Innovation has always been at the heart of the consumer packaged goods industry, but in today's fast-moving market, not all innovation is created equal. While some companies focus on small, steady improvements, others introduce groundbreaking technologies that reshape entire industries. The key challenge for CPG leaders is knowing when to optimize existing products and when to embrace high-risk, high-reward innovations. Failing to evolve at the right pace can lead to stagnation, while moving too aggressively into unproven innovations can waste resources. The solution? Balancing four key innovation models—incremental, sustaining, radical, and disruptive—to maintain a competitive edge.

Incremental innovation keeps products relevant

For most established cpg companies, incremental innovation is the default approach. It involves making small, continuous improvements to existing products, services, or processes. These refinements enhance functionality, respond to minor consumer pain points, and improve efficiency without fundamentally altering the product or market.

Think of a beverage company releasing new limited edition flavors, like when PepsiCo announced their new limited-time MTN DEW Baja Blast Point Break Punch Flavor, a food brand reducing sugar while keeping the same taste, as seen with Nestlé's 40% sugar reduction in Milo ready-to-drink, or a beauty brand upgrading packaging for sustainability, such as L’Oréal's new sustainability goals and progress. These innovations may seem minor, but they help brands remain relevant and responsive to shifting consumer expectations.

Incremental innovation often involves anticipating and responding to evolving consumer preferences, creating new product variations that align with current trends. In January 2025, Mars launched the M&M’S Peanut Butter Ice Cream Cookie Sandwich, featuring vanilla sugar cookies embedded with M&M’S® Minis and filled with peanut butter-flavored ice cream made from real peanut butter. This is a perfect example of how incremental innovation taps into current consumer trends, offering a new flavor pairing that aligns with Gen Z and millennial preferences for peanut butter in ice cream.

However, while incremental innovation extends the lifecycle of existing products, it rarely delivers breakthrough growth. A company that focuses exclusively on small updates risks being left behind when consumer preferences shift more dramatically. Competitors investing in more ambitious innovation can quickly overtake brands that rely only on minor adjustments.

Sustaining innovation builds on existing market strength

Sustaining innovation goes a step beyond incremental improvements. It is about delivering superior performance within an existing market, ensuring a company does not just maintain relevance but strengthens its position against competitors.

Apple’s yearly iPhone releases, like the Apple iPhone 15 Pro, are a textbook example. Each new model introduces meaningful performance upgrades, making the device faster, more powerful, and better suited to evolving user needs. In the CPG space, reformulating a snack to be high protein or plant based without compromising on taste is a form of sustaining innovation, such as General Mills launching a new high-protein yogurt line.

Sustaining innovation is crucial for keeping up with ever changing consumer expectations, but it does not redefine industries. It helps a brand win market share within an existing category, but it does not create a new category. That is where radical and disruptive innovation come in.

Radical innovation creates new markets

Radical innovation introduces entirely new technologies or product categories, creating new markets and opportunities. Unlike sustaining innovation, which refines existing markets, radical innovation often starts as a niche offering before gaining widespread adoption.​

When Tesla entered the automotive market, EVs were not mainstream. Traditional automakers focused on optimizing gas-powered cars, while Tesla bet on an entirely new technology that eventually reshaped the automotive industry.​

Early adopters of plant-based proteins and lab-grown meat were not immediately competing with traditional food brands. Over time, these innovations gained consumer traction and carved out significant market share. Companies like Impossible Foods and Beyond Meat have developed plant-based alternatives that closely mimic the taste and texture of meat, appealing to both vegetarians and meat-eaters.  Similarly, companies like Aleph Farms are pioneering lab-grown meat, cultivating beef directly from animal cells without the need for raising and slaughtering livestock.

Red Bull created an entirely new product category—energy drinks—rather than competing directly with traditional beverages. By offering a different value proposition, marketing strategy, and consumer base, Red Bull fundamentally shifted the beverage market and paved the way for competitors like Coca-Cola and Pepsi to enter the market years later.​‍‍

Radical innovation requires vision, patience, and investment. Many successful radical innovations start as niche products, serving early adopters before eventually reshaping entire industries. However, it also carries higher risk, as not all new technologies achieve mass adoption. Companies must balance experimentation with commercialization, ensuring that radical innovations align with long-term business objectives.​

Disruptive innovation reshapes industries

While radical innovation often introduces completely new markets, disruptive innovation redefines how existing markets operate. It emerges when a new business model, technology, or approach makes an industry's traditional players obsolete.​

Netflix's rise at the expense of Blockbuster is one of the most well-known examples of disruptive innovation. While Blockbuster focused on improving DVD rentals—a sustaining innovation—Netflix introduced an entirely new way of consuming entertainment through on-demand streaming, fundamentally shifting the industry. ​Similarly, Uber did not just improve taxi services; it fundamentally changed the way people use transportation. By offering a more affordable, efficient, and flexible alternative through its user-friendly app, Uber disrupted the traditional taxi industry. ​

In the consumer packaged goods industry Nespresso, which transformed coffee consumption with single serve coffee pods. Before Nespresso, consumers primarily bought bulk coffee or visited coffee shops for espresso. By introducing a pod system that offered convenience and quality, Nespresso created an entirely new segment, disrupting traditional coffee sales and changing how people brewed coffee at home.

Unlike radical innovation, which can take years to gain traction, disruptive innovation often scales quickly. It is particularly dangerous for incumbents who do not see the shift happening until it is too late. Companies that fail to recognize disruptive trends risk losing market dominance to new entrants that understand consumer behavior better.

Open innovation as a strategy for managing radical and disruptive change

Radical and disruptive innovation have the power to reshape industries and unlock entirely new markets. Both offer a compelling path towards market leadership, brand recognition, and significant financial rewards. The potential to revolutionize entire industries and create lasting societal impact further elevates the value proposition of these bold strategies.

But revolutionary innovations pursuit is inherently riskier. Unproven technologies, unfamiliarity with new markets, and the potential for resistance from established players all contribute to the inherent uncertainty.

The concept of open innovation offers a compelling solution to navigate the challenges associated with radical and disruptive innovation. By embracing collaboration with external partners, companies can leverage a wider range of expertise and resources. This can include partnering with startups possessing cutting-edge technology, research institutions with deep scientific knowledge, or established players in complementary fields. Engaging innovation consultancies specializing in partner assessment further strengthens this approach. Their expertise can help identify suitable partners, evaluate their technological capabilities, and ensure alignment with the corporate strategic goals. The net effect? A significant reduction in risk associated with in-house development and a potentially faster time-to-market by leveraging a partner's existing solutions. This collaborative approach allows companies to share the risks and rewards of radical and disruptive innovation, ultimately propelling them towards market leadership and superior performance.

By leveraging open innovation, companies can test bold ideas faster, scale proven innovations efficiently, and maintain a strong competitive edge. This approach allows them to push boundaries without overextending resources, ensuring that radical and disruptive innovation translates into tangible market success.

Balancing the four innovation models

Each of the four innovation models—incremental, sustaining, radical, and disruptive—plays a crucial role in an effective strategy. The key is knowing when to optimize existing products and when to take bigger risks.

Incremental and sustaining innovation drive continuous improvement and short-term growth, keeping products relevant and competitive. Radical and disruptive innovation create long-term opportunities by introducing new markets and reshaping industries.

Many companies lean too heavily on incremental and sustaining innovation because they feel safer. However, those that fail to explore radical and disruptive opportunities risk falling behind more forward-thinking competitors. The most successful companies embrace all four models, ensuring they are not just keeping pace with the market, but actively shaping its future.

At SOSA, we help companies strategically balance all four innovation models while leveraging open innovation to reduce risk and accelerate impact. By identifying and integrating emerging technologies, we ensure that innovation efforts lead to measurable business outcomes—whether through incremental improvements, market-leading advancements, or entirely new product categories. Working with startups, research institutions, and industry leaders, we help companies adopt the right innovations at the right time, turning strategic decisions into competitive advantages.

Get the full picture: Insights from our latest report

Understanding how to balance incremental, sustaining, radical, and disruptive innovation is critical for long-term success. Our latest report explores how leading CPG companies are leveraging open innovation to stay competitive in a rapidly evolving landscape.

• How companies using open innovation models see 33% higher revenue growth
• Why 95% of executives say consumer demands are shifting faster than they can adapt
• The key technologies shaping the next decade of CPG

Download the full report now and discover how open innovation can transform your business.

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