The Paradox of Radical Innovation

GERO LUEBEN

What’s Radical Innovation All About and Why Is It Associated With A Paradox?

Radical innovation is associated with a massive improvement in performance and a change in technology. It can sometimes come in the form of a shift from existing performance or solving a complex (large scale) problem that existing products fail to solve. This oftentimes supposes the emergence of more sophisticated technology, resulted from pushing the boundaries of knowledge.


An example in this sense would be the first biopharmaceutical drugs. They were considered radical innovations because they used a completely different technology (biological methods of production rather than chemical synthesis) and addressed medical problems that hadn’t been solved by existing drugs.

In What Ways is Radical Innovation Different from Disruptive Innovation and Incremental Innovation?

Disruptors are innovators, but not all innovators are disruptors. Disruption takes a left turn by literally uprooting and changing how we think, behave, do business, learn and go about our day-to-day. Harvard Business School professor Clayton Christensen says that a disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.

 

As opposed to radical innovation, disruptive innovation initially provides inferior performance (as measured by existing industry metrics) to other available products. As a result, it is usually not of much interest to existing users or customers. Furthermore, disruptive innovations are adopted by a market that is currently underserved or not served at all. In other words, they serve a market segment that did not exist before and don’t need to be based on radical technological innovations.

 

Radical innovations could only rarely be classified as disruptive because, as explained above, they are often aimed at driving the performance frontier rather than serving underserved or unserved markets.

 

On the other hand, incremental innovation is applied to an existing product, sold through existing channels, to existing customers and a certain amount of ROI is expected to be generated over the next 3 years.

Users Becoming the Source of Radical Innovation

If, traditionally, patents were based on the idea that the inventor knew what the invention was for, nowadays, more and more inventors of things are not able to say that in advance. It is worked out in use, in collaboration with users, who become the source of radical innovation.

The latter is represented by new ideas affecting a large number of people/ technologies and which have a great deal of uncertainty attached to them. The paradox of radical innovation lies in the fact that the payoffs to innovation are greatest where the uncertainty is highest. To be more specific, when you get a radical innovation, it is often very uncertain how it can be applied. For example, the whole history of telephony is a story of dealing with that uncertainty. Think of the fact that when the landlines were invented, people didn’t think they could use the telephone to listen to live performances from concerts.

 

The more radical the innovation, the higher the uncertainty, the more you need innovation in use to work out what the technology is for. When mobile telephone companies invented SMS they had no idea what it was for. It was only when that technology got into the hands of the consumers that they invented the use.

 

The winning corporations are often those which realise that radical innovation is difficult to foster from the inside of the organisation. An example: In 2000, Procter and Gamble decided to stop looking at innovation from an internal detailed metrics perspective. Instead, they took a more strategic approach, deciding to acquire 50% of their new product ideas and technologies and products from outside P&G.

 

Over the next three years, they saw a dramatic decrease in R&D spend while overall company revenue with new product releases continued to rise. Knowing they were onto something, they continued to develop open innovation strategies and best practices, dramatically increasing their lead in the innovation space.

 

Conclusion

Because of the traditional mentality focused solely on immediate ROI and the fear of change and failure, tomorrow’s big ideas are difficult to find in today’s mainstream markets. Usually, big corporations have the tendency of reinforcing past success and that is why it’s difficult for them to spot emerging new markets. As a consequence, emerging markets are oftentimes populated by passionate users who become the source of big innovations.

 

Companies strive to achieve radical innovation, yet this (ideas affecting a large number of people/ technologies) has usually a great deal of uncertainty attached to it, which usually deters companies from taking the plunge into the unknown. What they should really understand is that, with radical innovation, the payoffs are greatest where the uncertainty is highest. It’s a paradox that goes beyond the traditional ROI and empowers companies to change the world we live in.

Leave a Reply