Despite innovation having become a buzzword in the business world, many businesses still struggle to understand its true meaning and how to practise it. This knowledge gap can distract entrepreneurs the full benefits. There are also concerns that innovation has to be permanently ground-breaking, but in fact, it's not what guarantees its success. Businesses need to learn how to practise continuous innovation and stay agile.
Continuous innovation doesn't require end customers to change their behavior and generally, doesn't fundamentally change the dynamics of an industry. The television industry is a prime example where it has been applied for decades. From black and white bulky sets, the television industry has evolved to customized flat screens and panels, HD-programming has improved the quality, and 3D features enable different user experience. All of these features had an impact on the industry, although they weren't disruptive, instead, they were gradual and continuous. Disruptive innovation (also know as discontinuous) delivers the opposite. It usually appears in the form of a completely new product or service, capable of creating new markets, changing industry growth rates, pricing assumptions and consumer perceptions. If disruptive innovation exists in a good customer environment and there are gaps in the market, it can drive greater and quicker results. However, those results are much harder to maintain, therefore, continuous innovation is considered a safer option, especially for SMEs.
In a world of technological breakthroughs, businesses that focus on continuous innovation have a higher probability of maintaining a strong market performance. However, there are also challenges due to compression of innovation cycle times caused by hyper-competition. Thus businesses have to be prepared to keep up with the fast pace that disruptive innovation creates. For example, according to CB insights, the AirBnB valuation is set to become higher than Marriot, Starwood and Expedia, growing by 140% from its last valuation in 2014. In order to compete, businesses have to adjust by applying a strategy built around agility.
It can be useful to break down large-scale, high-risk product development efforts into smaller, low-risk experiments. Any experimentation has to be performed quickly, this can be achieved by setting fixed intervals of time, for example, 3-5 months. Thus, teams have to be provided with the essential budget without disruption, in order to be able to test multiple ideas quickly. They also have to be able to clearly define a problem and to identify appropriate metrics to measure success from experiments.
Despite disruptive innovation being capable of driving greater results, it's a high-risk practice that can cause many complications following its success. Companies that implement continuous innovation achieve growth that is easier to retain if an effective strategy is put in place. It's critical to not stand still and keep experimenting with existing products, whilst keeping an eye on the development of new ones. An agile company will have better chances to succeed.