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By Patrick Lefler
Incremental innovation is more about evolutionary improvement than it is about instituting revolutionary change. It delivers short-term benefits for existing products, but at the expense of developing new markets or radically different products. It is a myopic focus on maintaining (or, at best, incrementally gaining) market share and it can act as blinders to the bigger strategic changes ongoing within the marketplace. This is the primary danger of relying on incremental innovation as a means of driving long-term strategy—failure to develop long-term vision can have deadly opportunity costs, especially for industries in transition.
Richard Foster and Sarah Kaplan--authors of Creative Destruction--highlight a classic case of incremental innovation in their story about the evolution of sailing ships to steam.1
In the late 1800s, sailing clipper ships still ruled the seas in the battle of transporting goods between continents. These swift sailing vessels carried cargo between the major ports of England and the United States. They were the FedEx carriers of the time, having been perfected through hundreds of years of incremental improvement.
But by 1870, ships powered by steam that had been around for nearly seventy years were challenging the leadership of the clippers. In the beginning, steamships were not all that effective (since the steam engine itself was not terribly efficient in 1820). Most of the cargo-carrying capacity of the steamship was consumed by fuel storage. By 1890, however, steam engines had improved to the point where they could overtake the cost advantage of clippers. The handsome clipper ships began losing market share to the steamships.
But the owners of the sailing vessels, and the naval architects who supported them, were not ready to relinquish control of the seas. They fought back by incrementally improving their ships. They added one more mast to the design and then increased the waterline which made these ships hold more cargo and sail even faster.
Thus continued a skirmish of technologies, steam versus sail. As more improvements were added to the clipper ship design, the steamships kept on attacking.
Undaunted, the naval architects struggled for further improvement, this time with a gaff-rigged design. The clipper ship Thomas W. Lawson was the result. The ship had more sail and waterline, which resulted in even more speed. But at this point, the incremental change in technology was reaching its natural limit.
On Friday, December 13, 1907, nearing the Scilly Islands in England, Captain Turner found he could not control the Thomas W. Lawson. With winds blowing at sixty knots, the sailing vessel ran into the rocks. Miraculously, Captain Turner survived. But the rest of the crew was lost--and so was the age of sail. Incremental innovation had run its course.
Incremental innovation does not result in the generation of either new markets or breakthrough products. It is instead symptomatic of the type of improvement that existing companies use to defend existing markets, where continuity is valued above all else. It should always be remembered that improvement alone is not true innovation. Only true innovation creates an outcome so unique that competitors are either unable or unwilling to match your offering.
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1 Richard Foster and Sarah Kaplan, Creative Destruction (New York, NY: Random House, 2001) pp. 109-113.
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Patrick Lefler is the founder of The Spruance Group; a management consulting firm that helps growing companies grow dramatically faster. He is a former Marine Corps officer and a graduate of both Annapolis and The Wharton School. The Spruance Group acts as a trusted partner by offering unbiased advice and providing unique solutions to help clients solve their most pressing strategy needs. For more information, visit www.spruancegroup.com or contact Patrick at: plefler@spruancegroup.com |