inventing the wheel here. Goldfire enables companies to rapidly equip themselves with a system that not only supports broad knowledge and content management, it's highly advanced semantic search and synthesis engine enables its users to identify, validate and quantify specific areas where innovation can have the greatest impact on a product, component, technology, functional capability or other forms of "know-how".  
 
While Goldfire may not be the answer to every company's innovation challenges, it's the most comprehensive and robust enterprise-level solution that I've ever seen, and warrants a good evaluation for alignment with your company's business objectives.
Posted @ Thursday, May 26, 2011 1:27 PM by Peter Balbus
My previous comments were directed toward E&Y, not Goldfire. I have no complaints re Goldfire. 
 
 
 
Francis Criqui
Posted @ Thursday, May 26, 2011 2:04 PM by Francis Criqui
Seems to me "Incremental Innovation" is just about synonymous with "Continuous Improvement" and "Transformational" with "Disruptive" Innovation. I agree with Peter Balbus's comments, though I haven't nearly the experience he has. Having worked at a reasonably large, conservative aerospace enterprise I am more than intimately familiar with the kind of mentality and process that makes achieving any kind of commercially viable innovation practically impossible.  
 
I'm of the opinion any kind of innovation that makes a difference requires a mixture of informed fearlessness and somewhat directed playfulness. I also agree with Balbus about Goldfire. Although it took me a few years to fully appreciate what they had to offer (and we started using it when it was branded as "Cobrain"), I believe Goldfire Innovator is one of the finest tools available for an organization to achieve long-term, sustainable (and maybe - hopefully - even disruptive) innovation.  
 
It's been over a year since my retirement from that organization but, if memory serves, Goldfires uses a combination of proprietary, semantic tools and other methodologies of incubating innovation (e.g. TRIZ) in a way that is, in itself, highly innovative. It's visualizations alone are the kind of thing that always helped my thinking move at least somewhat laterally from the direction it would normally have gone in.
Posted @ Monday, May 30, 2011 4:14 PM by Rick Ladd
it's nice of the folks at EY to confirm what some of us had identified years ago: 
 
 
 
From my Pre-2004 Refined  
 
Definition of Innovation 
 
(a gift to GE): 
 
 
 
-Incremental Innovation: Improving value-add of existing product or service. 
 
example: improving energy efficiency of power plant design by 7% 
 
 
 
-Exponential Innovation: Developing new product, service, or market. 
 
example: apple products/services 
 
 
 
:-) 
 
Dan Zimmerman 
 
Posted @ Friday, June 10, 2011 2:12 PM by Dan Zimmerman
Life is a journey. We always meet different people and suffer different stories. I think I am so fortunate to come into your world. So, friend,  
good luck to you! 
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