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The Two Types of Innovation

Posted on July 11th, 2016 by in Chemical Manufacturing Excellence

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It’s said that innovation comes in two different forms. We’ve touched on that idea before when we looked at how innovation is often about small steps of incremental improvement, and not always the game changing home runs that we seem to focus on.
The steady, gradual form of innovation is sometimes referred to as “sustaining innovation”, whereas the bigger game-changing innovation is often called “disruptive innovation”. A common pattern is for a disruptive innovation to create, or define a new market. It’s then the turn of sustaining innovation to move products and ideas forwards, meet the needs of the customers in this new market, and to help businesses stay competitive.

Although sustaining innovation is a much more common form of innovation, it’s the seemingly more significant disruptive innovation that most of us become preoccupied with. In the wake of any big disruption (whether because of innovation, or something entirely more political) there is huge opportunity as companies try to understand and make the most of the new landscape they’re operating in. Disruptive innovation can bring huge benefits, but in the long run, it’s only those doing the disrupting or those who follow suit soon after who really reap the rewards.

Disruptive Innovation
Innovation which truly create new markets and shakes things up is typically associated with small companies, start-ups or innovation labs within larger organizations. And with good reason.

In the early days, the market created by a disruptive innovation tends to be small. It’s usually prohibitively small for larger organizations who have established products, established customers, shareholder’s expectations and performance targets to manage. Predictable growth is a much more attractive option for organizations that find themselves in that position.

There’s far more financial upside for them to focus on gradual, incremental, sustaining innovation to meet the needs of their customers than to try establish a new market from scratch. But the danger of taking that approach is that there are others out there actively looking to do the disrupting.

Imagine owning a candle making factory before the invention of the light bulb. You’d probably spend most of your energy and investment in making sure the candles your factory produced were the best on the market. Working to achieve a longer burn time, a brighter flame, a lower cost per unit would all be high on the innovation to-do list (which are all examples of sustaining innovation). Your focus would probably be on serving your existing customers, and selling more candles. Everything might be going well until your market is disrupted by the invention of the light bulb. Then things start to go downhill.

Although inefficient and impractical at first, over time, the light bulb defines its own market and moves through its own sustaining innovation. The light bulb would be a huge threat to you and your candle making factory as it becomes more widely adopted and developed. So much so, that you’d probably need to change the way you work to stay in business. There would be plenty of options for doing that, but continuing to focus on the same sustaining innovation as you were before will almost guarantee you’ll be left behind.

Both Types Are Important
Perhaps the point of all of this is that both types of innovation we’re looking at here are important. They’re both different and each serve a different purpose, but both are crucially important. Without both disruptive and sustaining innovation, the light bulb wouldn’t be the market defining product we know today.

So although it’s tempting to focus on only one of the two (and which one you’re drawn to may well be influenced by the organization you’re a part of), it’s a balance of both types of innovation which brings the most success.


 

All opinions shared in this post are the author’s own.

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