Incremental innovation is more about improvement rather than what one thinks of as true innovation. The changes associated with incremental innovation are neither substantial nor ground-breaking. And the effect on market share is one of protection of existing share as opposed to the creation of a new product or market.
Richard Foster and Sarah Kaplan–authors of the book Creative Destruction–highlight a classic case of incremental innovation in their story of the evolution of sailing ships to steam.
In the late 1800s, sailing clipper ships still ruled the seas in the battle of transporting goods between continents. These swift sailing vessels carried cargo between the major ports of England and the United States. They were the FedEx carriers of the time, having been perfected through hundreds of years of incremental improvement.
But by 1870, ships powered by steam that had been around for nearly seventy years were challenging the leadership of the clippers. In the beginning, steamships were not all that effective (since the steam engine itself was not terribly efficient in 1820). Most of the cargo-carrying capacity of the steamship was consumed by fuel storage. By 1890, however, steam engines had improved to the point where they could overtake the cost advantage of clippers. The handsome clipper ships began losing market share to the steamships.
But the owners of the sailing vessels, and the naval architects who supported them, were not ready to relinquish control of the seas. They fought back by incrementally improving their ships. They added one more mast to the design and then increased the waterline which made these ships hold more cargo and sail even faster.
Thus continued a skirmish of technologies, steam versus sail. As more improvements were added to the clipper ship design, the steamships kept on attacking.
Undaunted, the naval architects struggled for further improvement, this time with a gaff-rigged design. The clipper ship Thomas W. Lawson was the result. The ship had more sail and waterline, which resulted in even more speed. But at this point, the incremental change in technology was reaching its natural limit.
On Friday, December 13, 1907, nearing the Scilly Islands in England, Captain Turner found he could not control the Thomas W. Lawson. With winds blowing at sixty knots, the sailing vessel ran into the rocks. Miraculously, Captain Turner survived. But the rest of the crew was lost–and so was the age of sail. Incremental innovation had run its course.
Here’s the takeaway: Incremental innovation does not result in either new markets or breakthrough products. It is, rather, symptomatic of the type of improvement that existing companies use to defend existing markets where continuity is valued above all else.