Innovation is key to creating and maintaining a competitive advantage and it is crucial to understand what kind of innovation has the greatest impact.
Engineering Business Priorities | Increasing Innovation Capacity
Smart manufacturers understand the importance of innovation to meet market demands and make the most of increasing technology capability. But there are different types of innovation and they can have markedly different impacts on your organization.
Harvard Business Review, in a report titled “Managing Your Innovation Portfolio” identified two key types of innovation:
Incremental innovation is focused on improving existing products in a company portfolio, and was found to have the largest resource allocation with the lowest ROI.
Conversely, transformational innovation leads to the creation of radical new products and opportunities, and was found to have a relatively small resource allocation but a huge ROI.
It is not surprising that most organizations devote more resources to incremental innovation, given the challenges to innovation success:
Meeting delivery schedules
Global markets and competition
In a report commissioned by Autodesk, Tech-Clarity sought to understand how industrial equipment manufacturers could become more innovative, while meeting the demands of current projects with existing resources.
They identified four key areas that can help organizations innovate successfully:
Create a culture of innovation
Invest in the concept phase
Have a look at this infographic to see the difference in investment and returns for the different kinds of innovation, and the steps you can take to innovate more successfully.