No one doubts that you need to be innovative. In today’s rapidly changing world, innovation is the engine of progress and growth. Innovation is to be or not to be. Two concepts have emerged in the digital age: edge innovation and quantum innovation. The question is, do we know what innovation to use and when? Which one should a Start-Up use versus a company that has been on the market for many years? Which innovation to use in times of prosperity versus times of crisis? What are the advantages and limitations of each? When is it time for ‘kaizen’ versus ‘kaikaku’?
It is also called incremental innovation. In practice, this means improving existing solutions, products, services, processes, operating models. Especially if these improvements are as close to the end user as possible. Edge innovation is another, albeit improved, version of the same thing.
One of the top examples of edge innovation is the reduction of customer wait times:
Less risk
Improving an existing solution takes less risk. We already know a lot. About the product, the service, the customer. Even if the edge innovation fails, we are left with an existing proven solution.
Rapid deployment
Edge innovations do not require long development time, numerous tests and validations.
Iterability
It is practically possible to surprise the recipient with one edge innovation after another. A car company can constantly change and improve something in a well-selling brand. This year it will release a car with a better sound system. In another with an improved engine. Still in the next one with a better lighting system.
Edge innovation preserves status quo
Edge innovation does not go beyond the mainstream. It improves what is already in place. Applying edge innovation is akin to improving your driving, but still in the same gear. Yes, we can improve acceleration, braking, cornering. But when you leave the city and find yourself on the highway, you simply have to shift into a higher gear. Or when you leave flat terrain and enter mountainous areas you will often need to shift to a lower gear.
Playing up a competitor’s use of quantum innovation, radical
If a competitor brings a solution to market, ours, even one that has been constantly polished, will simply be taken out of the game. Video rental companies have been refining their offerings and processes at the edges, while the offerings of film platforms have virtually wiped them out of the market at a moment’s notice.
The Scalability Challenge
Edge innovation will sooner or later face a wall of scale challenges. Many traditional training companies focusing exclusively on the classroom training model are unable to offer their service to a radically larger number of willing participants, scattered all over the world, at different times, while guaranteeing the same proven trainers.
This is otherwise a radical innovation. This is to get out of the current market game and build a whole new kind of competition. A good example of quantum innovation is the invention of the atom. It radically changed military, energy, medical systems. Quantum innovations are building empires.
It’s hard to find a prominent business that hasn’t innovated quantum at some point. Typically, quantum innovations are born out of a sense of discomfort or even crisis. Toyota’s hegemony in the hybrid car market was born out of the global fuel crisis in 2008. Toyota’s Global Vision 2020, developed at the time, gave rise to the search for highly fuel-efficient solutions.
Fresh effect
Quantum innovation surprises, radically attracts attention, triggers the need to try. It is like changing gears while driving. Often referred to as “running forward.”
Radical advantage in the market
The company that first introduces a successful quantum innovation becomes perceived as a leader and long “cuts coupons” because of it. Besides, by taking the beachhead first, it has time to polish the radical solution through numerous edge innovations.
High risk
You risk a lot by introducing a radical innovation. You risk the money you invest. Such an investment does not necessarily pay off. You’re risking your brand, because a failed innovation can stick you with the “loser” patch.
Access to resources
Quantum innovations require resources: money, technology, personnel. We may have an excellent idea for radical change, but we may not have the resources to implement it.
Startups should always start with quantum innovation
All well-known companies started with quantum innovation. Nike started by producing one model of running shoes made with a waffle iron. Today it is a tycoon earning 24 billion a year. Johnson Controls, Inc. struck out when the company’s founder invented the thermostat in 1883. Campbell’s Soup would still be a niche company producing some kind of canned food today if an employee hadn’t invented a commercial way to thicken soup.
Implement quantum innovation, then, when things are going well
Entrepreneurs like to avoid risk, and thus avoid quantum innovation. They have been occupying the current business model for too long. When a crisis comes, and a crisis always comes, or stronger competition emerges, they don’t have the time, idea and resources for quantum innovation. Market leaders are not waiting for trends to change. They anticipate changes in trends and create radical innovations when they are comfortable making mistakes.
You are successively decreasing your main indicators (margin, market share, etc.).
At BASF, all key market indicators have been declining for the past 10 years. The share price has halved over these 10 years. The group’s sales recently declined by almost a quarter and gross profit by almost 60%. The company had profits of €7.2 billion in 2013 and almost twice as less today. The company’s management can’t come up with any innovative solution. Only cost-cutting. Laying off people and closing factories. There is no innovation in this.
Intense competition is emerging
Nokia slept through Apple’s emergence of innovation. As the iPod, iPhone, iPad conquered the market, Nokia’s innovations, belated and misguided, were of little use. Cost-cutting hasn’t helped either.
Departure of good employees
In Lean, there are said to be 7 process wastes and one human waste: failure to use the innovative potential of employees. If the best employees are not given a chance to demonstrate their creativity, they will start to get bored. And they will leave. When there is a need to quickly launch a quantum innovation, you won’t have anyone to carry it out with.
Success in the market is ensured by using both types of innovation. At the right moments. Many Lean experts rave about “kaizen.” While there is also “kaikaku” in Lean. Empirical observations over decades prove that process optimization works 50% of the time and process re-engineering 50% of the time.
You can’t drive in one gear all the time, but you also can’t change gears every second. Especially prematurely.
