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Myth: Innovation is synonymous with disruption

The truth: Small and calculated steps lead to sustainable innovation

If you haven't shaken a single industry, have you innovated at all?

People involved in corporate innovation have in all likelihood encountered one version or another of this rhetoric. It is almost the figurehead of innovation these days.

Sure, disruptive innovation makes the headlines, shakes the enthroned market leaders a little, paves the way for a new generation of companies and all of the fad. But if every company placed the lion's share of its bets on high-risk and disruptive ventures, it would lead to massive economic collapse.

Why?

Regardless of the intentions, not all innovative companies can cause an industry or even market-wide disruption. So if all companies invested resources extensively in disruptive ventures, it would trigger economic ruin.

If an idea made waves in a market, restructured, or even dethroned one or more Fortune 500 incumbents, well and good, the investment would pay off. Should an investment fail to produce the expected results, a company could suffer irreparable losses.

Therefore, companies should ideally their "Innovations"-Distribute spending between low-risk and core initiatives, higher-risk neighboring companies, and high-risk and disruptive projects.

To break down the idea further, low-risk and core innovation initiatives should earn the lion's share of the resource, as it is about improving existing products for an enhanced customer experience.

The next large percentage of resources should go to riskier, neighboring ventures where an existing product is envisaged and applied with a new perspective. Finally, the smallest amount of resources should go into a disruptive initiative.

A disruptive undertaking has enormous return potential, but is a cause with a low probability. Therefore, depending on the industry, companies should allocate the resources so that they can work towards a breakthrough in the long term.