Incremental and Radical Innovation

In recent years, the importance of innovation in business cannot be emphasized too much. Along with rapid economic development, the cooperation having innovative ability enables them to own a place in this competitive society. In order to achieve the goal of survival, the firms need to understand the different types of innovation from incremental innovation and radical innovation for those firms who guarantee with the product quality, the lower cost and increasing profits.

Following this essay, the difference between incremental and radical innovation are the distinctness of change level of technology and the difference of effectiveness. Following this essay, the effectiveness of two different types of innovation and an example of each types would be explanatory. Innovation can be used in invention or improvement of products, production process, organization and staff creativity. According to the change level of technology , there are different types of innovation, one is incremental innovation and the other is radical innovation.

Utilizing which types of innovation depends on what kind of conditions does a cooperation faces. Different consequence would be reached while adopting these two types on innovative system. To begin with, the definition of incremental innovation is 'doing what we do but better' (Tidd, Bessant, 2009, p. 27). It usually bases on improvement or boost the existing technology, products or process for maintaining the competitiveness of specific market. Adopting incremental innovation could results in enormous cost saving through upgrading or improving old products or service. Stamm,2003,p260) . In terms of reduction of inefficiencies and waste, which could benefit company from saving money, resources or time. Also this effectiveness from incremental innovation could benefit not only cooperation, but also customers. For example, a famous US airplane company - American Airlines Incorporated (AA). In 1986, when AA had faced a downturn trend with profits, they cut a significant cost on their on board meal. (Maynard 2005). Their crew found out that 72% of passengers do not use olive in their salad catering from airplane.

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The price of salad was included five items, if they change their ingredients of food without olive, it can save $500,000 cost annual year. Since this incremental innovation had reduced the operating cost significantly, increasingly amenities had been cut for less spending such as playing cards, postcards and some toys for children. Although this type of innovation cannot bring new income directly, it does not mean it cannot save a enormous money. Compared with incremental innovation which means doing what we do better, the radical innovation refers to do something different. (Tidd, Bessant, 2009, p. 7) Radical innovation is the revolutionary change in technology or market. To make a breakthrough on the limitation of current technology and production capability , which could strengthen and sustain a firm's leadership in the market. Moreover, a radical innovation could change current competitive condition, creating a new market and making more opportunities for much benefits and profitability . For example a light emitting diode-LED which is a major device in current life. (It would be finished next time) These two different types of innovation are used in different conditions.

Incremental innovation is generally a short-term innovation. On the other hand, radical innovation would continue more longer, usually over 10 years, referring to an high risk investment. Furthermore, radical innovation requires ability of high level of technology innovation, which means it need a relative large expense of investment rather than that of incremental innovation. (Ten3 Business e-Coach 2004) To sum up, in this changing commercial environment, each company should keep learning and carrying out knowledge of innovation to achieve their commitments with profits growth.

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