Traditionally, most innovation programs have focused on either incremental or disruptive innovation: Incremental innovation to achieve near-term, quick wins and disruptive innovation to pursue longer-term big bets and game-changers. In most organizations, the split in terms of the percentage of resources and investment on each area, is typically 80/20 incremental versus disruptive.
The challenge with this binary approach is that both of these pursuits have their challenges and drawbacks. Incremental innovation tends to produce mere features and functions leading to the classic innovator’s dilemma in which large industry incumbents optimize their existing cash cow product lines by adding bells and whistles to produce sustaining innovation and miss entirely new disruptive opportunities in their market for better, faster, cheaper alternatives offering a new, good enough approach for the market. This is often described as catering to customers’ current needs as opposed to their future needs. Classic examples of companies who been impacted by the innovator’s dilemma include Blockbuster (vs. Netflix), Barnes & Noble (vs. Amazon), Kodak (vs. digital photography), and so on.
Disruptive innovation, on the other hand, while immensely attractive due to the degree of innovation, is in reality a moonshot, with very few organizations having the budgets and resources to achieve it. For organizations such as those owned by Alphabet or Elon Musk, or for organizations such as DARPA or (of course) NASA, moonshots are indeed desirable and feasible, but for most organizations they are high risk with limited odds of success.
There is, however, an elusive middle ground, which is often completely over-looked. Unicorn startups tap into this middle ground because it’s far more predictable and achievable than aiming for disruptive innovation from day one or in a single leap. It can lead to disruptive innovation yet is a more certain and customer-driven pathway which is also more readily accepted by the market due to a faster and easier learning curve for end users.