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.     

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.     

Framing problems in radical innovation

The challenge of managing radical innovation is partly about dealing with higher levels of uncertainty as organisations seek to extend their exploration into new technological and market spaces. Innovation management routines for dealing with this differ from those around incremental innovation — the well-established exploit/explore dilemma. But it can be argued that there is a second challenge associated with radical innovation under conditions of discontinuity — when new elements in the environment need to be brought into the organisation's frame for search, selection and implementation. Under these conditions existing routines fail and otherwise successful incumbents experience significant difficulties. This paper explores the challenge of such radical innovation through the lens of the ways in which innovation activity is framed and contributes to the theme of this Special Issue through discussing barriers and enabling routines associated with the search, selection, and implementation processes within organisations.     

Open innovation ecosystem organizing from a process view: a longitudinal study in the making of an innovation hub

This paper uses process theory as a theoretical lens to analyze AstraZeneca's enactment of an open innovation initiative with the purpose of strengthening the firm's surrounding innovation ecosystem. Based on empirical data collected over 7 years, we develop a process model of open innovation enactment and explain how the initiative gradually transformed while maintaining its guiding principles, which were set from the start. In applying a process perspective, we highlight open innovation initiatives as dynamic and evolutionary – but not deterministic – developments. As such, we provide a comprehensive and more nuanced understanding of not only what open innovation is but also how it becomes. This study also contributes to the innovation ecosystem literature by theorizing how firms orchestrate innovation ecosystems through open innovation initiatives over time.     

Towards an integrated framework for managing the process of innovation

Innovation has become a major driving force for business growth and success. However, successful and sustained innovation represents challenges rooted in technological uncertainties, ambiguous market signals and embryonic competitive structures. Notably, in the management of innovation, many challenges still remain in both theory and practice, which demand improved managerial approaches. In this context, the development of a practical and explicit management framework for the process of innovation could be beneficial. This research sets out to develop the concept of ‘Innovation Readiness Levels’ (IRL), an explicit model for managing the process of incremental innovation. Basically, IRL is a framework depicting the development of an innovation over its lifecycle. Within the emerging framework proposed in this paper, five key aspects that determine the effective implementation of innovation are identified. The lifecycle of innovation is then divided into six phases, and for each phase, associated assessment aspects and criteria are identified. By providing better monitoring and control, IRL is intended to help implement innovation over the lifecycle more effectively. It is also expected to apply as a management tool, for which guidance of use is suggested.     

Commercializing a radical innovation: Probing the way to the market

Needs, market structures, business models, and relationships concerning radical innovations (RIs) are unpredictable and, consequently, firms face critical challenges in commercialization. Therefore, this study examines the commercialization of RIs as a process complicated by divergent challenges. By drawing on the literature on innovation management, RIs, and the commercialization and adoption of innovations, and by analyzing six longitudinal cases, the study generates its contribution: a dynamic process model for the commercialization of RIs. The model captures the iterative and partially unpredictable commercialization process comprising transits back and forth between three main zones: strategic marketing decision making, market creation and preparation, and sales creation and development. Over this probing process, a firm faces major commercialization challenges: 1) choosing a feasible strategy in conditions of uncertainty, 2) understanding the benefits of innovation from the customer's perspective, 3) creating credibility, 4) acquiring support from stakeholders and the ecosystem, 5) overcoming adoption barriers, and 6) creating sales. For managers, the results suggest diligence in the neglected market creation and preparation zone instead of attempting rushed sales creation.     

Coming in from the cold: The psychological foundations of radical innovation revisited

Radical innovation poses a series of well-documented adaptive behavioral challenges for individuals, organizations and organizational collectives. Drawing on the insights of recent advances in the social neurosciences, the authors demonstrate how theory and research rooted in the cold cognition era of human psychology has laid microfoundations for practices purporting to help address these challenges that are fundamentally unfit for purpose. Predicated on an outmoded conception of economic actors as affect-free information processors, devoid of emotion, scholars and practitioners alike are unwittingly perpetuating a (bounded) rationality façade. In so doing, they are undermining attempts to foster the requisite transformation of mindsets and behavior. To address these unintended consequences, new theory and research is required to shed light on the generative mechanisms through which firms might create the conditions to enable them to harness the cognitive and emotional capacities of individuals and groups, an essential step for overcoming the pitfalls of bias and inertia that so often inhibit adaptation to changing environments, thus slowing progress in the development and diffusion of innovations. To further this end, the present article advances a research agenda that places emotion management center stage, arguing that, to be truly dynamically capable, firms must learn to nurture self-regulation capabilities at all levels of the enterprise.     

Implementing radical innovation in the business: the role of transition modes in large firms

Extensive research has emphasized the relevance and importance of separating explorative from exploitative activities within firms. Recently, several scholars have argued that, in order to be successful, the outcomes of such structurally separated explorative activities need to be integrated in the operational business units of the firm. Nevertheless, detailed research on how such integration can be realized is lacking. Based on in‐depth case studies of seven large multinational, technology intensive companies, we find five transition modes on how interfaces between radical innovation units and operational business are managed effectively as a means to implement radical innovation on a company level: (1) external validating; (2) liaison channeling; (3) showcasing innovation; (4) network building; and (5) integrative innovation planning.     

National characteristics: innovation systems from the process efficiency perspective

This study compares the innovation system characteristics of 40 countries from the perspective of process efficiency. We treat the national innovation system as a two‐stage process that first produces knowledge and then commercializes the knowledge produced. After identifying efficiencies through data envelopment analysis, the within‐country strengths, or the contribution of the individual process factor to the efficiency, of all 40 target countries are compared by applying the network‐based ranking method. The comparison is different from previous efficiency‐based studies in that it hints at country characteristics and highlights the cross‐country benchmarks for each process factor. The pattern of within‐country strengths underlines the characteristic of each country. Based on country characteristics, we highlight the national differences and categorize the target countries into nine distinctive groups. We find that no single country demonstrates characteristics that focus on both the knowledge production and knowledge commercialization stages. The results provide policy makers with both references on what to improve and information for where to learn the experience from.     

Opening up the innovation process: the role of technology aggressiveness

Besides acquiring external knowledge, many firms have begun to actively commercialize technology, for example, by means of out-licensing. This increase in inward and outward technology transactions reflects the new paradigm of open innovation. Most prior research into open innovation is limited to theoretical considerations and case studies, whereas other lines of research have focused either on external technology acquisition or exploitation. In an integrative view, we consider inward and outward technology transactions as the main directions of open innovation. Moreover, technology aggressiveness, which constitutes an important dimension of technology strategy, is identified as a major determinant of open innovation. Data from a survey of 154 industrial firms are used to test three hypotheses relating technology aggressiveness, external technology acquisition, and external technology exploitation. In addition, clusters of firms with homogeneous strategies regarding technology aggressiveness and open innovation are identified.     

Evaluating failure in the innovation process: the micropolitics of new product development

For almost 40 years academics from a wide range of disciplinary backgrounds have sought to improve our understanding of the innovation process. In this paper, we examine the contribution made by those such as Kotler who have attempted to describe a rational approach to New Product Development (NPD). We argue that such frameworks offer a view of organisational activity which substantially understates the political activity associated with managing the innovation process. Most of those writing from a marketing perspective acknowledge external political influences such as government policies and the leverage of 'special interest groups'. We focus on the work of Burns and Stalker who clearly recognised the way in which internal political struggles to access resources or to improve career prospects impact on innovation. To analyse the role of micropolitics in the NPD process we describe the case of WEL, a medium-sized manufacturing firm, as managers and engineers attempted to develop an important new product. We conclude that it is essential to incorporate the role of internal politics into any framework which claims to offer a realistic account of NPD.     

A tentative model of the innovation process

The paper proposes a model of innovation claimed to be applicable both to the lone entrepreneur and the large institution. It treats innovation as a social process and views it in some respects as analogous to natural selection.
The model takes into account 12 elements: the innovator, the new concept, the innovating group, the new product, target user, competitors, capital supply, strategy, supplying organization, technology, relevant environment and chance. The author characterises each element and shows how they interact in the course of guiding a particular innovation to success or failure.
The operation of the model is illustrated by applying it to two cases — the rise and decline of the metal ski and the launch and success of a national US newspaper.
The paper concludes with a list of possible uses of the model, as a checklist for action, as a basis for incorporating other approaches to the innovation process and as a starting point for a quantitative representation of the innovation process.     

The 'transformation game': information systems and process innovation in organizations

The relationship between new information and communication technology and organizations is the subject of considerable debate. So too is the nature of organizational transformation. ‘Business process re-engineering’, with its emphasis upon the strategic deployment of information systems, brings both debates together. But does it resolve any of the issues?     

The impact of global and local cohesion on innovation in the pharmaceutical industry

In this paper, we examine how the configuration of intraorganizational networks, and in particular, cohesion among members of an organization, influences organizations' innovative output. We argue that the cohesion among R&D scientists could be at a local level or a global level, and that local and global cohesion may have different impacts on firms' innovation performance. We test our hypotheses by examining the structure of the R&D collaboration networks within firms that operated in the pharmaceutical industry between 1981 and 1989, and their innovative outcomes—patents that led to new product launches. We find that local cohesion has a positive impact on the innovative performance of a firm, and global cohesion has a negative impact. Copyright © 2011 John Wiley & Sons, Ltd.     

Users' contributions to radical innovation: evidence from four cases in the field of medical equipment technology

This paper focuses on contributions of users in early phases of radical innovation projects. In a multiple case study analysis in the field of medical equipment technology, we identify characteristics of users who contribute substantially to the development of radical innovations by being their inventors and (co)-developers. These innovative users have high motivation to seek new solutions, possess a diverse set of competencies, and are embedded in a supportive environment. We furthermore observe that they play an entrepreneurial role as they establish and organize the required innovation networks. These innovation networks are needed to transform the users' radically new concepts into first physical prototypes and marketable products. The study highlights how manufacturing firms can benefit from innovative and entrepreneurial users in the early phases of radical innovation projects.     

Product and process innovation in biopharmaceuticals: a new perspective on development

Developing new products and processes is increasingly a focal point of competition and often requires the development and successful implementation of novel process technologies. The process development and production of a new biological entity are significantly more complex than those for small molecule drugs. Conventional new product development models in the literature on firm level innovation fail to explain the nature of development projects for biopharmaceuticals. This paper makes the case that a new perspective is required to understand the management of product and process development in biopharmaceuticals. An explanatory model is proposed for this purpose.     

Identity,collaboration and radical innovation: The role of dual organisation identification

This paper explores the nature of the relationship between identity and the radical innovation process in the case of the Solid State Pharmaceutical Cluster (SSPC). Antecedents and consequences of identification with the SSPC and the transitioning of identify from an organisational orientation to a dual organisation identity are discussed. We demonstrate that organisational identity can represent a substantial barrier to collaborating for radical innovation, and explicate how identity shifts can smooth the transition from competitor to collaborator. This study illustrates that opportunities were created through leveraging affinity to provide an environment conducive to radical innovation where members could interact, explore and collaborate.     

The latecomer strategy for global ICT standardization: Indigenous innovation and its dilemma

This article reviews China׳s changing standardization strategies amidst the standards competitions that take place both domestically in China and globally. The relevant policies in China now support indigenous innovation, particularly in the information and communication technologies (ICT) industry by using standards, encourage domestic firms to patent their standard-related technologies, and promote innovation-oriented inter-firm alliances. The three cases examined illustrate the challenges that the Chinese government faces in implementing the policies. Most of all, while the government has actively promoted indigenous innovation as a latecomer strategy for global standardization, there are possibilities of clash with the international norms for free competition and economic liberalization which China is supposed to comply with. There are also oppositions from those domestic firms that mainly export products compliant with the international standards set by advanced countries, and from local authorities that support those firms. The demands for international compliance are often strengthened by multinationals importing products compliant with the international standards. These clashes and oppositions give a dilemma to the policy makers who want to push the standardization strategy based on indigenous innovation.