Strategic Innovation

BUS363: Technology and Innovation in Entrepreneurship

When discussing innovation, it is important to fully understand the knowledge push and need pull dynamic for new ideas or improvements on existing products or services. Before a new idea can become a reality it is important to follow and innovation framework to help gauge the future success of the product. Once the decision is made to create the new product or implement the changes and improvements to the existing product it is necessary to decide on incremental or radical change.

Incremental and Radical Change

Change is necessary to keep businesses competitive. When a business cannot or will not embrace and adapt to change they are doomed to fail. For an entrepreneur, devising a change that will be in demand can rocket the entrepreneur to success. When discussing business changes there are two types to investigate: incremental and radical changes. Incremental change or innovation introduces small changes to existing products, services or processes or “doing what we do but better” (Bessant, 2015). Radical change involves serious changes to existing products or services or “doing something completely different” (Bessant, 2015).

Incremental Change

The main strategies of incremental change are to increase profits for existing products and services while maintaining the company’s existing business model. The main advantage of incremental change is that it does not contain the same amount of risk for a company that radical change possesses (Gassmann, 2017). The most successful incremental innovation ideas come from having a customer or user based design process. The largest benefit when using incremental change is that the product or service already exists and has been distributed to consumers, but accessing consumer feedback changes can be designed to more efficiently meet the customers’ needs and wants. A simple example of incremental changes would be the modifications that JetBlue developed to address customers on-hold time. JetBlue now takes the customers phone number and calls them back so the customer does not have to wait on hold (Ebrahimi, 2013). The most important strategy to effective incremental change is to measure actual customers using the product, gather their feedback and design changes based on that feedback. Incremental change proved to be valuable in watching the evolution of cellular phones, and the changes and improvements just keep coming. In terms of invention, this wheel has already been created, but the improvements have never stopped.

Radical Change

Radical change is what naturally comes to mind when innovation and change are being discussed, Apple change the world as we know it when they introduced the iPhone. Apple created a huge new market, one that previously did not exist with the launch of this product. Radical innovation or change is a complex process rather than a behind the scenes event. The advantages of radical change include the ability to step away from the current market and to be seen as a true innovator in a new field which would allow the business to own the new market in the beginning (Gassmann, 2017). Radical changes affect the market and industry by putting technology and long term goals of the company at the forefront of the idea process. While incremental changes are generally brought about by the current customers, radical change comes from the creativity of employees and the ability to experiment with technology. Radical change requires the company to plan for and to be able to absorb failure and must use the failure to develop the next big change (Newman, 2018). Incremental change is best shown through the constant changes and improvement to smartphones, but the creation of the iPhone is the best example of radical change. Incremental change is the best solution for the company that has a product and the profits allow for research and development and new improvements to the product. Radical change is much harder to come by, contains much more risk than incremental change, but if you hide from risk you hide from the rewards. If you have the dream and the means you can literally change the world.

Attributes of Push and Pull Innovation

The biggest attribute for the knowledge push required for great innovation is the incredibly large amount of money spent every year on research and development. While companies used to rely on the team in white coats sequestered into a laboratory they now pull the resources of their and entire staff and even partner with other companies in hopes of developing the next big idea. The second attribute would be the embracing of incremental changes to close the gaps between the big breakthroughs (Bessant, 2015). While knowledge push leads to ideas it provides no guarantee that the ideas will matter to the consumers. The idea must stimulate a real or perceived need in potential customers. This method on innovation development can lead to big ideas but normally it is variations and adaptions of solid core ideas (Bessant, 2015). These two types of innovation do not isolate independently of each other, to the contrary, they work best when used together. In Chapter 6, Chris Freeman says, “necessity may be the mother of invention but procreation needs a partner” (Bessant, 2015). The best example of the combination of these two methods would be the Ford Assembly Line. Henry Ford did not invent the automobile, that had already been done, but they were so expensive that only the super rich could even dream of owning a car. The assembly line created a method which allowed Ford to build vehicles faster and cheaper and reach a more diverse market. When referring to technology innovation knowledge push would be the driving force in the next big idea. With current products, research and development, and a new generation of technology nerds it seems the only limit on creation is the limit of the imagination.

Innovation Strategy and Entrepreneurs

As discussed in the previous section, having a grand new idea is not the only key to success for the entrepreneur. There are many questions that need to be answered to make sure the idea will lead to the payoff. The innovation strategy framework that is based on the essential questions of: What, Where, How, Who and When must be researched and tested in great length to help ensure success (Bessant, 2015). Three main reasons to follow an innovation framework is to make sure that all of the necessary research has been done, to avoid unfounded assumptions and to make sure the thought process in complete. Most new businesses fail because the research was not complete and the target market was not clearly defined, the financing options were not nailed down, and the ideas in the plan were unfounded.

As described by Bessant, 2015, The five question framework can be broken down as follows:

Bessant, J. R., & Tidd, J. (2015). Innovation and entrepreneurship (3rd ed.). Hoboken, NJ: Wiley.