RESEARCH BRIEF: Incremental innovation and continuous improvement: Are they related?

by Johanna Madrigal

February 15, 2011. Dean and Bowen (1994) suggest that continuous improvement (CI) has been one of the largest advances in business management; actually there are few businesses, especially in the manufacturing sector that can ignore CI as a working philosophy; in the same situation we can find innovation which is also receiving a lot of attention as a tool for sustainable growth and competitive advantage (Tushman and Nadler, 1986); but are they related?

There are authors who have challenged if both approaches in business management can be found in the same organization due to the difference in their nature; for example, Maguire and Hagen (1999) argue that CI is not compatible with innovation, since CI is developed for managing quality meanwhile innovation is required to break all the standards to come with something new. As Prajogo and Sohal (2003) states, there is a concern about organizations having to choose between quality and innovation since being successful at both is not reachable.

However, there are cases in the literature showing the positive link between CI and Innovation. McAdam, Armstron and Kelly (1998),  Flynn (1994) and Prajogo and Sohal (2003) performed studies with results pointing out that a culture based on a strong notion of quality and continuous improvement brings the organizational support required to develop incremental innovation in products and processes. These research efforts showed that the relationship between CI and innovation is a causal relationship, where incremental innovation is the result of the introduction of continuous improvement. Both approaches are focused in meeting customer needs, and since CI encourages small but constant changes in current products, processes and working methods its use can lead firms to become innovative by taking these small changes as an approach to innovation, more specifically, incremental innovation. Table 1 shows a summary of various authors and their findings about the relationship among CI and innovation.

Table 1. Relationship between CI and Innovation

Relationship CI-Innovation Author
Both approaches search to solve customer needs Terziovski,  (2002), Imai (1986), Monden (1983), and Womack, Jones and Roos (1991)
CI is permanently looking for ways to improve current process and products, and these improvements can lead to incremental innovation
Successfully implemented CI processes bring a culture supported by managers who believe in change adoption, risk taking and foster associates’ contributions to solve current needs. This culture is also required to develop an innovative firm
The use of solving problem tools as done in CI helps to foster creativity and invention, which are elements to develop innovation Tomas (1999)Prajogo and Sohal (2002)
Firms that perform tasks under CI approaches also have shown a positive performance in innovation Baldwin and Johnson (1996), Flynn (1994), Gustafson and Hundt (1995), McAdam et al (1998), Cooper (1998), Westphal et al. (1997),Yamin et al. (1997), Prajogo and Sohal (2002)
A culture of CI within a company acts as a solid foundation on which an innovative culture and organization can be built. Also, training associated with CI has led to increased employee knowledge of customers, competition and markets which in turn have led to employee generated innovative product related ideas McAdam, Armstong and Kelly (1998), McAdam, Stevenson and Armstrong (2000), Hoerl and Gardner (2010)

More lately, Madrigal and Quesada (in review, 2010) performed a study in firms from innovative and non-innovative sectors to identify best practices in the innovation management process as a tool for sustainable growth. In this study the authors identify the use of CI as one of the best practices, considering that CI promotes a training structure based on problem solving tools that reaches every level of the organization, opening opportunities for finding new ideas that could become incremental innovations; using CI helps the organizations change adoption and risk taking by evaluating and implementing solutions to current needs.

Definitely, CI has shown a deeper contribution that goes beyond problem solving tools for performance improvement; this business management approach brings an option to reach an incremental innovation status by unleashing creativity, and enabling risk taking environments inside organizations.


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Terziovski, M. (2002), “Achieving performance excellence through an integrated strategy of radical innovation and continuous improvement”, Measuring Business Excellence, Vol. 6 No.2, pp. 5-14. 

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