Evolution or revolution?

BY PETER FRETTY | PHOTO BY ED CARREON

When it comes to innovation, sometimes it arrives in a flash, sometimes it takes years. And it's up to a company to know which method makes the most sense for its organizational culture.

Pharmaceutical development projects, for example, typically fall in the incremental innovation category. “While few scientists develop groundbreaking drugs from no prior research, most work within and react to already existing knowledge,” according to the 2005 report Pharmocoevolution: The Benefits of Incremental Innovation released by the International Policy Network, London, U.K. The innovation may at first seem dramatic, but further review reveals the steps along the way.

Mobileye NV, Amstelveen, the Netherlands, took a more radical approach—at least to start with. The company's computer vision-assisted “third eye” is designed to help drivers avoid accidents. But the company's leaders had initially been focused on vision, not automotive, applications, making the revelation somewhat surprising. “We embraced a radical approach in that we took a technology that is currently implemented mainly in simple or repetitive tasks and in controlled environments and went a completely different direction in order to solve an industry problem,” says Meny Benady, Ph.D., vice president at Mobileye Vision Technologies Ltd., the company's research and development subsidiary in Jerusalem, Israel. “Since that point, we have used incremental innovation to continuously expand the scope and application of the single camera system that put us on the map. As a result, we now have 13 applications.”

Of course, making the decision to use radical or incremental innovation means understanding what each approach offers.

Reviewing Radical

A radical approach to innovation focuses on the completely new, whether it's technology or a business model. A radical innovation by definition is creative and brings forth an entirely new deliverable.

“Sometimes you need that jolt, and it can be useful when the accepted methods have failed,” says Randy Banks, PMP, president of Riskparadigm Inc., a project management consulting firm in London, Ontario, Canada. “Radical also has a way of engendering a project strategy that results in delivering the product of the project much quicker than would have otherwise been possible.”

With a revolutionary approach, there's a clear beginning and end, says Jen L. Skrabak, PMP, senior project manager at Amgen, a biotech company in Thousand Oaks, Calif., USA. “The deltas are easy to visualize and explain, and there is a light at the end of the tunnel,” she says.

Launching a revolution usually means more danger, however. “By nature, this approach means accepting the risk associated with using something radically different, new and unproven,” says Adolfo Cruz Luthmer, development director at Isthmus, an IT firm in San José, Costa Rica. “Unfortunately, the additional costs and time required to implement the radical changes, to manage the change with the people and to test that it really works can be more than people initially anticipate.”

In addition, some businesses tend to embrace the radical approach simply to change for the sake of change. “Doing so causes the project to lose focus on the product and instead focus on the process. Many corporate cultures do not accept change well, and you may end up spending more time fighting the fight rather than getting project work done,” Mr. Banks says. “Whoever is doing this must know what they are doing. There is much greater opportunity to hurt not only the project, but also the corporation, and, depending on the size of the project, the future of the corporation. Plus, money can be wasted if the innovation is not accepted.”

Inside Incremental

Typically, embracing an incremental approach to innovation serves established business models exceptionally well, explains Robert Shelton, principal at PRTM, a management consulting firm in Mountain View, Calif., USA. He's also the co-author of Making Innovation Work: How to Manage It, Measure It, and Profit From It [Wharton School Publishing, 2005]. “These are situations where slight improvements or introductions are desirable,” he says. “The role of incremental innovation is to maintain what already exists, which is great for protecting market share or the competitive space of an existing business model. Firms taking this approach usually have an eye on improving cost or performance—essential enhancements that help with the goal of maintaining competitiveness of an existing product or service.”

fostering innovation

face time

Because the incremental approach is usually based on proven processes, products, services, technologies, models or practices, the outcome is rarely a surprise. The pace of the improvement is usually lower but the risk is too, as well as the cost and the time to change, Mr. Cruz Luthmer says.

The evolutionary approach also doesn't upset the routine, so it usually enjoys greater understanding and acceptance by team members. “However it is expensive with very long timelines, whereas by the time it is deployed, the business environment can have changed, which will make the innovation much less relevant,” Mr. Banks says.

Decision Time

When choosing which innovation projects to finance, organizations should look at their risk and reward comfort levels, says Keith Goffin, professor at Cranfield University, Bedford, U.K. “Companies need to truly understand risk and be able to break it down as it applies to their organization and the individual project,” he says. “Companies successful in this arena know how to reduce risks along the way and make hard decisions, such as killing certain projects, sooner rather than later.”

The decision on which innovations to back also depends heavily upon what is already available on the market, Mr. Goffin says. “What many companies mistakenly do is develop ideas for radical products internally. What they need to do is identify the real issues that customers face and develop appropriate products and services to address these,” he says. “Not recognizing customer issues keeps a company too heavily focused on incremental innovation where they are simply improving upon the existing product.”

Organizations also cannot afford to ignore the role organizational culture plays. “It is huge because the company's ingrained technology or market focus can ultimately impact which route a company takes,” Mr. Goffin says. “Not paying attention to where the company's interests rest can result in trying to force the team to conquer something that it is uncomfortable handling. Doing so often leads to mediocrity or failure.”

To determine if the organizational culture can support the choice, Ms. Skrabak recommends asking the following questions:

• What systems and structures are in place to support or hinder the approach?
• What's the maturity of my current processes?
• What's the organizational culture?
• Who will benefit and who won't?
• What's the timeframe?
• What's my overall objective?

“Evaluating the culture will ultimately dictate the sustainability and viability of the revolutionary versus evolutionary approach,” Ms. Skrabak says.

Perfecting the Portfolio

Portfolios of innovation are usually skewed heavily toward the incremental approach. This is, in part, because an extensively radical portfolio can create an unstable and disruptive environment.

While many companies tend to excel at one approach or the other, Mr. Shelton recommends they consciously develop the skills to succeed in both arenas. The processes inherent in the incremental approach provide a foundation that makes the radical possible. Once radical innovation is successful, it becomes the norm, and incremental innovations are required to keep it growing and profitable.

“People need to realize that both approaches are very valuable, but serve entirely different needs. The fact remains that the two approaches actually rest on each other,” he says. “Even in a company where the focus is on projects that are radical in nature, it is imperative that the firm also understands how to incrementally protect their radical product or service that is in development. Otherwise, they will introduce the radical innovation and it will be rapidly copied by competitors.”

Each method has its role to play. “Incremental provides advantages until one specific level, where the improvement starts to be lower in each cycle,” Mr. Cruz Luthmer says. “Then, the revolutionary approach provides the necessary leap that allows the company to start with another cycle of incremental improvement.”

However, Mr. Shelton cautions that incremental and radical project innovations require very different types of people, which may mean having separate teams. “There are very few folks who can succeed in both camps,” he says. “The processes that you use for radical innovation are not the same as for incremental innovation.”

Those businesses that go the revolutionary route “will require a lot of innovative people, who are very used to change,” Mr. Cruz Luthmer says. “The incremental approach requires very process-oriented individuals who are able to change without radical movements.”

Blended Brand

Getting that mix right often comes down to market demands. Embassy Suites Hotels, Nashville, Tenn., USA, hit the market with a revolutionary concept in 1984. Travelers needed space to live and breathe—and a relaxing atmosphere to do it in, so the philosophy went. The chain answered with two-room suites and an open-air two story atrium. Over the years, Embassy Suites made some incremental changes to meet both developer and traveler requirements. However, the company's growth was slowing—the Embassy model's need for large chunks of real estate and space for the atriums made it unworkable in many markets. So the company took a more radical step with its Design Option III, which features a more flexible layout that can be built on a 2.86-acre site instead of the four acres previously required.

“It is always vital for a brand to be steadily evolving and more important for revolutionary practices when the market calls for a vast change,” says Jim Holthouser, senior vice president of brand management for Embassy Suites. “In this case, travelers still need the same brand standards, the space of a two-room suite and the aesthetics of the atrium. But developers needed more cost-effective ways of building Embassy Suites properties that incorporate all of the amenities and offerings at a reduced overall cost.”

Embassy, like everyone else out there, just has to know when it's time for evolution or revolution. PM

Peter Fretty, a Whitehall, Mich., USA-based freelance writer, has contributed to more than 40 consumer and trade magazines.

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