Disruptive and incremental innovation are quickly becoming the buzz-words of the global industry. However, due to the novelty of the concepts, they are not well understood.
In practice, incremental and disruptive innovation are two opposite types of innovation. Incremental innovation is based around the idea of slow, gradual development of technology. It involves less risk and focuses on building upon the existing, already successful technologies that a company already has in its possession.
Good examples of incremental innovation in the global market are the Apple products and the smartphones in particular.
Rather than develop an entirely new technology from scratch, the company improves upon the existing designs, by slowly adding new features, which allows the company to improve its business model and retain the loyalty of its customers.
On the other end of the innovation spectrum is the disruptive innovation. This concept describes business ideas and models that by their nature radically change the market, with the added chance of wiping out the existing businesses that occupy the same niche. The most popular recent example of the disruptive model of business is the Uber Inc. which introduced a radically new way to connect drivers with paying passengers through a comfortable mobile application. The effectiveness of this mobile platform and difficulty in its regulation has made it a very dangerous competition for the taxi industry, stealing their clients and threatening to potentially drive them out of the market, unless they drastically changed their business model to compete with Uber.
The difference can also be illustrated by using the industries of the United Arab Emirates as the examples, considering that it is focusing on innovation as its main source of income in the future, past its reliance on oil.
For example, the country’s government has supported the development of apps that help the people better interact with authorities. “Smart Salik Dubai” allows the drivers to make payments for fines and tolls using their phones. This technology is based on existing concepts and ideas, and serves to improve the lives of people, but does not revolutionize the industry (Wentling 2015).
On the other hand, the government is actively supporting the development of alternative sources of energy to replace the fossil fuels. If successful in its entirety, this idea would be very disruptive for the traditional energy industry of oil and gas, and would most likely take over the market eventually, due to its beneficial nature for the environment on the one hand, which would grant it massive support from the public, and due to the inexhaustible nature of these resources.
The UAE has put a lot of focus into innovation in these past ten years, and has involved itself with every type of innovation.
It has shown remarkable network innovation in the field of education by creating the Dubai Knowledge Village and Dubai International Academic city, which are the world’s first free zones for higher education, human resource management, and professional learning. They provide the opportunity for over 400 companies and institutions to operate within this area, and give them an opportunity to take advantage of other companies’ technologies, practices, channels, and any other resource that they would be willing to share. This allows the companies and the country to maximize their potential in the education industry, and to create opportunities for more innovation (About DKP n.d.).
Product performance innovation is demonstrated brilliantly by the UAE’s Abu Dhabi Solar Challenge. While it is presented as a competition between companies designing solar powered cars, it is ultimately a massive multinational platform for the development and improvement of their products, allowing them to show off their achievements, effectiveness under real-world conditions. Naturally, the participants and winners have a chance to receive additional support and funding from the government as well as foreign stakeholders, which enables further innovation.
UAE has also achieved considerable success product system innovation, by establishing the Global Innovation Management Institute in 2009. While this non-profit organization can also be described as supporting network innovation, its major important lies in setting standards for innovation management, standards and best practices, which helps to improve interoperability, modularity and integration between companies (Global Innovation Management Institute n.d.).
While “Smart Salik Dubai” was mentioned as one example of service innovation, the Ministry of Interior app is an even better example of this type of innovation. This mobile app provides the users with an instant access broader range of services information, including transportation, fines, immigration and naturalization, as well as some others. This app smoothes the customer experience, and makes it more engaging and compelling.
Abu Dhabi City Guard is a very good example of customer engagement innovation.
This is a free mobile app that allows any residents of the city to effortlessly report incidents and file complaints directly to the government. This service elevates the quality of the local police and government services even further and greatly enhances public participation (Abu Dhabi – CityGuard n.d).
As it has been established, incremental innovation is a steady process that is the evolution of the already existing concepts. On the other hand, radical innovation aims to introduce a radically new product or service, which often leads to massive changes in the industry. In the Victorian Era, industrialization and creation of factories was an example of such radical innovation, since it changed how products were being produced, allowed mass production, and completely revamped the industry and the economy. Any improvements to the manufacture process after that were incremental innovations.
In recent years, the world has seen a number of sudden radical innovations, with such examples as the usage of mobile of applications to access services, the invention of 3D printing, which revolutionized the process of domestic and even personal manufacture, making it extremely easy and accessible. The main strengths of the disruptive innovations of these past ten years, is that they open the minds of people to new possibilities, a fact that supports Mr.Xu’s statement.
However, the majorities of the innovative projects we can observe at the moment are not radical, but rather build upon those innovations in a manner similar to how incremental innovation operates. Rather than designing entirely new ideas, the industries are now “playing” with the existing ones, and seeing how they can apply and modify them to their needs. This brings us the use of drones to deliver packages and catch fish, mobile apps to streamline delivery and car hailing, etc.
UAE showed a splendid example of this, by creating the world’s first 3D printed building. Dubai was the first city in the world to implement such a project, but it based it on existing technology, and was conceived as a case study for future improvement (WAM 2016).
4. Airbnb is a business that is built upon service innovation, and provides a highly effective mobile platform for booking accommodation and aggregating feedback about local facilities. This proposition aligned very well with the expectations of the customers, as it provided them with a much more simple, comfortable and involved way to make travel arrangements then by doing it on the phone, personally, or even on websites.
The S-Curve is a form of mathematical theory which compares the projected man-hours and costs needed to complete a project versus the actual numbers. The major benefit of the Airbnb is that it plays the role of middleman between the customers and the actual service performers, meaning that the company itself can focus on maintaining and upgrading its mobile platform, to maximize the profits. Since the expenses remain low, and the numbers of clients increase, the company has been receiving exponentially growing profits.
Many mainstream accommodation companies are beginning to catch up with the trend and are attempting to implement systems similar to the IPRs generated by Airbnb, particularly due to the aforementioned cheapness and simplicity of their implementation. In order to protect its market share, Airbnb would need to patent and trademark its peer-2-peer services, and it has already begun doing so by patenting the “Automated determination of booking availability for user sourced accommodations” (Blecharczyk et al. 2014)
About DKP n.d. Web.
Abu Dhabi – CityGuard n.d. Web.
Blecharczyk, N, Charkov, M, Weisinger, M, Newman & R, Zadeh, J 2014, Automated determination of booking availability for user sourced accommodations. Web.
Global Innovation Management Institute n.d. Web.
WAM 2016, World’s first 3D Printed building in Dubai. Web.
Wentling, E 2015, Innovation, not oil, key to future of UAE. Web.