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A radical innovation refers to a groundbreaking product that offers customers unprecedented performance or a massive reduction in cost and has the potential to restructure the relationship between customers and suppliers, displace current product leaders, create entirely new product categories, or transform an existing industry. Radical innovations are the gale-force wind popularized by Joseph Schumpeter's “creative destruction.”

In contrast, an incremental innovation is at the other end of the spectrum, in that it offers customers only modest improvements to existing products. Whereas incremental innovations typically utilize existing production methods and incorporate minimal technological changes, radical innovations often depart considerably from existing practices and include significantly new technology, thereby allowing them to outperform existing products, deliver significantly enhanced customer benefits, and drive fundamental changes in consumer behavior.

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