Innovation is an important factor in business success. Creating new products, services and technologies can help open up new markets and drive growth. But innovation does not always have to be something completely new and radical. It can also happen on a regular basis in rather small steps. The keyword: incremental innovation.

What is incremental innovation?

Incremental innovation refers to the step-by-step improvement or further development of existing products, services or processes. In contrast to radical or disruptive innovation, where entirely new solutions are developed, incremental innovation is based on existing resources and experience.

Most innovations are incremental innovations, as they take place over short- to medium-term horizons and aim to preserve the value of the current business. Because they build on existing resources and established solutions, they can be delivered faster and are usually less risky and more cost-effective than radical or disruptive innovations. They also help companies continuously align their products and services with the needs of their customers.

Common reasons for incremental innovation

Companies use incremental innovations primarily to increase the efficiency of their processes, to save time and resources, and to reduce costs. Beyond this, however, there are other factors that – individually or in combination – can lead to incremental innovation.

An important source of step-by-step improvements to products and services is feedback from customers. Competition in the market can also be a driver to remain competitive. Technological advances further encourage companies to extend or improve existing functions and capabilities. And finally, regulatory changes are a frequent reason to optimize products or services in order to meet new requirements.

Examples of incremental innovation

Incremental innovation happens in virtually every business area – from technology to retail to automotive. It can affect various aspects such as product design, quality, performance or usability. Examples of incremental innovation include:

• The regular improvement of smartphones with extended functions and higher performance compared with previous versions.
• The constant optimization of processed food recipes to perfect the taste and meet market needs.
• The continuous development of automotive engines to improve performance and reduce fuel consumption.

Even these simple examples make clear how companies use incremental innovation to improve their products and services and thereby strengthen their position in the market.

Challenges in implementing incremental innovation

Although incremental innovation offers many advantages, there are also challenges in implementing it. One of the biggest is identifying and implementing the right improvements. Companies have to deploy their resources effectively while taking customer needs into account.

Incremental innovations are also often difficult to communicate given their relative modesty. Companies should communicate and market the advantages and improvements of their incremental innovations clearly, so that they are recognized and appreciated by customers and other stakeholders.

Environmental impact of incremental innovation

Another important aspect not to be neglected is the question of the environmental impact of incremental innovation. Fundamentally, incremental innovations can make existing products and services more environmentally friendly – for example, by improving energy efficiency, such as using LED bulbs instead of incandescent ones, or by using recycled or biodegradable materials in place of conventional plastics.

On the other hand, paradoxically, environmental improvements can – through the so-called rebound effect – even lead to greater environmental damage. The rebound effect describes the fact that an efficiency gain often leads to an increase in overall use, which can diminish or even nullify the original efficiency gain. This effect is particularly observable with incremental innovations.

If products or services become cheaper or more convenient through incremental innovation, they are consumed more often, which leads to higher resource use and thus more environmental impact. For example, improving the energy efficiency of household appliances such as refrigerators or washing machines can make them cheaper to run and thus turned on more often.

It is therefore important to consider the rebound effect when implementing incremental innovations and to make sure that overall use does not rise so much that environmental impact actually increases.

The innovation process as a basis for incremental innovation

An important role in promoting incremental innovation from both economic and ecological perspectives is played by a holistic innovation process consisting of systematic trend management and effective innovation management. Such a process continuously helps identify potential for incremental innovation, allocate resources and develop employees accordingly. With systematic trend management, you can identify trends and market changes early in the so-called Fuzzy Front End of Innovation, pointing to necessary refinements. It is therefore advisable to work from the very beginning of the innovation process with outcome-oriented KPIs that allow you to derive possible measures for incremental innovation in good time.

How to set up systematic trend and innovation management

The TRENDONE whitepaper on trend and innovation management shows you how to successfully establish trend management in your company and how to professionalize innovation processes for the long term.

Incremental innovation: An essential component of your innovation strategy

Incremental innovation is an important strategy for companies to continuously improve their products and services and stay competitive. Through step-by-step optimization, costs and risks can be reduced, customer needs and demands met more effectively, economic growth promoted, and the ecological footprint reduced at the same time.

However, it is important to identify and implement the right improvements and to measure and evaluate the progress and success of incremental innovations. Companies should tackle these challenges and see incremental innovation as an essential component of their innovation strategy.