Innovation Doesn't Need to Leap: The Case for 'Ripple Innovation'
When people hear the word 'innovation,' I think many imagine a 'leap.' It's about diving into a field completely different from your core business and creating a venture that no one has ever seen before. This is the type that usually gets made into a movie.
However, through my experience supporting marketing for the manufacturing industry, I have come to think this way:
For most companies, what is needed is not a 'leap' but a 'ripple.'
In this article, I will write about the contrast between what I call 'stepping-stone innovation' and 'ripple innovation.'
What is Stepping-Stone Innovation?
First, let me explain 'stepping-stone innovation.'
Stepping-stone innovation is a method of innovation that jumps in a single bound to a place discontinuous from current technology or markets. It is like jumping across stepping stones in a river, skipping the stones in between to reach a distant one.
Launching an AI service unrelated to your core business, saying, 'From now on, we are an AI company too.'
Entering the healthcare sector with no technical connection, simply because it is a 'growth market.'
Starting a new business from scratch on a 'detached island' separated from existing operations.
In the context of new business development, this approach is often encouraged. It is spoken of alongside slogans like 'You won't achieve significant growth by extending your existing business' and 'Discard your company's conventional wisdom.' It is certainly cool, and if it succeeds, the returns are large.
However, when you think about it calmly, stepping-stone innovation has a structural problem: two unknowns occur simultaneously.
You don't understand the new technology, and you don't understand the new market. In experimental terms, it's like moving two variables at the same time. When things don't go well, you can't even isolate whether the cause is on the technology side or the market side. Moreover, since your company has no strengths at the destination, you end up fighting existing players there while carrying a handicap.
Unless a large, well-resourced company is playing a numbers game with 'at-bats,' I don't believe this is a strategy that a company for whom a single failure could be fatal should adopt.
What is Ripple Innovation?
Therefore, the alternative I would like to propose is 'ripple innovation.'
When you drop a stone into water, ripples spread out in concentric circles from the center. Ripple innovation is a method of innovation that places your company's technology at the center and expands your business domain as if spreading associations from there.
Can our technology be used for other functions?
Is our product in demand in other industries?
Can we solve the problems adjacent to those of our current customers?
Starting from these questions, you expand step by step to the outer circles. The key is that it is always continuous with "existing technology." Since you don't move too far from the center (the core technology), you can continue to compete within the range where your company's strengths are effective.
While stepping stones move two variables, ripples always narrow the variables to be moved down to one. Either keep the technology the same and change only the market, or keep the market the same and change only the product. Since one is already known, the accuracy of the hypothesis increases, and learning from failure can be applied to the next step. Moreover, every time you expand one circle outward, new knowledge is added to the "known territory," so the center of the ripple itself becomes thicker. This is the most rewarding part of ripple innovation.
Organizing with the Ansoff Growth Matrix
This contrast becomes clear when applied to the Ansoff Growth Matrix. Ansoff classified corporate growth strategies into four categories using two axes: "product" and "market."
Market Penetration: Existing Product × Existing Market
Product Development: New Product × Existing Market
Market Development: Existing Product × New Market
Diversification: New Product × New Market
Ripple innovation aims for "Product Development" and "Market Development" among these. You make only one of either the product or the market new. For the other, you use existing assets as they are. It is the image of attacking only the "next circle" of the ripple.
On the other hand, stepping-stone innovation corresponds to "diversification." Both the product and the market are new. Ansoff himself positioned diversification as the highest-risk strategy. Always keep one foot on familiar ground—in short, that is what ripple innovation is as a strategy.
Success that looks like a "bold transformation" is actually a ripple when you look closely
This is the main point. When you break down the history of famous companies that are talked about in the world as having made "bold transformations into different industries," you find that they were actually ripples, not stepping stones, in a magnificent way. Let's look at three companies.
Toyota: From Looms to Automobiles
When you hear that "a loom manufacturer made cars," it sounds like a big jump from textiles to automobiles. But the actual process was quite steady.
The automatic loom business built by Sakichi Toyoda was a business of designing and mass-producing machines that weave cloth, in other words, precision metal machinery. They made parts by casting, processed them with precision, and assembled them. Toyoda Automatic Loom Works accumulated technology in precision machining and casting during this process.
When Kiichiro Toyoda embarked on the automobile business, he did not start making cars right away. He established a research department within the company and started by researching the elemental technologies necessary for automobiles one by one, such as casting technology, special steel and forging, and machining and machine tools. Furthermore, he followed the approach established in the loom business of "prototyping on a small scale and gradually expanding production capacity while gaining proficiency" in the mass production of automobiles as well.
They did not jump from cloth to cars, but rather expanded the ripple one circle from the center of "precision machinery design, casting, and mass production technology" to automobiles, which were adjacent to looms. I think it is closer to reality to see it that way.
Yamaha: From Pianos to Propellers, and Then to Motorcycles
Yamaha's business development is a textbook example of ripple innovation.
It started with organ repair. As they progressed from there to the manufacturing of organs and pianos, two technologies were accumulated. One is woodworking technology such as processing and bonding wood. The other is the casting technology for piano frames. Piano frames are packed with know-how that allows a single casting to possess contradictory properties: the rigidity to withstand the tension of the strings (nearly 20 tons) and the moderate elasticity to enhance sound quality.
This woodworking expertise was valued, and during the war, they took on the manufacturing of wooden propellers. The technology for shaping and bonding wood with high precision is essentially the same for both musical instruments and propellers. Eventually, they advanced to the production of metal propellers and their test engines.
Then, in 1953, after the war, the president at the time, Genichi Kawakami, gave the instruction to 'prototype a motorcycle engine.' A musical instrument manufacturer making a motorcycle? It might seem surprising, but the company already had experience in manufacturing propeller engines and casting technology honed through piano frames. The first motorcycle, the 'YA-1,' completed in 1955, won races and led to the establishment of Yamaha Motor Co., Ltd.
Musical instruments → Woodworking → Wooden propellers → Metal propellers/engines → Motorcycles. You can see that it only expands one circle at a time. From the outside, it might look like a 'piano maker making motorcycles' is a giant leap, but if you trace the genealogy of the technology, it is completely continuous.
Dyson: From Cyclones to Motors and Batteries
A modern example is Dyson.
The core of Dyson is, of course, the bagless cyclone technology. It is a fluid and aerodynamic technology that separates dust from air using centrifugal force.
The next circle was the digital motor. When you push the performance of a cyclone vacuum cleaner to its limit, you hit the limitations of general-purpose motors (heavy, low efficiency, carbon brush wear). So, Dyson developed its own motor. The brushless, small, high-speed motor capable of over 100,000 revolutions per minute not only supported the suction power of vacuum cleaners but also created new product categories one after another. The technology remains the same—'creating a small, powerful airflow'—only the market expands. It is a clean ripple.
Furthermore, the outer circle is the battery. To make a cordless vacuum cleaner viable, the battery is just as important as the motor. Dyson has been investing in in-house battery development for over a decade and has even established its own battery manufacturing facilities.
By the way, Dyson announced its entry into the EV (electric vehicle) market in 2017 and withdrew in 2019. It was a challenge that was an extension of the ripple of motors, batteries, and aerodynamics, but the automotive market was several circles further out all at once. Even a company like Dyson could not pull off a jump that skipped over the ripples—I like this episode as well because it serves as evidence of the difficulty of 'stepping stones'.
How to Expand the Ripple: An Association Game of Technology → Function → Application
What the three companies have in common is that they do not immediately link technology to a 'market,' but instead insert 'function' in between.
Technology → Function → Application/Market
In the case of Yamaha's woodworking technology, if you think of it as 'technology to make pianos,' you cannot go beyond musical instruments. But the moment you translate it into the function of 'shaping and bonding wood with high precision,' the association with propellers is born. Toyota's casting and Dyson's motors follow the same structure.
For example, if a company has 'precision machining technology',
Technology: Precision machining
Function: 'Can achieve micron-level dimensional accuracy,' 'Can process difficult-to-cut materials'
Application: Parts for semiconductor manufacturing equipment, parts for medical devices, jigs for analytical instruments...
The moment you translate technology into function, the associations for applications expand all at once. Conversely, if you keep thinking in terms of technology, your thinking stops at 'we are a machining shop, so we only have machining work.' The medium that expands the ripple is 'function'.
Another important thing is to consider the circles in order, starting from the adjacent one. Instead of aiming for a market three circles away, you should target the industry next to your current customers or the application next to your current one. The closer to the center, the stronger the energy of the ripple. Fighting at a distance where your company's track record and credibility are effective will lead to a much faster startup.
Small and medium-sized manufacturing companies should go the ripple way.
Leapfrog innovation is a strategy for companies with the stamina to endure multiple failures. If small and medium-sized manufacturers with limited resources try the same thing, a single failure could be fatal.
In that respect, with ripple innovation:
Investments can be started small (one side involves repurposing existing assets)
Even if you fail, the center remains intact (the core business continues to run)
If you succeed, the center of the ripple thickens, and the next circle expands even further
It might look modest. But if you look back, both Toyota and Yamaha have sent their ripples to places unimaginable from their founding. If you go one circle at a time, the ripples can spread anywhere.
You don't need to leap.Drop the stone of your current technology deep and hard. Carefully push the ripples that spread from there outward, one circle at a time. I believe that is the most reproducible form of innovation for many manufacturers.