5.8.4 (HL)—Innovation

Incremental innovation makes successive improvements to an existing good, service or process for current markets. Disruptive innovation begins with a different, often simpler, cheaper or more accessible value proposition and can reshape a market as its performance and adoption grow.

Incremental innovation can improve quality, efficiency or features with lower uncertainty and use existing capabilities, but rivals may copy it and gains may be small. Disruptive innovation can create new customers or business models and weaken established advantages, but adoption, technology, timing and profitability are highly uncertain.

Identify what changed, the initial target users, the value proposition and whether the innovation improves the existing trajectory or changes who can access and value the offer. Evaluate capability, cannibalization, investment, adoption and competitor response.

Improving an existing delivery app's route suggestions is incremental. A low-cost self-service model that initially serves customers ignored by full-service providers and later improves enough to challenge them may be disruptive.

Disruptive does not simply mean dramatic, digital or successful, and a major technical invention may not disrupt a market. Innovation requires implementation and adoption, not novelty alone.