I have seen several research studies over the past couple of months about the decline of new-to-world and new-to-market products with a corresponding increase in incremental product improvements, product line extensions, and packaging changes. That begs the question – what should we consider as innovation?

Is new packaging that may use fewer resources or is easier to use an innovation for the products that use it, or is this just another case of old wine in new bottles? Is a new flavor or different color really innovative? Are product line extensions innovative when they mostly cannibalize revenue from existing product lines?

Some commentaries bemoan this shift of innovation focus as negative – that companies have lost their mojo to be truly innovative in bringing totally new products to market. Other commentaries support the need for a strong focus on continuous or sustaining innovation programs to create value by evolving existing products to maintain a competitive edge. Disruptive technology or innovation is broadly viewed as the pinnacle of innovation that companies should aspire to achieve.

But does this academic distinction between what is considered real innovation versus renovation really matter? Surely what matters most is the business results reflected in sustainable revenue and profit growth. Does sustainable above-average growth and profitability necessarily depend on disruptive or new-to-world or new-to-market innovations?

While these research studies show the results of the type of innovation investments being made in aggregate, data for the related business results are usually lacking. Companies are making decisions where and how to invest in innovation in a balanced and measured approach – you cannot keep placing huge bets on high risk disruptive or discontinuous innovation, you have make safer bets on sustainable and continuous innovation too.

In my opinion Apple had one big new-to-market innovation in the first iPhone – it was not new-to-world – I already had an HTC Windows Smartphone at the time, but obviously Apple figured out how to do it better and make it more usable and appealing. But since then, I would argue it has all been incremental and continuous innovation – nothing radically new. Even the iPad, while opening up a new category others tried and failed at doing, is largely an extension of what was previously introduced and developed with the iPad. Regardless of whether you agree with this opinion, the strategy has paid off handsomely for Apple.

It is not a matter whether you are innovating or renovating – what really matters is that you have a balanced approach with judicious risk management that produces the right business results for sustained above-average growth and profitability.

How do you distinguish and plan different types of innovation or renovation and determine whether the outcomes meet your strategic objectives?

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