Incremental and Radical Profits

It is not a novelty the fact that radical innovations generate more returns than incremental ones. Just to have an idea of the numbers there is a study from the INSEAD finding that 86% of all innovations are incremental, but they are responsible for generating only 30% of profits on the market. The large pie, over 60% of the profits, comes from the radical innovations, which account for only 14% of the total innovations.

You can read more about this in the article “Expand Your Innovation Horizons” by Richard Watson. In his own words: “part of the problem is that most companies put most of their innovation effort into what I’d call horizon-one type innovations. These are low-risk innovations that aim to incrementally extend the existing business.”

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