Evolutionary and Revolutionary Innovation

Triggered by a couple of recent discussions, I’ve been pondering for a while now over the question how evolution relates to revolution when it comes to innovation. In the following, I’ll try to develop my view on this. Let’s define  evolution as continuous and incremental innovations of a firm’s existing business. Whereas revolution can be described as radical and discontinuous leaps to completely novel offerings, opening up new business and growth trajectories. Jeff Stibel writes:

Evolutionary innovators ask questions based on the limitations of existing solutions; revolutionary innovators ask questions no one else has thought of. This sentiment was eloquently captured by Robert Kennedy when he paraphrased a quote by George Bernard Shaw: “Some people see things as they are and say why? I dream things that never were and say why not.

I’ve noticed time and again that this issue often leads to either-or positions. It can be argued that evolutionary innovators can be highly successful with limited risk – in large part,  innovation returns come from evolution. Moreover, evolution accounts for the majority of innovation activities in most firms. The problem: evolutionary innovation only optimizes and exploits existing businesses and prolongs their trajectories. Revolutionary innovation, in turn, explores new-to-the-world opportunities and creates new business potential. Both types of innovation require dedicated conditions, capabilities and mindsets in order to thrive. Whereas evolution strongly depends on customer insght capabilites, revolution is mainly fed by visionary foresight. Revolutionary innovation is closely connected with high uncertainty as it addresses a future that doesn’t exist yet, but is going to emerge through the innovation itself. The concept of customer orientation can be considered twofold:

• Evolutionary innovation focuses on orientation TOWARDS today’s customers

• Revolutionary innovation focuses on orientation OF tomorrow’s customers

Basically, firms need both, revolutions and evolutions in order to operate sustainable and profitable on the long term. At some point in time it becomes mandatory for every organization to operate “ambidextrously“. Those organizations are at risk of failing because innovations might be driven in the wrong system. Consequence: the existing business dies, the novel idea dies, or both. Organizational and individual capabilities to integrate opposing innovation systems prove to be increasingly crucial. Grant McCracken proposes, every company should build a second corporation:

The first corporation exists to win. It exists to find, extract, and capture available value. Leave this just as it is. But let’s acknowledge that this first corporation exposes us to risk. After all, it is designed to work with the world as it is. So it must be out of alignment with the worlds that may be. It make us a prisoner of the moment. The second corporation is looking for those worlds that may be. It’s task is not to win, but survive.

Source: D. Norman, R. Verganti: Incremental and Radical Innovation – Design Research versus Technology and Meaning Change (2012)

According to Don Norman and Roberto Verganti, the complementary relation of incremental innovation (within a given frame of solutions) and radical innovation (change of frame) can be depicted as hill-climbing paradigm (see figure). They write:

Although the hill-climbing procedure guarantees continual improvement with eventual termination at the peak of the hill, it has a well-known limit: there is no way to know whether there might be even higher hills in some other part of the design space. Hill-climbing methods get trapped in local maxima. Incremental innovation attempts to reach the highest point on the current hill. Radical innovation seeks the highest hill. (…) Without radical innovation, incremental innovation reaches a limit. Without incremental innovation, the potential enabled by radical change is not captured.

“Revolutionary ideas rely on evolution to survive”, says Rieva Lesonsky in a great post on that issue. This important interplay also becomes obvious upon considering the innovation adoption cycle, as discussed by Greg Satell. He writes:

When an early innovation comes to market, there will undoubtedly be a small amount of people who are excited about it. After all, it can do things nothing else has been able to do before. That’s cool and the “cool crowd” gets it immediately. They are enchanted by their new toy and start advocating it to friends. Adoption increases. There is, however, a problem. The new product doesn’t work very well, it’s hard to use and it’s expensive as many disruptive innovations tend to be. Many people can’t see the point in shelling out big money to buy a product that confuses them, makes them feel stupid and the final product experience doesn’t seem worth the effort. That’s when a change in the basis of competition happens. Success begins to become less a matter of features and functions and depends more on the interaction with the user. In other words, less on engineering (in the classical sense of the word) and more on design.

Source: G. A. Moore – Inside the Tornado: Marketing Strategies from Silicon Valley’s Cutting Edge (1995)

The point is: at the outset, radical innovation attracts early adopters due to its novelty. In order to cross the chasm and capture the mass market, the innovation needs to get optimized in terms of customer needs and user experience. That’s accomplished through steady incremental steps, typically leveraging insights gained by employing customer-centered methodologies. Drawing on the model of Norman and Verganti above, launching a revolution is like leaping to a new hill. Eventually succeeding in the marketplace, however, requires climbing up the hill to the peak through evolutionary progress.  “Breakthroughs don’t pay“, summarizes James Gardner the fact that research suggests: a first-mover advantage doesn’t seem to exist. Therefore, innovators don’t necessarily need to be first-to-market, but first-to-scale.

Another take comes from Jeff Stibel:

While both types of innovation play a vital role in the developmental ecosystem of technology, industry and business, it is the non-linear or revolutionary innovations that make the most significant advances. These are the ones that make the real difference. The really huge achievements in technology and the world at large are the result of visionary activists who imagine and then build something none of us had previously thought possible. (…) Reasonable people can debate whether a particular innovation belongs in the first category or the second. What is not debatable is that while both play a role in the ecology of innovation, it is the truly revolutionary innovations that make all subsequent incremental improvements possible.

Takeaway

Sustainable innovation isn’t about either evolution or revolution – it’s about both/and. Organizations are required to develop a “complementary innovation system” by integrating opposing approaches, capabilities and mindsets.

• Evolution tends to optimize the world as is. Revolution aims at creating the world as it could be.

• Evolution needs revolution in order to explore further potential to be tapped.

• Revolution needs evolution in order to survive and thrive.