Innovation : Disruptive or Incremental?
Posted By Rob Millard - 0 Comments -
The weblog Innovation Tools had a posting yesterday (10 March) on a strategic innovation tool called TRIZ (pronounced "treez".) The post describes the 5-Step process that TRIZ defines for a strategic innovation roadmap and references InSourcing Innovation, a new book on the topic.
TRIZ is a Russian acronym: "Teoriya Resheniya Izobretatelskikh Zadatch" (-¢-µ-æ--Ä-?--è --Ä-µ--à-µ-?-?--è -?-?-æ-±--Ä-µ--Ç-?--Ç-µ-ª--å--Å-?-?--Ö -?-?-¥-?--á.) An approximate English translation would be "Theory of Inventive Problem Solving (TIPS.)" The concept was developed by a Soviet patent specialist, Genrich Altshuller, while working with the erstwhile Soviet navy in the 1970s and 1980s. It has been considerably expanded and refined by subsequent work in the west.
How the tool can be applied in professional service firms is a topic for another posting. What I would like to blog about is an important insight about innovation itself, that emerged from Altshuller's work.
Innovation efforts can take a great deal of investment in time, effort and money; further costs to implement new ideas that emerge. There is often a dubious likelihood of success. Is it really true that a firm has to find a source of competitive advantage that is fundamentally new, unique and unable to be replicated by its competitors, in order to succeed?
Altshuller's conclusions suggest a resounding "no." Very little innovation, it would seem, involves market-wrenching disruptive change. Though it is great to discover a source of truly disruptive innovation, and it does happen from time to time, this is a little akin to winning the lottery.
His study scrutinized over 200 000 patents (others have continued his research and that figure is now over 1.5 million,) to determine how many of them represented truly new knowledge. The result? Only 5% of them were truly new concepts. The rest were simply improvements on what already existed.
He characterized his findings into five levels:
Level 1: Apparent Solution
This is a routine problem solved by methods well understood in the field, and probably within the personal knowledge base of the innovator. A "hit rate" of 1 winner in 10 ideas is typical.
About 32% of patents fell into this category.
Level 2 : Minor Improvement
This is a minor improvement to an existing system, by methods well understood within the field, usually with some compromise and typically utilizing knowledge that would have been available in the innovator's organization. A "hit rate" of 1 winner in 100 ideas is typical.
About 45% of patents fell into this category.
Level 3 : Major Improvement
Fundamental improvements to an existing system by methods from outside the field (i.e. not known within the field) with level 2 compromises and contradictions resolved, typically using knowledge from outside the organization but from elsewhere in the same field (or profession.) A "hit rate" of 1 winner per 1000 ideas is typical.
About 18% of patents fell into this category.
Level 4 : New Concept
A new generation solution using an entirely different and new principle to drive or perform the primary functions of the system. The solution is derived more from pure science or original knowledge than from technology or extrapolation of other applied knowledge. A "hit rate" of 1 winner per 100 000 ideas is typical.
About 4% of patents fell into this category.
Level 5 : Pioneering Discovery
A rare scientific discovery or a pioneering invention involving what is essentially and entirely new system. A "hit rate" of 1 winner per 1 million ideas is typical.
About 1% of patents fell into this category.
The implications of this are profound. It suggests that up to 95% of solutions to problems have been discovered somewhere before, and that in over 75% of cases the knowledge required to find that solution exists in the innovator's own firm.
Altshuller's research does throw serious doubt on the hypothesis that firm's should be expending effort, time and money primarily on a quest for the "holy grail" of level 4 or level 5 innovations. A great deal of competitive advantage can be derived from innovation at levels 1, 2 and 3, where success is also statistically more probable. While not many ideas that emerge in business improvement in professional service firms can be patented, there would seem to be no reason to believe that a similar breakdown by level would not apply to these ideas, too.
If you would like the source references for this material, by all means email me. Comments (add below) are also always welcome.
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