An Analysis of Incremental Innovation in the Automotive Industry

This essay examines the critical role of incremental innovation within the automotive industry. It begins by defining innovation and contrasts the common perception of 'eureka' moments and radical breakthroughs with the often-overlooked significance of incremental changes. The essay delves into the four types of innovation—incremental, modular, architectural, and radical—and argues for the importance of incremental improvements in a mature industry like automobiles. Using examples from the sector, the essay highlights how incremental innovation, such as improvements to existing features, can lead to increased productivity, enhanced competitiveness, and sustained growth with lower financial risk compared to radical innovation. The essay underscores how companies like BMW, which focus on structured incremental innovation, may achieve greater profitability than those prioritizing potentially high-risk radical innovations, such as Tesla. The analysis emphasizes the benefits of incremental innovation in enhancing efficiency, agility, and product life cycles, and how it fosters economic growth and addresses industry challenges. The conclusion highlights the significance of incremental innovation in driving commercial success and sustainability within the automotive landscape.

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Innovation 1
Innovation is about big leaps forward, ‘eureka’ moments and radical breakthroughs – or is it
not? Using examples from a sector of your choice make a case for the importance of incremental
innovation.
The objective of this essay is to enlighten the reader regarding the details about the importance of
innovation and its impact on the business environment. Innovation refers to the development of
new and positive idea in the business environment. The process of transformation and
organization of resources is such a way that revolutionary change occur in the business
environment is called innovation. Innovation process involves the use of technology in the
business environment to produce something new and different that can help the business to
achieve its objective in the market. The innovation process involves translating the idea or
invention into goods and services that will create value for the customers in the business
environment. Yes, it should be noted that innovation is about big leaps forward that are eureka
moments and radical breakthroughs. Innovation helps the world in growing, proceeding forward
as without innovation people would be able to perform basic actions on a regular, and the world
would not gain the opportunity to grow and welcome new aspects in life. The process of
innovation helps the world in bringing new technologies in the environment attaining more
profitability as well (Garcia 2015).
Further, it should be noted that creativity and innovation has not be adopted easily in the
business environment. People focusing innovation have faced several consequences in the
environment, finally after all the struggle they have been able to use it attain success in the
environment. Considering the case of automobile industry, it should be noted that the automobile
innovation segment appears because of the breakthrough of innovation in the industry.
Incremental innovation refers to a series of basic improvements and upgrades made by the
companies in the existing products or services. The changes present in the environment takes
place slowly and gradually (Wagner 2017). Further, it should be noted that there are four types of
innovation in the environment that are incremental, modular, architectural and radical
innovation. Incremental innovation refers to the process of innovation that changes and improves
the existing structure or process of the product, service or company by improve the components.
This type of innovation refers to the innovative change that builds the expertise of the business
using technology within the established structure.

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This type of innovation does not innovates or develops new technology changes in the business
instead it alters the earlier and non-function segments and rectify them. Incremental innovation
involves series of small improvements in a defined product or product line that helps in
improving the position of the product and attaining competitive advantage as well. Secondly,
radical innovation refers to the innovation refers to the innovation that brings out a complete new
design of the product in the business environment. This type of innovation ideally makes use of
new components and integrates them to produce a new product in the business environment. This
new product is not an upgraded version of older product; instead, it is a product having
differential design and features as well (Guisado-González, Vila-Alonso, and Guisado-Tato
2016).
Further, modular innovation refers to the innovation that involves production using a completely
new design but similarity with one significant component. Under this process, the functions of
the innovative product remain similar like radio was converted into online music apps and
websites like spotify etc. Lastly, architectural innovation refers to the innovation that
reconfigures the established system to link together components in a new and differential way.
Under this type of innovation, the functions of the innovation significantly changes. Products
converted according to this type of innovation are improved components but are not essential for
living (Kahn 2018). Considering the given case of innovation as a breakthrough or radical, it
should be noted that there are four types of innovation and every innovation is different in its
own way. Thus, it cannot be said that innovation always needs to be breakthrough only (Maslach
2016). Considering the example of automobile industry, it should be noted that this industry
faces all four types of innovation in the business environment. The automotive industry is global
and a capital intensive industry that involves the vertical integration of economies of scale. The
industry has already reached its maturity position in the market, so it is believed that the
incremental innovation helps the business in much better ways than the radical innovation as
incremental innovation increases productivity with less expenditure whereas on the other hand
radical innovation involves huge cost and a high risk of success (Elverum, and Welo 2015).
In automobile industry, the companies like Tesla Motors, Toyota etc. allocate special funds to
the research and development department of the company, so it can be understood that the
companies continuously reach for incremental innovation in the business environment. This type

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of innovation is slow and continuous as it focus on continuous modification of the products of
the company. Whereas, on the other hand, radical innovation focuses on changing the face of
product or service present in the automobile industry like innovation of electronic cars was a
radical innovation but innovation of safer driving with airbags was incremental innovation.
Further, it should be noted that the competency of the companies present the automotive industry
increases with the increment in the agility and efficiency of the system. The companies present in
the automotive industry works under the continuous pressure of making the structure more agile
and flexible for growth (Sheng, and Chien 2016). Thus, it should be noted that the company like
BMW make higher profit than Tesla because BMW focuses on incremental innovation that is
regular and structured while Tesla focuses on radical innovation that is unknown and
breakthrough. Incremental innovation in the automotive industry helps in better integration of the
process and technology in the business that provide better advantage to the companies in the
environment. In recent years, it has become necessary for the automotive organizations to make
use of innovation so as to survive in the industry. Structural changes occurring in the industry is
making the survival of companies difficult and reducing the product life cycle as well (Sumo, et.
al., 2016).
Thus, it was found that incremental innovation is that one source that keeps the automotive
companies moving forward. There is 97% of incremental innovation used by the company while
only 3% of radical innovation used by them to raise their level of profits. The process of
incremental innovation is directly linked with the sustainability aspect in the business
environment and all organizations works to attain a sustainable position in the environment. This
type of innovation does not provide any drastic changes to the business, but they focus on slow
and gradual process to condition the structure of the company (Vaz, Rauen, and Lezana 2017).
However, whenever innovation is explained in the environment, it is often related to eureka
moments with big sparks in it. But the fact is that the role of innovation in driving the
commercial innovation is diverse. Incremental innovation is basically nothing like eureka
moment instead it is the opposite of that but still is do wonders for the companies. This type of
innovation has been at core progression of many industrial products including the automobile
industry. The automotive industry is smoothly working with making use of eureka moment or
major transformation in the environment. The state in which the automotive industry is present

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providing them benefits and the companies do not feel innovating any breakthrough technology
to increase the satisfaction of the customers (Forés, and Camisón 2016). Series of incremental
innovation is currently changing the face of the automotive industry. Nowadays, the innovation
process is identified by the companies to foster economic growth and address the challenges in
the environment. The use of incremental innovation in the business has started to rise that has
also increased the level of sustainability for the companies. The radical innovation on one hand
works by accumulating the existing technologies while the incremental innovation on the other
hand improves and upgrade the existing structure of the company. The incremental innovation
helps the business in rising above the competition and expenses and improves the quality of
functioning of the company (Bouncken, et. al., 2018).
The pace of innovation has become extremely high today and the level of competition in the
automotive industry has become intense due to which companies are facing difficulty increase
the market share every day. Innovator and entrepreneurs often think to work on such
breakthrough innovation and technology that could help them to attract all eyes in the
environment and significantly innovate the product and services as well. They believe that the
radical innovation can help them to eliminate high degree of competition in the environment. In
fact, in business environment consistency is what matters the most (Coccia 2017). Companies
innovating the business using radical innovation are remembered for some time but the
companies using incremental innovation move slowly and reach on top. They do not perform any
action that can either make or break the business structure of the company; instead, they perform
all such actions that can help the business in moving only in forward direction. Thus, it can be
said that it is wrong to judge radical innovation as the innovation that plays the lead role in
eliminating competition and incremental innovation can do that for the business (Souto 2015).
Comparatively, radical innovation incurs huge cost in adopting new technology and change in
the business environment. Often the radical innovation is opposed by the employees of the
company because they not have faith in the process that it will provide benefit to the company or
not. However, incremental innovation on the other hand is also a kind of innovation but it does
not require heavy cost to introduce such innovation in the environment. Secondly, as this type of
innovation is already present in the internal structure of the company so the employees also do
not resist to implement changes in the environment. There are several benefits that incremental

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innovation provide to the companies, thus it is should be noted that it is not important for the
organizations to get their eureka moments in order to grow and survive. Incremental innovation
responds in much better ways that radical innovation (Wells 2015).
With the use of radical innovation, the companies always face the threat of failure and as the
expenses incurred are so the threat becomes more treacherous as it can ruin the position at which
the company is currently present. Whereas on the other hand, talking about the incremental
innovation, it should be noted that less expenditure is involved in the process and the innovation
is not immensely technical or new that subsequently reduces the risk of failure. More failures
have been conducted in the environment using radical innovation as compared to incremental
innovation in the business environment (Sick, et. al., 2016).
Thus, it should be noted that the fact is clear that incremental innovation provide better benefits
to the companies in the business. The companies do not always need breakthrough innovation to
fight against competition or any other issues in the business environment. Every company
present in the business environment cannot always perform radical innovation in the business
environment on a regular basis (Berggren 2019). As this type of innovation require generation of
new concept or idea, huge investment and time for its success. Thus, it is difficult for companies
to make use of this type of innovation on a consistent basis. However, the incremental innovation
is a differential type of innovation that can be significantly used by companies on a regular basis
to improve their current position and grow. Thus, it should be noted that the above mentioned
essay highlights the importance of incremental innovation in the business environment using the
case of automotive industry.

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