7.5 From Disruptive to Directional Innovation

Marcos Antonio de Lima Filho, PhD.

The evolution of commercial aircraft and smartphones reveals an interesting relationship between disruptive and directional innovations. When a new industry or market segment emerges, innovation tends to be less incremental, with both producers and customers constantly learning and adapting as they progress. This disruptive phase culminates with the emergence of a dominant design, prompting a shift from disruptive to incremental innovation (Abernathy & Clark, 1985). As industries reach maturity, their primary focus shifts towards cost reduction, increasing production volume and capacity (Utterback, 1994). With the maturing of a product, technological change becomes almost imperceptible (Abernathy et al., 1983).

Despite the inevitable trend of industries transitioning towards equilibrium as they mature, the prevailing paradigm of disruptive innovation often underestimates the importance of incremental innovations. This pro-disruption bias is a grave oversight, as incremental improvements are essential for transforming an initially disruptive technology into a mature and successful product or service. Hence, both disruptive and incremental forms of innovation should be regarded as complementary and equally significant for the development of industries:

Radical innovation brings new domains and new paradigms, and it creates a potential for major changes. Incremental innovation is how the value of that potential is captured. Without radical innovation, incremental innovation reaches a limit. Without incremental innovation, the potential enabled by radical change is not captured (Norman & Verganti, 2014).

Although each step of incremental evolution is modest, continual slow, steady improvements can result in rather significant changes over time (Norman, 2013, p. 279). While the differences between a new version and the one just preceding are small, the accumulation of long periods of incremental development may result in a product that is quite different from very early designs (Clark, 1980). This incremental pattern is evident in the dramatic declines in price and the improved reliability of the early Model T: From 1908 to 1926, its price fell from $1200 to $290, while the productivity of labour and capital increased markedly (Abernathy & Clark, 1985).

In recent years, smartphone evolution has become ever more incremental, with barely noticeable updates that often disappoint consumers. However, if not for these annual improvements, the potential unlocked by this disruptive technology would remain largely untapped. We would still find ourselves restricted by the constraints and inferior performance of the first generation of smartphones and mobile CPUs.

In a pattern consistent across multiple industries, incremental innovations have been instrumental in making smartphones cheaper and more accessible to a broad user base. This popularisation democratised internet access and brought digital literacy to the farthest reaches of the globe, leading to profound societal changes. Surely, such profound implications signal the need to pay serious attention to incremental innovations.

The popularisation of air travel can also be attributed to incremental innovation. The jet era was the most disruptive event in aviation history. Yet, the fuel efficiency of the first jet engines was far from optimal. The following sections discuss how this initial disruption was followed by decades of incremental improvements in engine efficiency and aircraft performance, resulting in a 79% decrease in fuel burn per passenger (Figure 7.6.1). Parallel to this, global passenger traffic (in billions) steadily increased. This correlation implies that incremental innovations may have contributed to the growth in passenger traffic by reducing operating costs and thus lowering ticket prices.

For companies, it is imperative to effectively manage the shift towards incremental innovation, as disruptive products rarely achieve their full potential upon initial introduction. These are often difficult to use, prohibitively costly, and limited in functionality. Meanwhile, incremental innovations are necessary to transform the radical idea into a form acceptable to the consumers who follow the early adopters (Norman & Verganti, 2014). Indeed, the first jet engines were so limited that they encountered resistance in commercial aviation. Conventional thinkers believed that the jet engine would consume too much fuel to be economically practical (Crouch et al., 2020). However, thanks to incremental innovations, jet-engine performance improved at a rapid pace. Turbofan jets now account for nearly all new aircraft deliveries (98%), and their efficiency continues to rise year after year.

Hence, to comprehend the essence of disruptive innovation, we must recognise that it is not a standalone phenomenon. Rather, disruption is an integrated part of a broader industrial evolutionary process, operating in concert with other transformative forces, such as directional, stabilising, and purifying innovation (Figure 7.5.1).