Incremental innovation: A case study analysis

Abstract

By its nature innovation suggests that unknown and potentially high risk is incurred. The perils of innovation have been well established, yet the pressures to innovate and seek new solutions to business problems do not diminish. Within the knowledge economy there has been a large amount of conceptual work to develop, for example, sophisticated models of customer relationship management. As with other managerially orientated initiatives such as business process re-engineering and total quality management, however, the process of adoption and subsequent business benefits are not consistently apparent to managers. The application of new management thinking and the adoption of innovative techniques are subject to significant risk of failure, with consequent effects on a business already under pressure to improve performance. This paper considers a traditional, family-orientated firm that has prospered for many years. Business pressures are forcing the company to consider ways in which profitability can be maintained and improved. The actions of the company are considered against two conceptual frameworks. First, the empirically-derived understanding of marketing practice developed by the Contemporary Marketing Practice group, secondly the conceptual approach to the development of database management practice proposed by Shaw and Stone. The innovation involved the introduction of a database marketing activity within the organisation. The case study demonstrates how the company develops incrementally from a traditional transactional approach to marketing, and adopts database marketing as a means to improve performance. This effectively represents a product being developed and internally sold by the marketing department of the organisation to the rest of the company. The success of this process is considered against criteria for product development proposed by Poolton and Barclay. The paper concludes by noting that adopting an incremental approach can reduce the risks associated with innovation. This is consistent with the frameworks discussed. This may, however, lead to suboptimisation of the potential returns, but may still be consistent with the objectives of the management team.