Importance of Incremental Innovation in Technology Industry
Innovation is a procedure of converting creative ideas into reality to improve existing product, service and process. In recent years, the role of innovation has grown substantially, and corporation uses it to gain competitive advantage and sustain their development in the market. Experts argue the importance of incremental innovation when compared to radical breakthroughs or ‘eureka’ movements in innovation. The role of incremental innovation is significant in the technology industry, and many corporations use it to increase their market share. This essay will examine the importance and process of innovation in the technology industry by focusing on Apple Incorporation. Apple is an American international corporation that provides its services through more than 467 stores in 17 countries. The essay will discuss the role of ‘eureka’ movements or radical breakthroughs in innovations and compare it with incremental innovation. Further, the essay will analyse the difference between radical and incremental innovation, and evaluate the importance of incremental innovation for Apple Incorporation and Technology industry.
Baregheh, Rowley, and Sambrook (2009) stated that innovation could be defined as a multi-stage process in which creative ideas regarding new and improved products, services or process are transformed into reality by an organisation, with an objective to compete and gain a competitive advantage to become successful in the market. Many people consider that innovation is about big leaps forward, radical breakthrough ideas and ‘eureka’ moments that completely change a process, product or service. But, experts give more importance to incremental innovation which is focused on small innovative improvements rather than radical overhauls (Ambrosino, 2014). In small and medium corporations, the role of innovative products, services or processes has increased in the past few years. As per the research of Statistics Canada, innovation is the key characteristic of successful small and medium firms. These corporations continuously innovate, they achieve strong growth due to such innovations, and they gain market share and increase their profitability through new innovations (Statisrics Canada, 2017).
Process of Innovation
Steve jobs stated that innovation differentiates a leader from a follower; the entrepreneurs that create new ideas and successfully transform them into reality become better leaders (Woo, 2013). The process of innovation requires critical analysis of product, procedure or service; effective establishment of an organisational structure is necessary to promote and support innovative thinking. According to Bessant and Tidd (2011), there are four dimensions of change that can be achieved by innovation such as product, process, position, and paradigm. For example, in technology industry creating new processor or gadget for computer or smartphone is considered as ‘product’ innovation. Changing the process of manufacturing a phone or computer by adding or subtracting material is ‘process’ innovation. An old corporation that creates glucose drink for children in the UK called ‘Lucozade’ decided to re-launch their products as a health drink for fitness market; it is ‘position’ innovation (Cave, 2017). Paradigm innovation means changing the underlying mental structure of a product or service, such as creating premium coffee or fruit juice to sell at higher cost.
A company is requiring analysing the process which they wanted to innovate and establish an appropriate structure to promote innovation. After selecting the process, a company is required to identify the goal or problems that are necessary to be solved in such process, product or service. Effective innovation is based on effective analysis; the corporation is requiring to thoroughly evaluating different factors relating to the process, product or service to understand its working and usage (Tao, Probert and Phaal, 2010). After that, the firm is requiring to develop and design new structure based on the information and ideas collected from the analysis. Conversion of the idea or innovation to gain perspective of other interested people is necessary to modify and change the process, and then the corporation has to commercialise the process by using real-time tests or creating prototypes to examine whether innovation is successful or not.
Apple Incorporation in Technology Industry
In the technology industry, the corporations that see and act on the changing market possibilities and opportunities through innovation are not only surviving but they become successful in the industry as well. The competition is technology industry is fierce; companies are heavily investing in the research and development to become the new innovators of the industry (Deloitte, 2017). Several examples proved innovation is the key to success in the technology industry. The prime example of innovation in the technology industry is internet and internet-based services; the innovation of internet has completely changed people life, work, and entertainment usage. Many corporations such as Uber, Airbnb, Amazon, Facebook, and PayPal are completely based on internet, and they are some of the most successful organisations.
Apple Incorporations is an American technology company which was founded in 1976; the company operated in the technology industry, and its headquarters is situated in Cupertino, California, United States. According to Fortune 500, Apple is the most profitable company in the world (Shi, 2016); according to Forbes (2017), Apple is world’s most valuable brand. The company has constantly used new innovation to gain competitive advantage and sustain their future growth. For example, the introduction of iTunes that completely changed the music industry; it brings people closer to their music and obsoletes the use of CD to listen to music. Apple did not invent smartphone, but they introduced the world to iPhone and the App Store; the combination of both gained business opportunities for millions of entrepreneurs (Newton, 2013). In 2017, the developer earning from App Store has reached US$70 billion (Apple, 2017). Along with these breakthrough innovations, Apple continuously invests in small innovations that improve the usability of existing products or services. New innovations attract customers to the company because innovations are based on consumers’ preferences, and it improves their overall experience.
Difference between Incremental and Radical Innovation
Incremental innovation is defined as series of small innovations or upgrades that are made to existing products, process, services and methods. The changes and modifications are made with an objective to improve the performance or usability of the product or service to enhance the experience of customers (Bessant and Tidd, 2011). The use of incremental innovation has become a common tactic in consumer technology industry, in which companies focus on regularly improving the personal gadgets by adding new customer-friendly features. Radical or disruptive innovation is the opposite of incremental innovation; when a new product, service or process is introduced in the market to replace or change existing technology and procedure completely, it is known as radical innovation (Ritala and Hurmelinna-Laukkanen, 2013).
An effective radical investment requires a significant investment of resources and time, and it includes a high-risk factor. In incremental innovation, a detailed plan can be created at the beginning of the procedure, but in radical innovation, the plan or business model evolves along with discovery and market-based learning. The risk factor is considerably high in radical innovation whereas in incremental innovation it is low comparatively (Norman and Verganti, 2014). The radical or disruptive innovations require a high level of resources and time, while incremental innovations follow a formal and predictable route that does not require such investment. Apple promotes innovative thinking and creative ideas, and their business model encourages incremental innovations. Apple divides its creative employees into groups to work on specific projects like innovation incubator. The company continuously learn from examining the industry, and in 2016, they spend US$10.39 billion on research and development (Leswing, 2017). The corporation believed in open innovation, and they encourage their employees to work in flexible hours.
Importance of Incremental Innovation
According to Claveria (2016), Apple has embraced an incremental innovation strategy to gain competitive advantage and sustain market growth. Tim Cook, the CEO of Apple, along with various other executive members considered incremental innovation as a key success factor for Apple, and they incorporate it into business strategies. Although, disruptive or radical innovations breakthroughs are considered as a reason for Apple’s past success, but in recent years, the company focuses more on incremental innovations. For instance, in recent keynotes, Apple emphasis on minor updates to its operating system iOS10, voice assistance Siri and messaging platform iMessage. Eddy Cue, Software Engineer, from Apple said in an interview that people think we deliver a breakthrough product or radical innovation each year when Steve Jobs was alive but those products were developed in a long period (Reisinger, 2017). On new iPhone launch, Glenn Fleishman provided that Apple develop in the market through punctuated equilibrium rather than disruption; revolutions or breakthroughs are hard but small innovations are easier for corporations.
Apple focuses on adding small features into their products such as iPhone, MacBook, iPad, iMac or iPod, and introduces large radical changes in long time intervals, and it assists them to maintain their success. For example, iPhone 6S camera was not a significant leap regarding megapixels, and it was same 8 megapixels as last year’s 5S. But it included various small features such as burst mode, f2.2 aperture, slow-mo., better low light capture, auto “best” shot selection, bigger sensor, dual tone flash and many others which made it considerably popular between the customers and it became the highest selling iPhone model ever (Su, 2016). Incremental innovation is not enough to attract customers into buying a product, but addition of multiple incremental innovative features can attract a large number of customers. There are several other examples of successful companies in the technology industry that gained a competitive advantage through incremental innovation.
For example, the business concept of Uber is considerably simple; it provides taxi service through a mobile application. But this strategy allows Uber to increase their value to $50 billion and become a leader in online taxi service corporations (Fast Company, 2017). The disruptive or radical breakthroughs require a significant amount of time to become successful, and usually, customers did not prefer to wait that long for new products or services. Therefore, Apple adds new features to its existing products to keep them fresh and according to the marker standards that attract more customers eventually increases company’s profitability. Apple maintains a level of familiarity with their products to ensure it is easier for customers to learn new features.
The radical breakthroughs also vulnerable towards risk of failure, for example, Windows 8 was a visual overhaul than compared to Window 7 and customers did not prefer the new changes, and it became a failure. Google Glass is another example of the failure of disruptive innovation; the device attracted a significant amount of hype but resulted in a failure (Eadicicco, Peckham, Pullen, and Fitzpatrick, 2017). Apple spends a significant amount of research and development to know the customers’ preference and creates new products according to them. The radical breakthroughs or eureka moments innovations did not guarantee success, but incremental innovations assist in improving the use of existing product and service. Therefore, it can be said that in the technology industry, innovation did not mean radical breakthroughs instead incremental innovations assist firms in gaining competitive advantage and sustain their future growth. Apple uses a similar strategy which assists them becoming world’s top profitable and value technology enterprise (Thomke and Feinberg, 2009).
From the above observations, it can be concluded that innovation is a process of converting new ideas into reality that assist in improving the usability of existing product, service or process. Innovation is a key to business success which allows the corporation to sustain their future development. In the technology industry, corporations focus on incremental innovations rather than radical breakthroughs because it attracts more customers and sustain their future growth. The innovation is not just about big leap forwards, or radical breakthroughs instead incremental innovations assist corporations in improving their products and services that attract a large number of customers. Apple uses this strategy to improve the usability of their products and services and provide new features to customers each year. Apple incorporation is a good example which shows the importance of incremental innovation in the technology industry and its role in sustaining company’s future growth.
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