Innovation: Increment or Transform?.In the past decade we've seen entire industries face huge transformations, as the digital economy and behavioural change forces entrepreneurs and innovators ask the question, "How Can We Transform Entire Industries?." One of the best ways to look at the possibilities of transformation is to ask yourself, what is a book? As first glance is appears to be a fairly simplistic, straight-forward question. Historical norms would suggest everyone knows what a book is. Or do they? Over the centuries, books were made out of paper. A fusion of paper and ink. While production methods evolved, they remained based on the same idea of producing a physical object for distribution. The creation of the cassette tape gave birth to audiobooks, as millions listened to Tony Robbins on their walkman or daily commute. Then came eBooks, quite popular first as PDF style documents or readers like Amazon's Kindle. The book industry is one of the best ways to show the variations in levels of innovations. In its simplest forms, there are three levels of innovation that we see. To date, many incumbents chase transformative levels of innovation, but only execute the strategy, tools, and support for lower-level, incremental innovations. The three levels are:
- Incremental Innovation. This consists of small, yet meaningful improvements in your products, services, or business increments tend to be the "new and improved" innovations that we frequently see in the market. Based on an existing baseline, these increments tend to be; all-natural flavour improved packaging, bigger or smaller size, faster or slower functioning, reductions in complexity or cost, heavier or lighter weight. By pinning improvements to a something establish, an innovation can see stronger acceptance rates, prolong the life of the product line, or optimise the profitability. Think Nike's latest runners, Microsoft's updates to MS Office, or McDonald's Double Cheeseburger.
- Breakthrough Innovation. At times, innovators can create large leaps forward, beyond the 'new & improved' to change an entire market. The breakthrough tends to give the inventing organisation a market leading position until competitors can catch up. One of the most famous breakthrough innovations of the recent decade is Amazon's Book store, which changed the distribution model of physical books. This model has since been copied, but it created a market leading position.
- Transformational Innovation. The deepest form of innovation in which has impact beyond a single market. Transformations tend to change the ecosystem, how we live, how we behave, or create an entirely new ecosystem. Transformative leaps forward usually result in the redundancy of an incumbent. Which means leaps of this size rarely come from an incumbent player, as they avoid the inherit legacy of business models, infrastructure and markets. While transformative innovations are rare, they often have large impacts, and give birth to entirely new industries. While Amazon's Book store was a breakthrough the transformation came when Amazon launch the Kindle, completely remodelling our thoughts on what a book is. They would have us believe that a book is its content, the physicality of a paper book is redundant.