Innovation and disruption: we’re all meant to be doing it. But that doesn’t mean you have to be the next Elon Musk – sometimes incremental innovation can have just as big an effect on your bottom line
Innovation is one of the buzzwords of our age. Businesses are keen to be seen as innovative and it’s regularly cited as one of the ways in which companies stay ahead of the pack. However, while we often associate innovation with ground-breaking inventions and disruptive new products, the majority of innovation involves small tweaks and changes to existing products, services and technologies.
From the manufacture of aircraft to the packaging of a soft drink, continuous but often tiny innovations are the key to success. Professor Hari Mann lectures in innovation and strategy at Ashridge Executive Education in Hertfordshire.
He says regular and incremental changes can often make better business sense than large-scale efforts. “Small improvements and changes over time mitigate the risk of doing the wrong thing,” he says. “If you do something the customer doesn’t like then you can always go back to the original successful idea.”
Mann says the world’s most successful and innovative companies continually tweak and change their products over time. Apple is a great example of this in action. “The iPhone was radical when it first came out, but it’s been changed incrementally since then,” Mann points out. “So now we have an iPhone 6 which is very different from the original, but customers aren’t very aware of the changes as they’ve happened over time.”
Innovation doesn’t just happen in tech
Innovation is often associated with technology and hardware, but it applies to traditional sectors too, including food and drink. A company such as Innocent Drinks was initially ground-breaking in creating drinks that were not made from concentrates.
But ever since then it has striven for constant improvements. “Innocent very slightly alters its recipes, branding and packaging over time so the product today is very different from the one it launched with,” says Mann.
The impact of incremental innovation on the bottom line is huge, he adds. Some companies start out with products and services that aren’t immediately successful, but through a series of successive improvements can be turned into world-beaters.
Room-sharing service Airbnb is a good example of this. Mann says: “When it launched it wasn’t very successful. But it went about altering things on its platform, changing how pictures were displayed, for instance, until it became something that consumers liked.”
Why innovation doesn’t need a big budget
Charmian Love is the co-founder of Volans, which advises businesses on innovative practices. She says that big budgets aren’t always required for innovation to be successful. In fact, she’s a proponent of ‘frugal innovation’ – where budget and resources are deliberately curtailed as a means of prompting creativity.
She says a great example of this is how General Electric created an electrocardiogram (ECG) machine for use in rural India. The machine needed to be easy to use due to a lack of trained staff, lightweight to enable transport and far cheaper than existing machines. The engineers worked with off-the-shelf products and used their know-how to make cheaper components. They were set ‘stretch’ targets, which forced them to innovate and think the impossible.
The end product, the MAC 400, is a hand-held device that was produced for just $800 compared to $2,000, the price of a standard ECG machine. Furthermore, this was achieved in just 18 months.
“GE reduced the size and cost of an ECG machine significantly by applying the principles of frugal innovation,” says Love. “The project’s use of stretch targets fuelled the creative process.”
Love says frugal innovation is an idea that is catching on in the business world. “Many big companies recognise how frugal innovation can help develop cost-effective and resource efficient products for different market segments.”
Illustration: Harry Haysom