Managing radical innovation: an overview of emergent strategy issues

Despite differences in definitions, researchers understand that radical innovation within an organization is very different from incremental innovation , and and that it is critical to the long-term success of firms. Unfortunately, research has also shown that it is often difficult to get support for radical projects in large firms [14], where internal cultures and pressures often push efforts toward more low risk, immediate reward, incremental projects. Interestingly, we know considerably less about the effective management of the product development process in the radical than in an incremental context. The purpose of this study is to explore the process of radical new product development from a strategic perspective, and to outline key observations and challenges that managers face as they move these projects to market. The findings presented here represent the results of a longitudinal (since 1995), multidisciplinary study of radical innovation projects. A multiple case study design was used to explore the similarities and differences in management practices applied to twelve radical innovation projects in ten large, established North American firms. The findings are grouped into three high-level strategic themes. The first theme, market scope, discusses the challenges associated with the pursuit of familiar versus unfamiliar markets for radical innovation. The second theme of competency management identifies and discusses strategic challenges that emerge as firms stretch themselves into new and unfamiliar territory. The final theme relates to the people issues that emerge as both individuals and the project teams themselves try to move radical projects forward in organizations that are not necessarily designed to support such uncertainty.A breadth of subtopics emerge within and across this framework relating to such ideas as risk management, product cannibalization, team composition, and the search for a divisional home. Taken together, our observations reinforce the emerging literature that shows that project teams engaging in radical innovation encounter a much different set of challenges than those typically faced by NPD teams engaged in incremental innovation.     

A critical look at technological innovation typology and innovativeness terminology: a literature review

A plethora of definitions for innovation types has resulted in an ambiguity in the way the terms ‘innovation’ and ‘innovativeness’ are operationalized and utilized in the new product development literature. The terms radical, really‐new, incremental and discontinuous are used ubiquitously to identify innovations. One must question, what is the difference between these different classifications? To date consistent definitions for these innovation types have not emerged from the new product research community. A review of the literature from the marketing, engineering, and new product development disciplines attempts to put some clarity and continuity to the use of these terms. This review shows that it is important to consider both a marketing and technological perspective as well as a macrolevel and microlevel perspective when identifying innovations. Additionally, it is shown when strict classifications from the extant literature are applied, a significant shortfall appears in empirical work directed toward radical and really new innovations. A method for classifying innovations is suggested so that practitioners and academics can talk with a common understanding of how a specific innovation type is identified and how the innovation process may be unique for that particular innovation type. A recommended list of measures based on extant literature is provided for future empirical research concerning technological innovations and innovativeness.

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Antecedents and Consequences of Reflexivity in New Product Idea Screening*

Pre‐development activities, such as new product idea screening, are considered to play an important role in innovation success. At the screening stage, a management team evaluates new product and service ideas and makes a first go/no‐go decision under high levels of uncertainty and ambiguity. Paying more attention to the decision‐making process in the screening stage appears important because too rigorous a use of rigid evaluation criteria and inflexible methods have been shown to have an adverse effect on market performance of novel products. The present study proposes and tests a model of team‐level antecedents and consequences of reflexivity—the explicit evaluation and discussion of working methods, tools, and criteria within a team. Recently, researchers have proposed that cognitive style and leadership style are major antecedents of decision‐making performance. This study posits that reflexivity offers an explanation of how transformational leadership and cognitive style can eventually affect decision‐making performance in the context of new product idea screening. Results of a survey among 126 top managers from large international firms show that the positive effects of transformational leadership and procedural rationality on the effectiveness and efficiency of screening decision making are largely mediated by reflexivity at the team level. This suggests that screening teams can improve their decision making in the following ways: committee chairs are advised to stimulate openness, develop a stop‐and‐think attitude among screening committee members, and support argument‐based discussion in order to adapt available decision tools, models, and checklists whenever needed. The paper concludes with implications, limitations of the study, and suggestions for further research.     

Resource orchestration for team‐based innovation: a case study of the interplay between teams,customers, and top management

The resource orchestration concept has attracted considerable interest in contemporary innovation research. However, resource orchestration is a manager‐centric framework and not all of its components necessarily reflect the value‐creation processes of organizations focusing on team‐based innovation. Drawing on a single‐case study of an innovative Swedish software company, we illustrate the roles of autonomous teams, customers, and top managers in orchestrating resources for team‐based innovation. Moreover, we introduce the concept of resource flocculation to describe how key actors co‐orchestrate various resource orchestration processes. The study contributes to research on resource orchestration by adapting the model to the conditions characterizing team‐based innovation, and to research on team‐based innovation by addressing how innovative teams are related to overall resource orchestration processes and, ultimately, organizational innovation outcomes.     

The impact of leadership influence tactics and employee openness toward others on innovation performance

Despite the vital importance of leadership, employees, and their social interactions in the open‐innovation process, there is scarce evidence on the influence and connectedness of different sub‐firm levels related to open innovation. The aim of this study is to explore the influence of leadership influence tactics and employee openness toward others on innovation performance at the individual and team levels. We applied a multilevel analysis on a sample of 85 employees and their 15 direct supervisors/team leaders. We find that leaders’ building open‐innovation coalitions exhibits a positive cross‐level relationship with employee openness toward others and individual‐level innovative behavior, and also moderates the link between the latter two constructs. Additionally, the leaders’ building open‐innovation coalitions variable is positively related to the team‐level scope of innovations and the team‐level innovation implementation phase.     

Innovation Performance in New Product Development Teams in China's Technology Ventures: The Role of Behavioral Integration Dimensions and Collective Efficacy

In emerging markets, technology ventures increasingly rely on new product development (NPD) teams to generate creative ideas and to mold these innovative ideas into streams of new products or services. However, little is known about how behavioral integration (a behavioral team process) and collective efficacy (a motivational team process) jointly facilitate or inhibit team innovation performance in emerging markets—especially in China, the world's largest emerging‐market setting with collectivist and high power distance cultures. Drawing on social cognitive theory and behavioral integration research, this article elucidates the relationships between behavioral integration dimensions (i.e., collaborative behavior, information exchange, and joint decision‐making) and innovation performance and also examines how collective efficacy moderates these relationships in China's NPD teams. Results from a sample of 96 NPD teams in China's technology ventures reveal that information exchange is positively associated with innovation performance. Collaborative behavior positively but marginally influences innovation performance, whereas joint decision‐making does not relate to innovation performance. Moreover, collective efficacy demonstrates an important moderating role. Specifically, both collaborative behavior and joint decision‐making are more positively associated with innovation performance when collective efficacy is higher. In contrast, information exchange is less positively associated with innovation performance when collective efficacy is higher. This study makes important theoretical contributions to the literature on team innovation and behavioral integration in emerging markets by offering a better understanding of how behavioral and motivational team processes jointly shape innovation performance in China's NPD teams. This study also extends social cognitive theory by identifying collective efficacy as a boundary condition for the overall effectiveness of behavioral integration dimensions. In particular, this study highlights the condition under which behavioral integration dimensions facilitate or inhibit NPD team innovation performance in China.     

How to manage innovation processes in extensive networks: A longitudinal study

In this paper, we examine the managing of the full innovation process, from visioning to commercialization, in extensive networks. By drawing on the IMP, strategic network, and innovation network literatures, we develop a comprehensive picture of the management activities when ‘mobilizing’, ‘orchestrating’, and ‘involving’ actors in working towards the innovation aim in such network settings. Through using two longitudinal case studies – the one pursuing radical and the other incremental innovation - we provide an empirically refined understanding of seven key management activities (motivating, resourcing, goal setting/refining, consolidating, coordinating, controlling, and leveraging), which are needed throughout the innovation process to turn the diversity of an innovation network into an opportunity rather than an obstacle. We demonstrate how actor diversity and the type of innovation (radical or incremental) shape the management activities, and map a dynamic actor composition that evolves alongside the innovation process. The longitudinal data highlights the consequences of the presence or lack of management activities, and the interlinkages between activities throughout the process. Our findings also provide insights for practitioners on how to cope with the increasing tendency to involve diverse stakeholders in innovation by pinpointing the critical management activities that can be employed.     

Antecedents and Consequences of Creativity in Product Innovation Teams

The generation of creative ideas and their manifestation as new products (NPs) are fundamental innovation activities of product innovation teams. Despite the importance of generating creative ideas at the fuzzy front end of the product innovation process, our understanding of antecedents and consequences of creativity of product innovation teams is limited. Drawing on Shane and Ulrich's organization design perspective of innovation, this study aims at examining the intermediary role of creativity as a critical link between team dynamics and product competitive advantage. In this study, the authors focus on NP and marketing program (MP) creativity in product innovation teams. They develop and empirically test a model that examines how internal and external team dynamics influence NP and MP creativity, and how NP and MP creativity affect product competitive advantage as a strategic innovation outcome. The study uses 206 matched responses from senior managers and product team leaders in high‐tech manufacturing firms in the United States to avoid common‐method bias. The authors use maximum likelihood estimation in a structural equation model to empirically test the proposed model. They find that two separate dimensions of creativity—novelty and meaningfulness—are differentially affected by team dynamics. For example, NP novelty as a result of divergent process is predominantly influenced by external team factors such as market‐based reward system and planning process formalization. On the other hand, NP meaningfulness as a result of convergent process is dominantly influenced by internal team factors such as social cohesion and superordinate identity. In addition, MP novelty is determined by social cohesion, superordinate identity, planning process formalization, and encouragement to take risks, while MP meaningfulness is influenced by social cohesion and planning process formalization. Our findings also suggest that NP novelty and meaningfulness, but not MP novelty and meaningfulness, play important intermediary roles in determining product competitive advantage. This study contributes to narrowing the important gap in the literature by examining the effect of team dynamics on creativity and by linking creativity to strategic innovation outcomes. Our study suggests that a firm's ability to manage team dynamics toward generating creative NPs and MPs constitutes a dynamic capability that can provide a competitive advantage over the competition.     

PERSPECTIVE: Trends and Drivers of Success in NPD Practices: Results of the 2003 PDMA Best Practices Study*

Since 1990, the Product Development & Management Association (PDMA) has sponsored best practice research projects to identify trends in new product development (NPD) management practices and to discern which practices are associated with higher degrees of success. The objective of this ongoing research is to assist managers in determining how to improve their own product development methods and practices. This paper presents results, recommendations, and implications for NPD practice stemming from PDMA's third best practices study, which was conducted in 2003. In the eight years since the previous best practices study was conducted, firms have become slightly more conservative in the portfolio of projects, with lower percentages of the total number of projects in the new‐to‐the‐world and new‐to‐the‐firm categories. Although success rates and development efficiencies have remained stable, this more conservative approach to NPD seems to have negatively impacted the sales and profits impact of the new products that have been commercialized. As formal processes for NPD are now the norm, attention is moving to managing the multiple projects across the portfolio in a more orchestrated manner. Finally, firms are implementing a wide variety of software support tools for various aspects of NPD. NPD areas still seriously in need of improved management include idea management, project leadership and training, cross‐functional training and team communication support, and innovation support and leadership by management. In terms of aspects of NPD management that differentiate the “best from the rest,” the findings indicate that the best firms emphasize and integrate their innovation strategy across all the levels of the firm, better support their people and team communications, conduct extensive experimentation, and use numerous kinds of new methods and techniques to support NPD. All companies appear to continue to struggle with the recording of ideas and making them readily available to others in the organization, even the best. What remains unclear is whether there is a preferable approach for organizing the NPD endeavor, as no one organizational approach distinguished top NPD performers.     

Product Development as Core Competence: How Formal Product Development Practices Differ for Radical,More Innovative,and Incremental Product Innovations

Although universally recognized as an important consideration in building product development (PD) competency, the effect of a firm's ability to vary its PD practices to develop winning products has been given scant attention in large‐scale, multiorganizational, quantitative studies. This research explores differences in formal new PD practices among three project types—incremental, more innovative, and radical. Using a sample of 380 business units, this research investigates how development practices differ across these three classes of innovation with respect to the formal PD process, project organization, PD strategy, organizational culture, and senior management commitment. Our results diverge from several commonly held beliefs about formal PD processes and the management of radical versus incremental innovations. Our results indicate that radical projects are managed less flexibly than incremental projects. Instead of being an offshoot of less strategic planning, radical projects are just as strategically aligned as incremental projects. Instead of being informally introduced entrepreneurial adventures, radical projects are often the result of more formal ideation methods. While these results may be counterintuitive to suppositional models of how to radical innovation happens, it is the central theme of this research to show how radical innovation actually happens. Our findings also provide a foundation for reexamining the role of control in the management of innovation. As the level of innovativeness increased, so too did the amount of controls imposed—e.g., less flexibility in the development process, more professional, full‐time project leadership, centralized executive oversight for new products, and formal financial assessments of expected NP performance.     

CEOs’ Transformational Leadership and Product Innovation Performance: The Roles of Corporate Entrepreneurship and Technology Orientation

Product innovation is an important research topic that has stimulated significant interest among management scholars and practitioners. Leadership has been suggested to be a critical factor affecting product innovation. Numerous studies have documented that transformational leadership positively influences product innovation performance, which is conceptualized as the degree to which a new product and/or service has achieved its market share, sales, rates of asset return, rates of investment return, and profit objectives. However, there is a lack of studies examining the specific means through which transformational leadership influences product innovation performance at the firm level. Therefore, this study aimed to investigate the processes through which such effect is achieved and to determine whether corporate entrepreneurship and technology orientation as intervening factors influence this effect. To test the hypotheses, data were collected from 151 matched top management team (TMT) members and chief executive officers (CEOs) from Chinese manufacturing firms. Two separate questionnaires were used to collect the data. TMT members’ questionnaire included measures of CEO's transformational leadership, whereas CEOs’ questionnaire included questions about corporate entrepreneurship, technology orientation, and product innovation performance. Hierarchical linear regression was used to test the hypothesized effects. The results of the analysis provided the support for the fully mediating role of corporate entrepreneurship on the relationship between CEOs' transformational leadership and product innovation performance. In addition, technology orientation was found to significantly moderate the CEOs' transformational leadership–corporate entrepreneurship linkage. Furthermore, the mediated moderation effect of corporate entrepreneurship on the relationships among CEOs’ transformational leadership, technology orientation, and product innovation performance was significantly supported. By studying leadership among CEOs, this study contributes to the research by elucidating the mechanisms through which transformational leadership influences product innovation performance. The mediating role of corporate entrepreneurship encourages managers to improve their leadership style so as to enhance the development of corporate entrepreneurship and innovation practices. The findings also show that technology orientation provides the conditions for the smooth translation of the CEO's transformational leadership into actual entrepreneurial activities. Hence, firms should prioritize technology orientation to optimize the implementation of transformational leadership so as to emphasize innovation and new venture creation.     

Team control mode,workers' creativity,and new product innovativeness

Scholars of creativity and innovation argue that successful innovations originate from the creative ideas of workers. However, few studies have empirically examined how management mechanisms, such as the control mode adopted by the new product development team, may work together with workers' creativity to deliver a successful new product. Drawing on the theory of opposing action strategies of team innovation, we propose that different team control modes may work together with team members' creativity to jointly influence the innovativeness of teamwork outcomes. With survey data collected from different sources in new product development teams, we find that restrictive control can effectively help teams composed of very creative members to successfully develop innovative new products. Conversely, promotive control can effectively help teams composed of less creative members to deliver innovative new products.     

Autonomous Teams and New Product Development

An autonomous team is an emerging tool for new product development (NPD). With its high degree of autonomy, independence, leadership, dedication, and collocation, the team has more freedom and stronger capabilities to be innovative and entrepreneurial. Several anecdotal cases suggest that autonomous teams are best when applied to highly uncertain, complex, and innovative projects. However, there is no empirical study to test such a notion. Moreover, autonomous teams are not a panacea, and implementing them can be costly and disruptive to their parent organization. When should this powerful, yet costly tool, be pulled out of the new product professional's toolbox? This paper attempts to answer this question. The objective of this study is to explore under which circumstances an autonomous team is the best choice for NPD. Based on contingency and information‐processing theories, autonomous teams are hypothesized to be more effective to address projects with: (1) high technology novelty and (2) radical innovation. To test these hypotheses, the relative effectiveness of four types of team structures: autonomous, functional, lightweight, and heavyweight are compared. The effectiveness measures include development cost, development speed, and overall product success. Vision clarity, resource availability, and team experience are the controlled variables. The empirical results based on the data from 555 NPD projects generally support the research hypotheses. Relative to other team structures, autonomous teams are more effective in addressing projects with high technology novelty or radical innovation. The results also suggest that heavyweight teams perform better than other teams in developing incremental innovation. These results provide some evidence to support contingency and information‐processing theories at the project level. Given the importance of the development of novel technology and radical innovation in establishing new businesses and other strategic initiatives, the findings of this study may not only have some important implications for NPD practices but may also shed some light on other important topics such as disruptive innovation, strategic innovation, new venture, corporate entrepreneurship, and ambidextrous organization.     

Product Innovation Processes in Small Firms: Combining Entrepreneurial Effectuation and Managerial Causation

This article reports a multimethod study of product innovation processes in small manufacturing firms. Prior studies found that small firms do not deploy the formalized processes identified as best practice for the management of new product development (NPD) in large firms. To explicate small firms' product innovation, this study uses effectuation theory, which emerged from entrepreneurship research. Effectuation theory discerns two logics of decision‐making: causation, assuming that means are selected to attain goals; and effectuation, assuming that goals are created based upon available means. The study used a process research approach, investigating product innovation trajectories in five small firms across 352 total events. Quantitative analyses revealed early effectuation logic, which increasingly turned toward causation logic over time. Further qualitative analyses confirmed the use of both logics, with effectual logic rendering product innovation resource‐driven, stepwise, and open‐ended, and with causal logic used especially in later stages to set objectives and to plan activities and invest resources to attain objectives. Because the application of effectuation logic differentiates the small firm approaches from mainstream NPD best practices, this study examined how small firms' product innovation processes deployed effectuation logic in further detail. The small firms: (1) made creative use of existing resources; (2) scoped innovations to be realizable with available resources; (3) used external resources whenever and wherever these became available; (4) prioritized existing business over product innovation projects; (5) used loose project planning; (6) worked in steps toward tangible outcomes; (7) iterated the generation, selection, and modification of goals and ideas; and (8) relied on their own customer knowledge and market probing, rather than early market research. Using effectuation theory thus helps us understand how small firm product innovation both resembles and differs from NPD best practices observed in larger firms. Because the combination of effectual and causal principles leverages small firm characteristics and resources, this article concludes that product innovation research should more explicitly differentiate between firms of different sizes, rather than prescribing large firm best practices to small firms.     

Individual differences, environmental scanning, innovation framing, and champion behavior: key predictors of project performance

Although increasing evidence points to the importance of champions for keeping product innovation ideas alive and thriving, little is known about how champions identify potential product innovation ideas, how they present these ideas to gain much needed support from key stakeholders, and their impact on innovation project performance over time. Jane M. Howell and Christine M. Shea address this knowledge gap by using measures of individual differences, environmental scanning, innovation framing and champion behavior to predict the performance of 47 product innovation projects. Champion behavior was defined as expressing confidence in the innovation, involving and motivating others to support the innovation, and persisting under adversity. Interviews with 47 champions were conducted to collect information about the innovation projects and the champions' tendency to frame the innovation as an opportunity or threat. Survey data were obtained from three sources: 47 champions provided information on their personal characteristics (locus of control and breadth of interest) and activities (environmental scanning), 47 division managers subjectively assessed project performance at two points in time, and 237 innovation team members rated the frequency of champion behavior. The results revealed that an internal locus of control orientation was positively related to framing the innovation as an opportunity, and breadth of interest was positively related to environmental scanning. Environmental scanning of documents and framing the innovation as a threat was negatively related to champion behavior, while environmental scanning through people was positively related to champion behavior. Champion behavior positively predicted project performance over a one‐year interval. Overall, the findings suggest that in scanning the environment for new ideas, the most effective source of information is the champion's personal network of people inside and outside the organization. Also, the simple labeling of an idea as a threat appears to diminish a champion's perceived influence and erode credibility in promoting an innovation. From the perspective of division managers, champions make a positive contribution to project performance over time, reinforcing the crucial role that champions play in new product development process.     

The influence of material resources on innovation projects: the role of resource elasticity

More (rather than fewer) material resources are thought to be the key driver in innovation project performance. Recent empirical evidence, however, suggests that the influence of material resource availability on innovation projects is not as simple and straightforwardly positive as it may seem. We build on the concept of an innovation project team's resource elasticity to disentangle the material resource–innovation output conundrum. This concept is analogous to the marketing concept of price elasticity and points to four types of innovation project teams based on their resource elasticity: In resource‐elastic teams, the relationship between material resources and innovation outcomes is positive (hence, they are ‘resource driven’ when able to dispose of adequate material resources or ‘resource victims’ when lacking these material resources). In contrast, and as a significant departure from previous work, resource‐inelastic teams show no or even a negative relationship between material resource adequacy and team performance (thus, the teams are ‘resourceful’ if they can perform with limited material resources or ‘resource burners’ if they show low success with adequate material resources). Because neither adequate nor inadequate material resources seem to be a reliable predictor of success, we synthesize empirical research efforts that point to each team type's key characteristics to derive novel implications for managing innovation projects.     

Radical Product Innovation Capability: Literature Review,Synthesis, and Illustrative Research Propositions

Product innovation is a key to organizational renewal and success. Relative to other forms of innovation, radical product innovations offer unprecedented customer benefits, substantial cost reductions, or the ability to create new businesses, any of which should lead to superior organizational performance. In other words, a radical product innovation capability is a dynamic capability, one that enables the organization to maintain alignment with rapidly evolving customer needs in high‐velocity environments. Extensive research has been conducted on the antecedents to an incremental/general product innovation capability, and meta‐analyses have been conducted to integrate the results from the various studies. However, whether and how a radical product innovation capability differs from an incremental product innovation capability is also critical. The purpose of this work is to develop a testable model of the antecedents to radical product innovation success. Based on an extensive literature review, a comprehensive set of organizational components that comprise a firm's radical product innovation capability is identified. These organizational components include senior leadership, organizational culture, organizational architecture, the radical product innovation development process, and the product launch strategy. Of course, each of these components has subcomponents that provide even more texture. This review highlights how the components of a radical innovation capability function differently from those for an incremental capability. In addition, this review strongly suggests that the direct effects models that dominate this literature underestimate the complexity of the interplay of components that comprise a radical product innovation capability. Thus, a model to demonstrate this interplay of these organizational components is provided. Illustrative research propositions are offered to provide guidance to researchers. Suggestions for executives and managers who are involved in the product development process and for scholars who seek to advance the state of knowledge in this area are offered in the conclusion.     

Can me‐too products prevail? Performance of new product development and sources of idea generation in China – an emerging market

New products developed in emerging markets such as China, India and Brazil are not only sold locally but also ‘exported’ globally, suggesting a changing landscape for global innovation. Existing literature in technology learning and capability accumulation has long held the claim that, for a certain period of time in their development, firms in latecomer countries rely on their counterparts in developed countries to get new product ideas. However, existing research in this area is generally based on case studies and historical analyses; there are few empirical studies exploring the performance consequence of learning from competitors abroad. Using large‐scale, nationwide survey data from China, we explore specifically whether learning about new product ideas from leading firms in foreign countries will lead to higher performance outcomes than other sources (i.e. domestic competitors, customers, universities or internal departments) in an emerging market. Our findings suggest that Chinese firms that source new product ideas from leading firms in foreign countries achieve overwhelmingly superior performance along financial, customer and technological dimensions. Implications to the managers and policy makers are also discussed.     

The field of radical innovation: Making sense of organizational cultures and radical innovation

Organic organizational structures and cultures facilitate innovation because they allow organizations to shift their understanding of what a product, service or technology means. Yet, organic organizations may have to instill mechanistic structures and bureaucratic processes if they produce successful radical innovations. Thus, the basis of innovation can be undermined by its consequences. To explore this issue, this paper analyzes data from an ongoing longitudinal case study of a SME digital-design agency that developed a radical innovation for the market research industry. The paper observes that founders of the organization shifted their position to become managers as a result of their radical innovation and that other members of the organization have, consequently, re-evaluated their attitude toward the organization. To conceptualize our findings we turn to the work of Pierre Bourdieu. His notion of fields—which structure experiences and are, themselves, structured by experiences—offers a framework to understand the dynamics within an organization that occur as a result of a successful radical innovation. The contribution of our paper is: theoretically, we relate the discussion of innovation to wider social theories of practice and, thus, introduce temporal and cultural dynamics into the account of radical innovation; methodologically, we provide an example of a longitudinal study; and, in managerial terms, we indicate where divisions occur within an organization concerning the construction of meaning between managers and employees after a radical innovation.