Innovation incremental/substantial/breakthrough

A rounded innovation project portfolio should also be distributed according to degree of import (incremental, substantial, breakthrough). Obviously, the magnitude of investment, risk, and potential impact on profit increases as you move up the chain from incremental to breakthrough innovation. 

The extent to which you can complete the innovation financial management documents early in the project depends on the level of innovation you hope to achieve. During incremental innovation, your initial ratio of knowledge to assumptions (Exhibit 11.1) will be higher than for substantial or breakthrough innovation. In either case, you should update the relevant financial documents, as well as the Project Charter, as you uncover new data throughout the project. 

While it s difficult to firmly establish what constitutes incremental versus substantial versus breakthrough innovation, each company can define these terms for themselves. The chemical division of Royal Dutch Shell, for instance, said at one time it needed to generate 100 million or more in revenue for an innovation to be classified as a breakthrough. Whatever the criteria, every company needs to constantly populate and refresh its innovation project pipeline. 

Exhibit 1.2 shows the relative proportions of a typical innovation portfolio. Usually you will have more product, process, and service innovations— and fewer business model innovations. As well, most organizations aim for more incremental and substantial innovations—and fewer breakthrough innovations. 

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