3 Ways To Innovate: Transformational, Incremental, and Adjacent

Innovation is high on the priority list for most businesses. Although a relatively new buzzword in business, Innovation is not a new concept. People have been innovating since the dawn of time.

What has changed in the last couple of decades is the speed of innovation required to keep up and stay relevant in this fast-changing, consumer-driven society.  Instant access to information, global marketplaces created by online distribution, and low barriers to entry for tech products mean that it is easier than ever for nimble startups to pull the carpet out from under the current Goliaths.

Hence the well-worn expression “Innovate or Die”. Companies need to grow their market share by reaching new client groups, extend their product life cycles, and respond to disruptors in their space, in order to improve ROI to shareholders.

Transformational Innovation

Innovation is often portrayed as the Disruptor, the Moonshot, the radical solution using breakthrough technology to achieve an unimaginable shift for markets that don’t exist yet. This is the sexy innovation that gets all the PR, the Driverless cars and Space X stuff.

This innovation is generally high risk, high reward; long term projects based on educated and well researched speculations that if the stars align and the market shifts, the company will be ready to take advantage of that change and transform societies.

But it doesn’t need to be the only goal in your innovation framework.

Incremental Innovation

On the other end of the spectrum,  Incremental Innovation refers to the optimisation of existing products for existing markets – basically do what you’re doing but better. Solve the current problems of your current clients, better. Continuously. Sustainably.

The first iPhone was a moonshot but since then it is the incremental improvements to the larger touch screen, the app store, the camera, and the entire ecosystem that crosses devices and makes a customer’s digital life one of ease and convenience.

Sounds simple, but the key to getting this right is truely knowing your customers, and having a deep and empathetic understanding of their problems. Because none of us exist in a vacuum, these are always shifting so it’s important to stay close to your customers to keep an ongoing understanding of them.

Adjacent Innovation

Where Incremental innovation is all about improving existing products for existing markets, there are often opportunities to leverage an existing product, process, or infrastructure to reach new markets.

Amazon is the best example of this. The online bookstore leveraged their digital storefront and logistics capability to make selling products online accessible to anyone. In fulfilling their own eCommerce infrastructure needs, Amazon Web Services was born and now powers companies like Netflix and AirBNB.

Now Amazon Prime provides digital entertainment to over 100 million members.  Where before Amazon may have sold books, CDs and DVDs to their customers, they now provide unlimited streaming video, music and kindle ebooks. And now they have a whole suite of electronic gadgets on which to consume media and entertainment – Kindle, Echo, Fire TV.

There is room for all of these innovation types in a company’s innovation portfolio. The mix should be determined by factors like strategy, time horizon, risk appetite, competition etc.

For incremental and adjacent innovations, lightweight MVP solutions that are quick to get into the market, are a great way to test desirability to customers and validate assumptions to build on, or collect learnings to pivot. The idea is not to invest too much time, resource and money in a solution that hasn’t been tested by real customers, in other words to de-risk buy following a build-measure-learn methodology driven by customer centric design.

For Transformational innovations this may be trickier, as often the market does not yet exist. But there is still room to gauge interest, watch trends, and prepare customers. Disruptive innovation doesn’t need to be a shot in the dark!

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