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Incremental vs. disruptive innovation: An IT resolution for 2017

Editor's note: Disrupt or be disrupted is the new reality for just about every industry. In this CIO Minute video, SearchCIO columnist Joseph Flahiff talks about incremental vs. disruptive innovation and why it's important now for businesses to focus on the latter. To lay the groundwork for coming up with the kind of disruptive ideas that lead to new business models, Flahiff suggests organizations dedicate a percentage of their workforce to "skunkworks" projects. Here is a transcript of his remarks that has been edited for clarity.

There is no such thing as a market that is not available for disruption today.

I'd like to talk to you today about business strategy and the different types of innovation that are happening in the market today.

There is no such thing as a market that is not available for disruption today. There are a couple of kids in a garage somewhere working on a way to put your business out of business -- not by taking your customers, but by completely changing the way your market operates. So, you need to be as aggressive as those kids in the garage.

Typically, what I see in a lot of organizations is innovation -- they are striving for innovation -- but what we find is they're striving for incremental innovation vs. disruptive innovation. And, it is really hard to have those leaps of innovation that those kids in the garage are coming up with.

An idea for you is to take some percentage of your organization -- I think, at least, 10% of your organization -- and this cohort should be dedicated to a skunkworks type of operation. The sole purpose of this 10% of your organization is to put the rest of your organization out of business. Then, you are -- every day -- reinventing yourself to come up with disruptions to the way your organization is operating right now.

You can be ahead of the disrupters that are disrupting.

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How do you define incremental vs. disruptive innovation?
They are loose definitions here. Incremental is innovation that builds on the existing; platforms, systems, or technologies.
Disruptive innovation alters those foundational elements. Introducing a new; platform, system, or technology. Thus changing the game. Think Taxis and Uber. Both address the transportation of individuals and small groups, but Uber introduced a new platform (or system depending on how you think about it.).  Does that make sense? Thanks for the question. 

I agree that a dedicated team is needed for identifying disruptive innovation else enterprises can only achieve incremental innovation and the prime reason being lack of focus

How have you experienced that? 

While delivering your day to day responsibilities, every individual dwells on bringing in a change in his/her way of working particularly in a service industry and it results in small service improvements. A dedicated team can focus on such incremental changes and evaluate if it is possible to implement it across multiple varied projects which will result in either major process improvements or may have positive financial impact

I understand the rhetoric in this piece, but we also need to keep our feet on the ground.  Most companies do not make 10% returns - so take 10% and devoting it to skunk works would eliminate all profit. 

The alternative is to use tools like the business model canvas and the operating model canvas to help layout radical/disruptive alternatives.  Then look to see if any students in garages are trialing any of the alternatives.  Then decide whether to sponsor them or complete.   The operating model canvas is especially helpful here - see book of this title due out March.