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Sustaining Innovation
Sustaining innovation is essential for most businesses, yet something that many business owners fail to consider. People often associate innovation with disruptive innovation, which involves breakthroughs and exciting new products. However, understanding how sustaining innovation works may be critical to the financial success of your business.
What is Sustaining Innovation?
Sustaining innovation involves improving existing products to offer better value to customers instead of creating new markets or products. By developing existing products, businesses increase the sustainability of the product.
Sustaining innovation was developed by innovation expert Clayton Christensen. It involves incremental changes to continually deliver more value. It is the primary business model for a variety of industries. With this form of innovation, several leading companies continually try to outperform each other and capture a larger portion of the market by releasing newer models of existing products.
Two common examples include smartphone manufacturers and computer chip manufacturers. Apple and Samsung lead the way in the mobile phone industry. Both companies release new models of their flagship phones each year or two. The designs are not always noticeably innovative, as they tend to include minor developments compared to the previous generation of phones.
AMD and Intel are two of the leading computer chip manufacturers. These companies spend millions researching and developing ways to manufacture smaller chips with more processing power. The advances are incremental but allow both companies to maintain sustainable product lines.
Incremental Innovation vs Sustaining Innovation.
Incremental innovation and Sustaining innovation share many features. In fact, sustaining innovation is a type of incremental innovation. Incremental innovation increases the value of existing technologies, work practices, or products. Through incremental innovation, businesses aim to give customers more value within an existing market.
The business model becomes “sustaining” when it helps support an existing product. Sustaining innovation is also distinct from incremental innovation as it targets high-end customers instead of the general market.
While the lines between sustaining innovation and incremental innovation blur, both models provide an opposite approach to disruptive innovation. Sustaining/incremental innovation and disruptive innovation are the two primary types of innovation that businesses can focus on. Incremental innovation that sustains the value of an existing market tries to maintain the status quo. Disruptive innovation aims to create a new market and disrupt the existing one.
Case Examples
Looking at the history of the iPhone provides good examples of both sustaining and disruptive innovation. When Apple released the first iPhone in 2007, the company disrupted the mobile phone industry.
Before the iPhone, the leading mobile phones included small LCD screens and compact QWERTY keyboards. It was a niche market that mostly appealed to professionals. About 90% of US households still relied on landline phones.
Apple introduced something entirely new. The first-generation iPhone had a sleek design with a 3.5-inch touchscreen display. Almost all smartphone designs that followed have emulated the original iPhone. The first Android phone came out a year after the iPhone.
Over a decade later, close to 90% of US adults have a smartphone, and fewer than 40% have a landline, making the iPhone an example of disruptive innovation. Apple helped usher in a new market (smartphones) while participating in the disruption of an existing one (landline telephones).
Apple has maintained between 40% and 45% of the smartphone market through sustaining innovation. The company has released 20 different iPhones over the years. With each release, Apple finds a way to deliver more value to an existing market without disrupting it.
The incremental changes to each generation of smartphones help drive sustaining innovation through competition. Apple and other smartphone manufacturers continually attempt to outperform competitors without introducing anything drastically new.
It is further found in the fast-food market. McDonald’s disrupted the restaurant industry when Ray Kroc began opening franchises across the country. By the end of the 1950s, fast-food restaurants had become America’s favourite way to dine out. This trend has continued for over 60 years through sustaining innovation. Fast food restaurants have gradually introduced minor changes to appeal to the needs of consumers and sustain the popularity of the industry.
The automobile industry also relies on this type of innovation. The latest cars are often slightly more fuel-efficient and safer compared to previous generations. However, as with most markets, automakers face competition from potentially disruptive technologies. The introduction of electric vehicles, hybrids, and self-driving technology has already forced the automobile industry to begin expanding into new markets while attempting to sustain its core market.
Tips for Using Sustaining Innovation in Your Workplace.
Sustaining innovation relies on exceeding the expectations of consumers. Listening to customers and gathering feedback helps businesses determine the direction of their innovation. Without knowing what customers want, companies run the risk of introducing features that fail to maintain interest in a product or service.
Use all available channels to obtain feedback from customers. Companies often collate customer comments across social media platforms. Surveys and customer service inquiries also provide access to learn more about the wants and needs of customers.
Sentiment monitoring is also frequently used for sustaining innovation. With sentiment monitoring, businesses analyze public reactions to new advertisements and product launches. Combining and analyzing customer input from multiple sources paints a fuller picture of what customers hope to get out of a product or service.
Furthermore, it requires businesses to remain aware of developments within their industry. Businesses should pay attention to the latest features and updates offered by the competition—monitor public reaction to releases from competitors to learn from their successes and failures. Managers, board members, and other executives may use this data to inform the research and development stage of a product’s life cycle.
Conclusion
Sustaining innovation is not a radical business concept, as most businesses depend on it for continued profits in established markets. Finding ways to sustain a product or market allows businesses to retain and grow their customer base.
Supporting sustaining innovation requires businesses to listen to customers and address their biggest concerns or deliver more value. It offers a wider profit margin compared to disruptive innovation, as it relies on existing technologies, processes, and products.
While disruptive innovation may be wise as part of a long-term strategy, you should focus on sustaining innovation to sustain your business.