Breakthrough Innovation vs Incremental Innovation: Investment Patterns

Innovation drives growth. But not all innovation is the same. Some types lead to big changes—new markets, products, or even industries. Others are smaller but steady, improving what already works. These two types are called breakthrough and incremental innovation. Each comes with its own way of investing, managing risk, and expecting returns. This article looks into both, using real-world statistics to guide business leaders, product managers, and entrepreneurs. Whether you’re trying to launch the next big thing or just make your current product better, this guide will show you how to invest wisely.

1. 70% of R&D investment in large corporations is allocated to incremental innovation

Why Most Big Companies Play It Safe

Large companies tend to invest most of their R&D funds—about 70%—in incremental innovation. This means they focus on improving existing products, optimizing operations, or enhancing customer experience rather than launching something entirely new.

This approach is safe. It delivers predictable returns and helps maintain existing market positions. Shareholders and boards are often more comfortable backing ideas that don’t rock the boat.

However, this reliance on incremental innovation also means companies risk falling behind in markets that are changing fast. Competitors investing in disruptive ideas may eventually redefine the game and make existing products irrelevant.

What You Should Consider

If you’re running innovation in a large company, it’s important to balance risk and reward. Here’s how:

Audit your innovation portfolio. See how much of your R&D budget is tied to incremental vs breakthrough innovation. Is 70% too high?
Create a separate team or unit to explore higher-risk, higher-reward ideas. Keep it small, but give them freedom.
Use a dual strategy. Continue improving core offerings while planting seeds for future breakthroughs.

2. Only 10-15% of corporate innovation budgets go toward breakthrough or radical innovations

The Risk-Averse Reality

Despite all the buzz about disruption, most companies invest only 10-15% of their innovation budgets into breakthrough projects. These projects aim to create entirely new markets or business models. They are risky, expensive, and take longer to show results.

But they are also the future.

If you’re not investing in breakthroughs, you’re not preparing for tomorrow. The trouble is, many companies are structured to avoid uncertainty. They prefer the safe returns of incremental improvement over the unknowns of radical change.

How to Make Breakthroughs a Part of Your Strategy

Here’s what you can do:

Set a clear threshold. Allocate at least 15-20% of your innovation budget to breakthroughs.
Don’t demand short-term results from these projects. Understand that these bets are about building long-term advantage.
Involve top leadership. Without strong support from the C-suite, breakthrough ideas struggle to get the resources they need.
Use external innovation. Partner with startups or invest in innovation hubs where breakthrough thinking thrives.

If you want to be in the game five or ten years from now, breakthroughs can’t be ignored. Start small, but start now.

3. 60% of breakthrough innovations take over 5 years to reach market readiness

Patience is a Prerequisite

Most breakthrough innovations are long journeys. Around 60% of them take more than five years before they are ready for market. These projects often involve entirely new technologies or ways of doing business. That takes time.

Many organizations give up too early. They expect fast results, and when that doesn’t happen, they shut things down. This is a big reason why many promising breakthroughs never see the light of day.

Managing Long-Term Bets

Here’s how to handle the long timeframes:

Set milestones, not just outcomes. Track progress in phases like prototyping, user testing, and pilot launches.
Use horizon planning. Classify innovation efforts into short-term (H1), mid-term (H2), and long-term (H3). Make sure your H3 pipeline—your future breakthroughs—is moving.
Educate stakeholders. Let investors and internal teams know why some projects need more time and why the payoff could be huge.
Secure funding differently. Set aside separate funds or use venture-style budgeting that fits the longer lifecycle of breakthroughs.

Time is a cost, but also a filter. If you can outlast others and keep investing smartly, you’ll be in a strong position when the idea finally takes off.

4. Incremental innovations yield returns 1.5x faster than breakthrough innovations

Speed of Return Is a Big Driver

It’s no wonder companies love incremental innovation—it pays off fast. On average, returns come in 1.5 times quicker than with breakthrough innovations. This fast payoff helps cash flow, pleases shareholders, and supports reinvestment.

But that speed can also create a trap. If you only chase quick returns, you’ll miss the big plays that could redefine your market. A steady flow of small wins feels good, but it may not be enough to stay competitive in a changing world.

Finding the Right Balance

Try this approach:

Blend timelines in your portfolio. Have some projects that deliver in 6-12 months, and others that are 3-5 year plays.
Measure differently. Don’t judge all innovation by the same metrics. Use speed metrics for incremental work and strategic value metrics for breakthroughs.
Share wins often. Celebrate fast results to build momentum, but keep communicating the value of longer-term efforts too.
Avoid over-rotation. Don’t let early success from incremental projects lead you to abandon higher-risk ideas.

Quick wins are good—but only if they support a bigger, long-term innovation vision.

5. Companies investing over 40% of their R&D in breakthrough innovation outperform peers by 25% in long-term revenue growth

The Power of Bold Bets

Companies that dedicate more than 40% of their R&D spending to breakthrough innovation often see long-term revenue growth that’s 25% higher than their peers. That’s a huge difference—and a powerful reason to look beyond small improvements.

These companies are not afraid to take risks. They understand that while not every bet will pay off, the ones that do can create entirely new revenue streams, markets, or even industries. Think of companies like Tesla, which invested heavily in battery tech and autonomous driving before others even took them seriously.

Making the Leap Without Losing Control

If you want to move in this direction, here are some tactical steps:

Set a bold vision. You need leadership that clearly communicates why breakthrough innovation matters.
Protect the budget. Ensure that your investment in breakthrough ideas isn’t the first thing cut when earnings dip.
Hire for creativity and resilience. These projects require people who can think outside the box and keep going through setbacks.
Use venture-style funding rounds. Break large projects into stages, and release more funds only when they hit defined technical or market milestones.

This kind of strategy isn’t for the faint-hearted. But if you’re aiming for growth over the next 10 years—not just the next quarter—it’s one of the smartest moves you can make.

6. Breakthrough innovations account for 61% of new industry market leaders over the past 20 years

The Real Change-Makers

Over the last two decades, 61% of companies that became market leaders did so through breakthrough innovations—not by tweaking existing products. That’s a clear message: major growth often comes from doing something entirely new, not better.

When companies like Airbnb, Uber, or Netflix rose to dominance, they weren’t doing a better version of an existing business—they were building something people hadn’t seen before. That kind of leap captures attention and creates entirely new customer behaviors.

Becoming a Category Leader

Here’s how to align your strategy with this stat:

Look for unserved needs, not just underserved ones. Ask: What are people putting up with because they have no better option?
Encourage radical thinking. Set aside time and resources for exploring “crazy” ideas—they’re often the seeds of breakthroughs.
Don’t benchmark too much. Following what others do leads to incrementalism. To lead, you must go where others aren’t looking.
Prepare to educate the market. Breakthroughs often need you to change how people think, not just what they buy.

Market leadership comes not from doing more, but from doing different—and better in a whole new way.

7. 85% of CEOs say incremental innovation is easier to measure and manage

Why Simplicity Wins—At First

Most CEOs—about 85%—say incremental innovation is easier to measure and manage. That makes sense. It’s closer to daily operations, fits into standard project planning tools, and has metrics everyone understands.

Things like cost savings, process efficiency, and quick feature upgrades are easier to quantify. You can track timelines, budgets, and performance using familiar KPIs. But this ease also creates a bias. It tempts organizations to focus too much on what’s easy, rather than what’s necessary.

Managing the Complex

Here’s what to keep in mind if you’re only measuring what’s easy:

Adopt new metrics. For breakthrough projects, consider measuring learning milestones, ecosystem development, or patent filings.
Use narrative reporting. Numbers don’t tell the whole story. Get teams to share their insights, failures, and pivots.
Train leadership on innovation complexity. The board and executives must understand why a lack of quick metrics doesn’t mean lack of progress.
Create space for ambiguity. Not everything can be put in a spreadsheet—yet.

Incremental efforts are great, but don’t let the ease of tracking them stop you from funding bolder, fuzzier ideas that may hold the real upside.

8. 52% of breakthrough projects fail to meet their expected ROI

The Odds Aren’t Always in Your Favor

Over half—52%—of breakthrough innovation projects fail to hit their expected return on investment. That’s a tough reality. But it doesn’t mean you should avoid them. It means you need to manage them differently.

Breakthrough innovation isn’t about betting on a sure thing. It’s about learning quickly, failing smart, and being ready to pivot when things don’t go as planned. The goal is not perfection, but progress and adaptation.

Managing Risk Without Avoiding It

Here’s how to navigate high failure rates:

Start with small bets. Run lean pilots before going all in.
Use stage-gated funding. Only release more capital when early results show real potential.
Encourage experimentation. Reward teams for what they’ve learned—not just what they’ve earned.
Kill bad ideas quickly. Don’t let sunk costs drive continued investment. If something’s not working, cut your losses and move on.

A 50% failure rate may seem high, but remember: the few that succeed can pay for all the rest—and then some.

9. Incremental innovation has a success rate of ~80% in product launches

The Comfort of Predictability

When companies stick to incremental innovation, they win more often. About 80% of these product launches succeed. That’s a strong number. Why? Because these innovations improve things people already use. The risk is lower, and the customer understanding is higher.

Improvements are easy to sell—better speed, lower cost, or a new feature. Sales teams understand the product. Customers don’t need to change behavior. That’s why the hit rate is high.

Making the Most of Incremental Wins

Here’s how to use this to your advantage:

Bundle upgrades. Combine several small improvements into a compelling new version of your product.
Drive upsell strategies. Use improved features to push customers toward higher-value plans or services.
Cross-promote smarter. If one feature improves adoption, use it to highlight other offerings.
Gather fast feedback. Use every product tweak to learn more about your market and prepare for deeper changes later.

Incremental success builds credibility and momentum. Use that stability to eventually support bigger, riskier moves.

10. 43% of VC funding for technology startups focuses on breakthrough innovation

Why Investors Chase Big Bets

Venture capitalists are known for taking bold risks—and 43% of VC funding in the tech world is funneled into startups working on breakthrough innovation. That tells you something important. Investors understand that even if most of these bets don’t work out, the ones that do can deliver exponential returns.

VCs look for potential category creators—startups that aren’t just improving what’s already there, but rewriting the rules. Think of how Stripe reimagined payments or how OpenAI changed the game in AI. These aren’t tweaks. They’re leaps.

What This Means for Founders and Corporates

If you’re leading a startup:

Tell a bold story. Investors want to know how you will change the landscape, not just make it slightly better.
Show a massive potential market, even if it’s early. Disruption often starts niche but scales fast.
Demonstrate technical edge. Investors fund startups with intellectual or technological barriers to entry.

If you’re a corporate leader:

Watch where the VC money is going. It often signals where your industry is heading.
Partner with or acquire startups working on breakthroughs that align with your future roadmap.
Create a corporate VC arm to place early bets and stay close to innovation.

Breakthrough innovation attracts big funding because it holds the potential for big impact. Follow the money—and learn from it.

11. Firms pursuing breakthrough innovation are 3x more likely to use open innovation models

The Openness Advantage

Companies that chase breakthrough innovation are three times more likely to use open innovation strategies. That means they work with startups, researchers, universities, and even competitors to build new things.

Why? Because breakthroughs rarely happen in isolation. New technologies often come from fresh perspectives, outside expertise, or different industries. Open innovation is a smart way to tap into a wider pool of ideas without shouldering all the risk alone.

How to Work Smarter, Not Just Harder

Here’s how you can make open innovation work:

Build partnerships with universities to stay close to academic breakthroughs.
Run startup accelerators or challenges where early-stage companies bring you ideas you haven’t considered.
Create open APIs or platforms that allow developers to extend your product in new ways.
License in technology, especially when building something from scratch is slow or expensive.

Breakthroughs thrive in collaboration. The more you open your doors to outside thinking, the more likely you are to discover something game-changing.

12. 29% of organizations report lack of executive buy-in as a barrier to breakthrough investment

The Leadership Roadblock

Nearly a third of organizations say their biggest barrier to investing in breakthrough innovation is the lack of executive buy-in. That’s a leadership problem—and it can quietly kill innovation without anyone noticing.

Without support from the top, breakthrough ideas don’t get the funding, attention, or time they need. Middle managers may play it safe. Teams might hesitate to pitch bold ideas. And breakthrough projects slowly fizzle out.

Getting Leadership on Board

Here’s how to build executive commitment:

Frame breakthroughs as business growth opportunities, not science experiments.
Showcase competitor moves. When rivals are investing in bold ideas, it creates urgency.
Highlight strategic alignment. Connect breakthrough projects directly to long-term business goals.
Start with small wins. Pilot a breakthrough idea that solves a real pain point. Use that story to get executive champions.

Leadership drives culture. If the top doesn’t support radical thinking, the bottom won’t feel safe to try it.

13. Companies that dedicate 20% of their portfolio to disruptive innovation grow 2.4x faster than average

The 20% Growth Rule

Companies that set aside at least 20% of their innovation portfolio for disruptive projects grow 2.4 times faster than those who don’t. That’s not a small bump—it’s a leap.

This doesn’t mean they’re betting the farm on risky ideas. It means they’re investing enough to give breakthroughs a real chance, without starving their core business. The result is steady short-term performance with massive long-term upside.

Creating Your Own 20% Strategy

You don’t have to flip a switch overnight. Here’s how to move toward this:

Audit your current innovation investments. How much is focused on defending vs disrupting?
Identify 1–2 disruptive themes you want to explore—think AI, sustainability, automation, or new business models.
Set aside protected funding, separate from core budgets. This avoids constant comparison to short-term ROI metrics.
Appoint innovation leads with clear mandates to explore, test, and scale new ideas.

A 20% shift can change the shape of your future. The key is to commit—not just in dollars, but in mindset.

14. 70% of incremental innovations are driven by customer feedback loops

Listening Fuels Small Wins

A full 70% of incremental innovations come straight from customer feedback. That’s no surprise. When you ask your users what they want—or watch how they use your products—you find easy opportunities to improve.

These changes often cost less and deliver fast value. A feature tweak, a faster process, or a new payment option can all come from simple feedback. It’s innovation with a low barrier and a high impact.

Making Feedback Actionable

If you’re not tapping into this goldmine, here’s how to start:

Establish always-on feedback channels—email surveys, chat logs, review monitoring.
Host regular customer councils to hear directly from users who care.
Use product usage data to find friction points that suggest improvement areas.
Empower frontline staff to share customer complaints and suggestions with product teams.

Customer-led innovation is efficient and effective. Use it to build momentum, trust, and loyalty—one small win at a time.

15. 46% of firms use different teams for breakthrough and incremental projects

Separate Tracks for Different Goals

Almost half of all firms—46%—choose to keep their breakthrough and incremental innovation efforts separate, using different teams. And for good reason.

These two types of innovation require very different mindsets. Incremental innovation needs detail-focused teams that can fine-tune, optimize, and improve. Breakthrough innovation needs explorers—people comfortable with risk, ambiguity, and long-term bets.

Putting both types under the same roof often leads to confusion, tension, or worse—neglect of one in favor of the other. That’s why separation often works best.

How to Structure for Success

If you’re managing multiple innovation tracks, here’s what helps:

Create two innovation pipelines. One focuses on short-term improvements. The other explores new markets, technologies, or models.
Use different success metrics. Incremental projects might use ROI or time-to-market. Breakthrough projects might be judged on learning velocity or potential market size.
Designate different leaders. Each track should have someone accountable who understands the specific demands of that type of innovation.
Encourage cross-pollination, not blending. Let teams share knowledge without forcing them to work the same way.

Think of it like this: you wouldn’t have the same team build a new mobile app and a new business model from scratch. Different work needs different minds—and space to work their way.

16. Breakthrough innovation initiatives are 2.6x more likely to be cut during budget downturns

Why Bold Ideas Get the Axe

When budgets tighten, it’s often the boldest ideas that get cut first. Breakthrough innovation projects are 2.6 times more likely to be slashed during financial downturns. Why? Because they seem optional, risky, and far from delivering returns.

It’s a short-term mindset that feels safe—but it’s dangerous. Cutting your most forward-looking efforts during hard times can leave you trailing behind once the market recovers.

Protecting the Future in Hard Times

To avoid this trap, you need to plan ahead:

Ring-fence your breakthrough budget. Set aside a fixed portion that’s protected—even during downturns.
Create scenario plans that show the cost of not innovating. Make it clear what future opportunities will be missed if the project is killed.
Communicate the strategic value clearly. Keep reminding decision-makers why the project matters.
Use staggered funding models. That way, you’re not committing all funds upfront but showing progress in stages.

Your competitors might be cutting back too. If you can hold the line on breakthrough investment, you’ll emerge stronger when the dust settles.

17. Only 7% of firms have a formal process for identifying breakthrough opportunities

The Missing Structure

Only 7% of firms have a structured, repeatable way to identify breakthrough innovation opportunities. That’s a huge missed opportunity. Without a formal process, you’re relying on chance, gut feeling, or executive whims to find your next big idea.

A structured approach doesn’t kill creativity—it gives it direction. It helps you spot patterns, trends, and customer shifts that can spark something game-changing.

Building a Breakthrough Engine

Here’s how to start formalizing your discovery process:

Use foresight tools like trend analysis, scenario planning, and future-back thinking.
Host regular ideation sessions, but with a purpose—targeted themes, market gaps, or technology shifts.
Encourage problem-led innovation. Ask: What major pain points are customers just tolerating today?
Involve diverse voices—engineers, marketers, customers, even outsiders—to find unexpected insights.

Breakthrough ideas don’t have to be lucky finds. With the right process, you can spot them more often—and act on them faster.

18. 57% of incremental innovations come from internal R&D suggestions

The Value of In-House Insight

More than half—57%—of incremental innovations come from within a company’s own R&D team. That’s a powerful reminder: your best improvement ideas might already be in the building.

R&D teams work closest to the product. They see what works, what breaks, and what could be better. With the right culture, they can be a constant source of practical, valuable innovation.

How to Tap Internal Innovation Potential

If you want to boost internal contributions:

Make idea submission easy. Create simple tools or channels where teams can log suggestions anytime.
Run monthly idea reviews. Give R&D a voice in product planning and continuous improvement.
Celebrate implemented ideas. Give credit where it’s due—and make it public.
Train R&D in customer thinking. Help them tie technical tweaks to actual user needs and business outcomes.

Incremental innovation doesn’t need huge strategy shifts—it needs a system that listens to your own experts and acts on their insights.

19. 62% of breakthrough innovations stem from external partnerships or acquisitions

Outside the Walls Lies Opportunity

Nearly two-thirds—62%—of breakthrough innovations come not from internal teams, but from external collaborations or acquisitions. That makes sense. New ideas often live at the edge of your business, not the center.

Startups, research labs, inventors, and even other industries can bring in new technologies or approaches your teams haven’t considered. Rather than reinventing the wheel, smart companies look outside and bring that innovation in.

Becoming an Innovation Magnet

Here’s how to use external innovation effectively:

Map key innovation areas where external tech or ideas can help.
Build a scouting function to track startups, patents, and research.
Establish fast-track partnership models. Make it easy to test ideas with startups or academic partners.
Invest in strategic acquisitions that bring you closer to new capabilities or market segments.

Breakthroughs don’t always have to come from scratch. Sometimes, they come from being in the right place, with the right partner, at the right time.

20. Breakthrough innovation portfolios require 2x the time-to-profit horizon than incremental ones

Longer Runways, Bigger Payoffs

Breakthrough innovation takes time. On average, these initiatives need twice as long as incremental innovations to become profitable. That’s not because they’re inefficient—it’s because they’re building something completely new. They often involve creating new technology, new markets, or even new customer behavior.

While incremental innovation might turn a profit in a year or two, breakthrough efforts could take five, seven, or even ten years to show a return. But when they hit, the payoff is often much larger.

How to Think in Decades, Not Quarters

Managing a long-term horizon requires a different mindset and approach:

Set clear, multi-year goals. Break the journey into phases—proof of concept, prototype, pilot, market test, and scale-up.
Adjust your ROI expectations. Don’t apply short-term return metrics to long-term bets. Use strategic indicators early on, like patent filings, early traction, or partner interest.
Manage board and investor expectations. Help stakeholders understand the role of these projects in shaping the future, not today’s numbers.
Build internal patience. Create a culture that respects long development cycles. This isn’t slowness—it’s depth.

If you want to win big, you have to wait longer. But only those who stay the course can collect the prize.

21. On average, companies spend 6–10% of revenue on innovation, with only 1–2% allocated to breakthrough

The Spending Gap

Companies typically invest between 6–10% of their revenue in innovation. That sounds healthy, but here’s the issue: only 1–2% of that goes to breakthrough innovation. That means the bulk of innovation spending is going toward safer bets—incremental improvements, operational efficiency, and enhancements to existing offerings.

Breakthrough innovation is underfunded—not because it’s unimportant, but because it’s uncertain. And that makes it easy to deprioritize when allocating resources.

Fixing the Budget Imbalance

If you want to stay ahead of the curve, you need to shift how you budget:

Create a fixed allocation rule. Decide that a minimum percentage—say 20% of your innovation budget—goes to breakthrough projects.
Use separate innovation tracks in your budgeting process. Don’t force incremental and breakthrough ideas to compete for the same pool.
Treat breakthrough innovation like venture capital. Expect some losses, and price in the risk.
Reinvest windfalls. Use profits from successful incremental innovations to fund bolder, longer-term bets.

You don’t need to overspend. You just need to spend smarter—and make sure your budget reflects both the now and the next.

22. 75% of Fortune 500 firms view breakthrough innovation as critical to long-term survival

The Strategic Imperative

Three out of four Fortune 500 companies say that breakthrough innovation is vital for their long-term survival. That’s not marketing hype—it’s a strategic truth. In fast-moving industries, sticking to what you know is no longer a safe bet.

Market shifts, new technologies, and changing customer expectations can make legacy products obsolete overnight. Companies that don’t adapt—and invent—risk becoming irrelevant.

Turning Vision Into Action

Acknowledging the importance of breakthrough innovation is a good start. But you need action to back it up:

Make breakthrough innovation a board-level topic. Tie it to your company’s strategic roadmap.
Appoint a chief innovation officer or equivalent who focuses solely on long-term bets.
Connect innovation to survival. Help employees see how big ideas protect jobs and create future value.
Benchmark against disruptors, not just peers. Look at what startups and global tech leaders are doing to change your industry.

Breakthroughs aren’t optional. They’re how you build the future—and make sure your company still has a place in it.

23. Firms investing in both types report 33% higher EBITDA margins

The Balanced Innovation Advantage

Companies that invest in both incremental and breakthrough innovation don’t just grow faster—they’re also more profitable. In fact, they see EBITDA margins that are 33% higher than firms that invest in just one approach.

Why? Because they get the best of both worlds. Incremental innovation keeps operations efficient and products competitive. Breakthrough innovation opens up new markets and revenue streams. Together, they create a powerful engine of growth and resilience.

Building a Dual Innovation Model

Here’s how to create this balanced structure:

Segment your innovation portfolio. Define clear categories: core improvements, adjacent plays, and transformational bets.
Balance short-term and long-term funding. Don’t let today’s performance squeeze out tomorrow’s potential.
Build mixed innovation teams. Cross-functional teams can work across the spectrum, feeding ideas up and down the innovation chain.
Review performance differently. Core innovation might use traditional KPIs. Breakthroughs should be judged on strategic milestones and learning curves.

When you combine reliable gains with bold breakthroughs, you build a company that’s not just successful—but unstoppable.

24. Breakthrough innovation increases market share by 17% on average when successful

Big Wins, Big Impact

When breakthrough innovation succeeds, it doesn’t just make headlines—it boosts market share by an average of 17%. That’s a huge leap. It means new customers, new segments, and often, a commanding lead over competitors.

Unlike incremental improvements, which maintain your position, breakthroughs shift the landscape. They change the value equation for customers, reset expectations, and often leave slower competitors scrambling to catch up.

Scaling Success

To turn breakthrough wins into lasting market share:

Plan for scale early. Have a roadmap for how you’ll go from pilot to full deployment.
Protect your advantage. File patents, build ecosystems, and invest in brand positioning to lock in your lead.
Support the breakthrough with strong marketing. Many great ideas fail because no one hears about them.
Leverage customer evangelism. Early adopters of your breakthrough product can help you go viral within their networks.

A 17% market share boost isn’t a fluke. It’s the reward for doing the hard, risky, visionary work—and doing it right.

25. Only 5% of incremental innovation leads to new market creation

Incremental Doesn’t Usually Break New Ground

Here’s a revealing stat: only 5% of incremental innovations lead to the creation of new markets. That means 95% of the time, these innovations work within your existing customer base and known segments. They help you maintain relevance—but not necessarily expand your reach.

If your goal is growth beyond the familiar, relying solely on incremental changes won’t get you there. It’s like rearranging the furniture in your living room instead of building a new room.

When Staying the Same Isn’t Enough

To grow beyond your current market:

Use incremental innovation for depth, not breadth. Optimize products for existing users, but don’t expect them to open entirely new doors.
Pair incremental with adjacent exploration. While you improve current offerings, run pilot projects that test new customer segments or use cases.
Watch your competitors. If they’re gaining market share through category creation, incremental improvements may not be enough to compete.
Set clear growth goals. Make it explicit whether a project is aimed at retention, expansion, or disruption.

Incremental innovation is great at keeping the engine running. But if you want to build a new track, you’ll need to look further afield.

26. Breakthrough projects require 3x more experimentation and prototyping phases

Learning by Doing (and Redoing)

Breakthrough projects go through three times more experimentation and prototyping than incremental ones. That’s because you’re venturing into unknown territory. You don’t just need to get it right—you need to figure out what “right” even looks like.

It’s a discovery-driven process. You try, fail, learn, and try again. And again. Each prototype gets you one step closer to clarity, but the road is winding and full of surprises.

Building a Culture of Experimentation

If you’re managing or funding breakthrough work, here’s how to embrace this reality:

Budget for iteration. Assume that you’ll need multiple rounds of prototypes, testing, and reworks.
Use lean innovation practices. Start small, test often, and pivot quickly based on what you learn.
Celebrate progress, not perfection. Encourage teams to share insights from failed experiments. Each one brings you closer.
Track learning velocity. Instead of time-to-launch, measure how quickly your team is validating assumptions.

Breakthroughs don’t happen in one shot. They happen through disciplined trial, error, and learning. Make room for that.

27. 41% of firms say talent scarcity limits breakthrough innovation efforts

The Talent Crunch Is Real

A major roadblock to breakthrough innovation is finding the right people. In fact, 41% of firms say talent scarcity is one of their biggest challenges. Breakthrough innovation requires people who can think creatively, handle ambiguity, and combine technical skill with big-picture thinking.

These individuals are rare—and in high demand. Competing for them means rethinking how you hire, train, and retain your innovation talent.

Winning the Innovation Talent War

To attract and keep breakthrough-ready talent:

Rebrand innovation roles. Highlight the excitement, purpose, and impact of working on future-shaping projects.
Offer cross-functional exposure. Let your innovators work across departments—tech, business, design—for deeper insight and creativity.
Invest in internal upskilling. Grow your own talent through innovation bootcamps or rotational programs.
Collaborate with academia. Partner with universities to tap into fresh thinkers and cutting-edge research.

Innovation isn’t just about money. It’s about people. The right minds make the difference between a dream and a delivery.

28. Incremental innovation initiatives fail 25% less often than breakthrough initiatives

Lower Risk, Higher Predictability

Incremental innovation is safer. On average, it fails 25% less often than breakthrough innovation. That’s because the risks are known, the customers are familiar, and the changes are smaller.

This success rate is why companies love incremental work—it offers fast wins and fewer surprises. But with low risk comes low upside. You’re improving, not transforming.

Smart Portfolio Planning

So, what should you do with this knowledge?

Use incremental innovation to stabilize your business and generate short-term wins.
Allocate breakthrough innovation to areas where you need step-change growth, not just better margins.
Track risk-adjusted ROI, not just raw outcomes. A failed breakthrough might still yield valuable insights or assets.
Set expectations accordingly. Your leadership team needs to know: fewer failures mean fewer big wins too.

A lower failure rate feels safe, but it also means you might be playing too small. Sometimes, failure is just part of chasing something truly worthwhile.

29. 68% of firms investing in breakthrough innovation use horizon planning models (H1-H3)

Planning for Now, Next, and New

Most companies that succeed with breakthrough innovation use horizon planning models, especially the H1-H2-H3 framework. In fact, 68% of firms investing in breakthroughs rely on this approach to organize their innovation efforts.

Horizon 1 (H1): Core, near-term improvements.
Horizon 2 (H2): Adjacent, mid-term opportunities.
Horizon 3 (H3): Transformational, long-term bets.

This model helps you balance present needs with future growth—and gives each horizon the attention and resources it deserves.

Bringing Horizon Planning Into Your Organization

To use this model well:

Categorize your current innovation projects by horizon. What’s focused on today, what’s for tomorrow, and what’s for the future?
Assign horizon-specific goals. H1 should be judged by efficiency and ROI. H3 might focus on learning, patents, or market readiness.
Invest with intention. Don’t accidentally let H1 crowd out H2 and H3. Protect those long-term investments.
Use different teams or processes for each horizon, if possible.

This framework gives structure to the chaos of innovation—and makes sure the future doesn’t get lost in the pressure of now.

30. Breakthrough innovation contributes to 35% of all new patent filings, despite lower investment levels

High Impact From Leaner Investment

Even though breakthrough innovation receives far less investment, it still drives 35% of all new patent filings. That’s a clear sign of its impact.

Patents aren’t just paperwork—they’re proof of originality, technical edge, and potential market control. When a relatively small part of your innovation spend creates over a third of your intellectual property, you know you’re onto something important.

Protecting and Leveraging Breakthrough IP

To get the most from your breakthrough innovations:

File patents early. Don’t wait for market readiness—protect your ideas as they mature.
Build patent strategy into your innovation process. Train teams to think about what’s protectable as they work.
Use IP for leverage. Patents can open doors to licensing deals, joint ventures, or even investor interest.
Monitor the IP landscape. Understand where your competitors are filing and where your white space lies.

Breakthrough innovation may be unpredictable—but it punches well above its weight in creating defensible, valuable assets.

Conclusion

Innovation is not a one-size-fits-all game. It takes both steady improvement and bold exploration to win in today’s fast-moving markets. As we’ve seen through these thirty powerful statistics, incremental innovation gives you reliability, speed, and cost-effectiveness. It helps you optimize what you already do well. But breakthrough innovation—though riskier and slower—opens new doors, builds long-term growth, and can transform your entire industry.