Sustaining innovation

Definition

Sustaining innovation refers to the process of developing new products or improving existing ones to enhance performance in established markets. This type of innovation typically aims to meet the demands of the company's current customers, allowing businesses to maintain their competitive edge and profitability over time. It contrasts with disruptive innovation, which targets overlooked segments and introduces simpler, more affordable alternatives that can eventually disrupt established markets.

5 Must Know Facts For Your Next Test

1. Sustaining innovations are often driven by customer feedback and technological advancements, focusing on enhancing the performance of existing products.
2. Companies that excel in sustaining innovations tend to have strong research and development capabilities to continuously improve their offerings.
3. This type of innovation can lead to increased profit margins by catering to higher-end market segments, where customers are willing to pay more for enhanced features.
4. Sustaining innovation can take various forms, including product upgrades, improved service delivery, and enhanced customer experiences.
5. While sustaining innovations are vital for growth, they can lead companies to overlook emerging disruptive innovations that may threaten their market position.

Review Questions

• How do sustaining innovations differ from disruptive innovations in terms of target markets and customer needs?
  • Sustaining innovations focus on enhancing products for existing customers in established markets, aiming to improve performance and meet their evolving needs. In contrast, disruptive innovations target overlooked or less demanding customer segments with simpler, more affordable solutions. This difference is crucial as sustaining innovations seek to retain market share and profitability within existing frameworks, while disruptive innovations can ultimately redefine those frameworks by appealing to new customer bases.
• Discuss the impact of sustaining innovation on a company's competitive advantage within its industry.
  • Sustaining innovation plays a significant role in maintaining a company's competitive advantage by continuously improving its offerings and responding to customer demands. By investing in research and development, companies can enhance product features and services that meet the expectations of their existing customers. This ongoing commitment can lead to increased customer loyalty, higher profit margins, and an overall stronger position within the industry. However, it is essential for companies to balance sustaining innovation with awareness of disruptive threats that could shift market dynamics.
• Evaluate the risks associated with focusing solely on sustaining innovations at the expense of exploring disruptive innovations.
  • Focusing exclusively on sustaining innovations can create significant risks for companies as it may lead them to ignore emerging trends and disruptive technologies that challenge their market position. By prioritizing improvements in existing products, firms might miss opportunities to capture new markets or address changing consumer preferences. This lack of foresight can result in obsolescence, as companies become vulnerable to agile competitors who introduce innovative solutions that cater to unmet needs. Therefore, a balanced approach that encompasses both sustaining and disruptive innovation strategies is essential for long-term success.

Related terms

Disruptive innovation: A type of innovation that creates a new market by providing a different set of values, often targeting less demanding customers before eventually displacing established market leaders.

Incremental innovation: Small, continuous improvements made to existing products or services that enhance their performance or user experience without making drastic changes.

Value proposition: The promise of value that a product or service delivers to customers, highlighting its benefits and differentiating it from competitors.