7.3 Incremental, Directional, and Disruptive Innovations

Marcos Antonio de Lima Filho, PhD.

The previous section demonstrates the impact of directional selective pressures on animal species. An intriguing parallel to this process of natural evolution is evident in the domain of technology. This can be exemplified by the directional selection observed in the evolution of passenger aircraft and smartphones, where gradual enhancements have led to significant advancements over time.

Scholars have used various terms to describe these patterns of gradual development, including “incremental innovation”, “regular innovation”, and “conservative innovation”. Although these labels may differ slightly, they all seem to denote the same underlying phenomenon and are frequently used interchangeably. Despite the varying terminology, these labels refer to the same core concept and are often used interchangeably.

William Abernathy and James Utterback, both seminal authors in the field of innovation studies, were pioneers in delineating the nuances between incremental innovation and its more transformative counterparts, namely radical and disruptive innovations (Abernathy & Utterback, 1978). This categorisation became essential as it was later recognised that “innovation is not a unified phenomenon”. On the contrary, its impact can range broadly: “Some innovations disrupt, destroy, and render established competencies obsolete, whilst others refine and improve” (Abernathy & Clark, 1985). When compared to other more radical types of innovation, regular innovation is one that:

1. Improves/perfects established design;

2. Strengthens existing organisational structure;

3. Extends viability of existing skills;

4. Reinforces application of current materials/suppliers;

5. Extends existing capital;

6. Builds on and reinforces applicability of existing knowledge.

This conservative type “is often almost invisible, yet can have a dramatic cumulative effect on product cost and performance. Regular innovation involves change that builds on established technical and production competence and that is applied to existing markets and customers” (Abernathy & Clark, 1985). Consistent with this understanding, the data discussed in this section underscores the cumulative effect of incremental innovations over time.

Abernathy and Utterback also noted that incremental innovation is more prevalent in industries that are already well-established and mature:

The markets for such goods are well defined; the prod­uct characteristics are well understood and often stan­dardised; unit profit margins are typically low; produc­tion technology is efficient, equipment-intensive, and specialised to a particular product; and competition is primarily on the basis of price. Change is costly in such highly integrated systems because an alteration in any one attribute or process has ramifications for many others. In this environment innovation is typically incremental in nature, and it has a gradual, cumulative effect on pro­ductivity (Abernathy & Utterback, 1978).

“Major new products”, such as the ones introduced by disruptive innovations, “do not seem to be consistent with this pattern of incremental change” (Abernathy & Utterback, 1978). The authors also note that “major product change is often introduced from outside an established in­dustry and is viewed as disruptive; its source is typically the start-up of a new, small firm, invasion of markets by leading firms in other industries, or government sponsor­ship of change, either as an initial purchaser or through di­rect regulation”. In this sentence, Abernathy and Utterback presented a hypothesis that would guide future research for decades.

Following Abernathy and Utterback's steps, numerous scholars have adopted the dichotomy of incremental versus radical innovation. However, despite recognising that incremental innovation is the most pervasive type of innovation, this pattern is somewhat overlooked in academic research. The concept lacks a unified definition, which perhaps contributes to this relative neglect. Scholars have also emphasised different aspects of this innovation type:

Incremental innovations tend to refine and extend established designs in both product and process and to strengthen established market linkages (Abernathy et al., 1983).

Incremental technological improvements enhance and extend the underlying technology and thus reinforce an established technical order (Tushman & Anderson, 1986).

Incremental product innovation refers to the small changes in a product that help to improve its performance, lower its costs, and enhance its desirability, or simply result in a new model release (Norman & Verganti, 2014).

In essence, these scholars describe incremental innovation by focusing on different aspects of it, such as its impact on market linkages, established technical structures, or product designs. However, the objective of this study diverges from these conceptions. Rather than concentrating on the end product or outcome of incremental innovations, this study highlights the evolutionary process that underpins incremental innovations.

Therefore, in order to strengthen the analogy with evolutionary theory, I prefer the term “directional” over “incremental”. Directional innovation aligns with the generally accepted understanding of incremental innovations. However, while both terms may indeed be used interchangeably, the “directional” label provides a more explicit representation of the evolutionary process inherent in these advancements.