Radical Innovation: Definition, Differences, and Examples10 min read

Radical Innovation: Definition, Differences, and Examples

In an age where people’s needs and preferences rapidly evolve, businesses need to innovate to survive. Companies have to constantly enhance products, processes, models, and services to remain competitive and significant in their customers’ lives.

Innovation comes in different ways, yet there is one that is considered rare by many as only a few organizations have done this.

In this article, you will learn what radical innovation is all about. Moreover, you will read some examples that can help you understand this concept even further.

Let’s start!

What is radical innovation?

Radical innovation is a type of innovation that combines the power of technology with a new business model.

It is a concept that changes the relationship between customers and suppliers by displacing current products and services or by making new product categories.

Centralized vs Decentralized

Companies that perform radical innovation transform the industry for the better. They respond to existing problems in completely new ways. This is why radical innovation needs a lot of time and technology to implement.

It also maximizes assets and other fundamental resources of the enterprise to make products and services that displace what the market currently offers.

To implement radical change, a company has to exert effort in reinforcing a culture of innovation in the workplace.

How does it differ from other types of innovation?

Innovation comes in many forms. Some innovations focus more on groundbreaking technology, while others are on gradual improvements, disrupting markets, and sustaining market positions.

Understanding the different types of innovation can help you identify what kind of innovation your company needs to implement now, and in what ways you can best execute it.

Knowing this can help you respond to your customers better and allocate your resources accordingly.

Apart from radical innovation, the other two types of innovation are:

Disruptive innovation

Disruptive innovation involves a product, a concept, or a service that makes a new value network by penetrating an existing market or by creating a new one.

Just like radical innovation, disruptive innovation is difficult to execute because:

  • It demands new capabilities and goes beyond traditional business methods. It might take a while for new entrants to disrupt the market, so implementing it requires time and thorough study.
  • Some businesses are afraid to optimize their offerings and adjust to the competition because of their business model’s current success.
  • Disruptive innovation is risky. You would be dedicating some of your resources to build something that delivers new and alternative solutions, which can take a while for mainstream customers to get used to.
  • It involves exploring new profit centers and industries, which makes you a neophyte into the market.

Because of its ability to disrupt industries, disruptive innovation is often compared with radical innovation.

Spotify Stockholm Office

However, these two types differ in such a way that disruptive innovations can only happen if:

  • Incumbents are “defeated” by smaller enterprises with fewer resources.
  • The innovation enters the lower end of the market first, particularly a market segment that had been overlooked by established companies.
  • The innovation converted nonconsumers into consumers. Meaning, a new market among the targeted audience of the incumbents has now been made by the entrants.
  • The neophyte company is offering an alternative to the incumbents’ products and services, like functionality at a lower price.
  • The new innovation slowly dominates the market and pushes its competitors’ prices down.
  • The mainstream customers have adapted to the new innovation.

Some of the most popular disruptive products today are Airbnb and Netflix. It took a while for these innovations to happen, but they have successfully upended competitions and opened new market segments, which allowed them to generate billions annually.

Incremental or Sustaining Innovation

Incremental innovation focuses on gradually and continuously improving existing products, concepts, and services.

It enhances the previous versions of one’s offerings while injecting slight variations at the same time.

Unlike disruptive and radical innovation, incremental innovation does not create new markets, segments, and product categories.

Apple applying the principle of incremental innovation

However, incremental innovation still generates a lot of money for companies, particularly if they apply the changes and features that their customers wish to see in the future versions of their existing offerings.

A classic example of incremental innovation would be mobile phones. New versions are released every year, even if the main idea and components of mobile phones are basically the same.

In fact, some of the most sought-after phone manufacturers today only offer new phones with never-before-released colors and upgraded specs while retaining the same look, functionality, and design.

The Three Horizons of Innovation

Because radical innovation is a combination of revolutionary technology and new business models, the three horizons model of innovation is useful for businesses who like to explore new opportunities by making new business models or innovating their present ones. 

The three horizons of innovation is a framework that emphasizes innovation, change, and growth in relation to sales and time.

The core idea of this structure is that an organization can only achieve long-term growth once it starts working on three concurrent activities indicated on every horizon.

Horizon 1

Horizon 1 refers to your existing model or your current and ongoing way of handling things.

This part refers to your activities as of the moment, like the products and services that you are currently offering and profiting from.

In Horizon 1, you are working on applying gradual and continuing improvements to extend your business line (incremental or sustaining innovation).

Horizon 2

On the other hand, Horizon 2 focuses on innovating business models, changing some of its elements to tap into new customer groups and distribution channels (disruptive innovation).

This is the stage where you can begin the process of developing new offerings for existing customers.

In Horizon 2, entrepreneurs start building long-term visions for their companies. They take these thoughts in envisioning future trends and developments.

Horizon 3

Horizons 3 is where the revolution happens (radical innovation).

Because you want to stay relevant in the future, you are incorporating technological developments with your efforts on horizon 2.

You can also view the 3 horizons model as a concept map that illustrates the truth and importance of innovation:

The higher the step that you take, the longer the time that you need to execute the level of innovation associated with every horizon.

However, the higher the horizon you occupy, the higher the rewards (sales) that you may reap too.

Examples of Radical Innovation

As mentioned above, radical innovation can significantly transform the way we live and communicate. It uses the power of technology that gives companies the ability to speed up and drive economic growth.

Some of the most notable examples of radical innovation are the following:

Washing Machine

The Washing Machine is one of the most basic domestic appliances that a household uses regularly.

Historically, people used to wash their clothes on streams and rivers by hand. Yet over time, this basic chore has become time-consuming and laborious as people find themselves busy at work and other matters.

Washing a blue shirt with bare hands

Decades later, washing machines were invented, transforming the way we used to do our laundry.

From washing our clothes by hand to putting them inside the machine, the chore can now be accomplished in just one click, saving us all a lot of time than doing it manually.

Personal Computers

Personal Computers have replaced a lot of items that we use for different processes, particularly in business.

It has made our lives so much easier, especially in computing and accounting transactions or even making necessary documents.

Rows of computers in a cubicle

Technology has come a long way over the years, and our PCs prove that radical innovation changes the way we do things. We can even have our own laptops and carry our tasks with us wherever we go.

Moreover, our personal computers, when connected to the internet, allow us to conduct ideation sessions online — breaking barriers of time, place, and people.

Cloud Technology

The cloud is a virtual storage space on the internet that serves as the place where people can store files, applications, and other digital resources for safekeeping and other purposes like keeping file copies and navigating them regardless of location.

In business, cloud technology has significantly contributed to the way things are done in companies with employees from different parts of the world.

Working in a restaurant

Not only does it allow them to communicate in real-time despite being miles away — but it also helps them collaborate as well.

With cloud technology, problems can be resolved, strategies can be sharpened, and ideas can be made and suggested anytime, anywhere. Presentations can also be done without having to gather physically.

In the end, radical innovation may take time for people to be accepted because it’s something new and different to them. It takes a lot of time and technology to develop and distribute to mainstream markets.

However, when implemented strategically, it can mark the beginning of a new era. It can cause a transition from doing the normal to going beyond it.

Learning more about innovation by downloading the Simple Guide to Organize Innovation here.

Published On: September 1st, 2021Categories: Innovation strategy

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