Serial Innovators' processes: How they overcome barriers to creating radical innovations

Formal new product development processes typically are depicted in the literature as linear processes having some number of stages, each of which is completed by a cross-functional team. At the end of each stage a management committee makes a decision as to whether the project will proceed to the next stage, be stopped, or recycle through the previous stage to better complete some of the tasks or steps in the stage. Teams proceed stage by stage, until the product is launched into the market.However, this formal process typically is positioned as occurring after the “fuzzy front end” (FFE), the chaotic, messy up-front part of new product development before there is a solidified concept. Because incremental, evolutionary innovations go through an abbreviated FFE, or even have none at all, these formal processes work quite well for them. However, radical innovations typically have very messy, chaotic and fuzzy front ends, which are not helped by these formal processes. Formal product development processes may actually act as a barrier to radical innovation. Very little research to date has investigated processes that overcome the barriers to radical innovation and allow firms to successfully bring radical innovations to market.This research investigates the product development processes used by 19 Serial Innovators—individuals in large, mature firms who have been associated with one after another radical innovation success. We find that Serial Innovators' processes have four specific features that enable them to overcome organizational barriers and allow them to create and successfully commercialize radical innovations. Serial Innovators' processes:

• •are not at all linear in nature;
• •focus significant time and effort on the fuzzy front end;
• •explicitly manage the transition from the fuzzy front end tasks and outputs (a proposed solution to a problem) to the more formal and institutionalized development process; and
• •proactively work to create market acceptance.

     

Portfolio management for new product development: results of an industry practices study

Portfolio management for product innovation – picking the right set of development projects – is critical to new product success. This article reports on the new product portfolio practices and performance of a large sample of firms in North America. Reasons why portfolio management is important are identified, followed by the relative popularity of the different portfolio techniques: financial methods are first, followed by business strategy methods, bubble diagrams and scoring models. Next, how the various portfolio methods fare in terms of six performance metrics is probed. Financial methods, although the most popular and rigorous, yield the worst results overall, while top performing firms rely more on non‐financial approaches – strategic and scoring methods. The details of how some of these more popular methods are employed by firms to rate and rank development projects are also provided. Finally, managerial implications, including suggestions for making portfolio management more effective in industry, are outlined.     

A framework, process and tool for managing technology‐based assets

Technology organisations centre their business on the development of new technology‐based offerings (i.e. products and services). The strategic management of technology‐based assets is therefore crucial for these organisations as an imperative for business success. However, these assets are often intangible and reflect future rather than current value and are therefore difficult to manage when using traditional managerial concepts. This study investigates integrative mechanisms addressing the management of technology‐based assets and offerings in a technology organisation. The approach taken was to study the views and practices regarding the management of technology‐based assets in a number of strategic units of a technology organisation (CSIR, South Africa). The study maintains that the management of technology‐based assets and offerings requires clear strategic management of the process of technological innovation with special emphasis on the management of the intellectual capital (IC) and the intellectual property (IP) of the organisation. The study describes a framework linking the core processes supporting the management of technology‐based assets and offerings with other organisational elements such as leadership, strategy, and culture. Specific key links between the core process of innovation and the strategic management of investment in technology‐based assets using a portfolio approach are discussed.     

Seller–Buyer Interactions During the Commercialization of Technological Process Innovations

For buyers and sellers alike, high-tech process innovations can be a double-edged sword. On the one hand, technological process innovations (e.g., computer hardware and software, factory automation equipment) offer buyers the potential for reduced production costs and enhanced product quality. However, early adoption of such innovations is often a risky proposition. For the seller, successful commercialization requires stimulating not only adoption, but also successful implementation of the innovation. In other words, effective management of seller—buyer relations during the development and commercialization process go a long way toward determining the success of a high-tech process innovation. Gerard A. Athaide, Patricia W. Meyers, and David L. Wilemon examine the relationship marketing activities employed by successful sellers of high-tech process innovations. They identify eight strategic marketing objectives that underlie these relationship marketing activities: product customization, information gathering on product performance, product education and training, ongoing product support, proactive political involvement (to encourage support for the innovation from the various affected parties in the buyer's organization), product demonstration and trial, real-time problem-solving assistance, and clarification of the product's relative advantage. Their findings suggest that successful sellers engage in relationship marketing activities throughout all phases of the commercialization process. Rather than simply trying to close a deal, these firms seek active involvement from potential customers, ranging from codesigning of products to seeking feedback on product-related problems or desired modifications. This broader scope of customer involvement necessitates cooperation among various groups in the seller's organization. Product development and engineering work closely with the customer during product customization. Those groups must communicate effectively with the salespeople who demonstrate the product and with the customer support people who obtain feedback and provide real-time problem-solving support. In other words, these relationship marketing activities cut across functional barriers. Consequently, a clear understanding of the buyer's needs and environment is essential throughout the seller's organization, not just in the sales and marketing departments.     

Realities of R&D as a business: MBI's experience

The level of effort in a R&D activity on research or development depends upon whether the R&D activity is basic or applied. In general, the R&D at a university is focused more on the research (R of R&D) whereas the emphasis in an industrial R&D is more on the development (D of R&D) and less on research. In the past, this created a gap difficult to bridge between the R&D needs of an industrial sector and the R&D output from university and governmental laboratories. The recent success in R&D as a business has mainly been due to understanding the critical steps needed to take an idea to a marketplace and, thus, the emphasis on R or D has become a moving target depending upon the need. MBI International, a non‐profit R&D organization, was created to bridge the gap between academic and industrial R&D and to validate, develop and demonstrate technologies having commercial potential in the industrial sector. In the process, MBI developed partnerships with universities, governmental agencies, foundations, and industries to resource innovative technologies, funds, physical facilities and market opportunities to make the R&D business a reality. In this paper, we present MBI's experience in developing and commercializing R&D technologies in several new spin‐off companies, joint ventures, and out‐licensing.     

Managing Diffusion Barriers When Launching New Products

In recent years there has been a growing interest in the link between new product launch activities and market success. So far, most empirical research has focused on launch activities that target customer adoption barriers. However, with such a focus the influence of other stakeholders on innovation diffusion is not taken into account. A review of diffusion research and stakeholder theory serves as a basis for discussing the influence of different stakeholder groups such as customers, dealers, suppliers, and competitors on innovation diffusion. Essentially, it is expected that addressing multiple diffusion barriers during new product launch will have a positive impact on market success. The new concept for launch activities addressing multiple diffusion barriers is tested with data on new product launches in industrial markets using a multiple‐informant approach. The results lend support to the notion that a successful launch requires activities addressing diffusion barriers related to different stakeholder groups. Specifically, barriers related to customers, suppliers, and stakeholders of the further firm environment need to be lowered during market launch. For the group of competitors, a balanced launch approach including measures to both lowering and erecting entry and diffusion barriers will increase the market success of new products. The subsequent investigation of the influence of technological turbulence, market turbulence, and product complexity on the performance relationships shows that under high uncertainty managing multiple‐diffusion barriers is of higher relevance than in more unambiguous, clear‐cut contexts. Thus, the results demonstrate that a careful management of diffusion barriers related to multiple stakeholders is a relevant task when launching a new product. The paper concludes with implications for management practice and avenues for future academic research.     

Exploring How Peer Communities Enable Lead User Innovations to Become Standard Equipment in the Industry: Community Pull Effects

Literature on new product development indicates that on average around 40% of new products fail across different industries (e.g., Crawford, 1977 ; Crawford and Di Benedetto, 2008 ). Out of those that survive only few become widely accepted standard equipment in the industry (Utterback, 1996 ). Literature on entrepreneurship (e.g., Baron and Shane, 2008 ) and on innovation (e.g., Christensen, 1997 ) shows that such innovations often originate outside the boundaries of established firms. However, it is difficult to understand and analyze the exact source of such innovations and the entrepreneurial processes by which they are developed. It is therefore the aim of this study to shed light on how innovations become widely accepted by large segments of the market and specifically which demand‐side forces are at work. An approach suitable for pursuing this objective is to focus on those individuals who are on the leading edge with respect to an important market trend (lead users) and their respective peer communities. As little knowledge is available, an explorative case study design is applied, working with cases from two different industries, specifically the medical equipment and sporting equipment industry. A longitudinal research design is used, extracting data from multiple respondents and various other sources such as reports, publications, databases, or community web pages. The research framework takes a process perspective by following the entrepreneurial processes from invention to commercialization and diffusion. In this process, micro‐level variables at the individual and group level are analyzed as well as the barriers to be overcome by the individual innovator and the community. The findings show that communities play a central and active role in the entrepreneurial process. Community members provide valuable feedback on the overall potential of the lead users' ideas, participate by making concrete development contributions, acting as testers of the new products, and finally helping to diffuse the innovations inside and outside the community. We identify two pull effects on the part of the community: first, community members demand and facilitate the development of prototypes; and second, community members help to cross the chasm between first adopters and the early majority. This paper has various implications for entrepreneurship and innovation research. For entrepreneurship, this article points out peer communities as a specific kind of social network that plays a crucial role in entrepreneurial processes. For innovation research, this article emphasizes the interaction between lead users and their peer communities in the process of developing the next dominant product design.     

Innovation among suppliers to automobile manufacturers: an exploratory study of barriers and facilitators1

This paper reports on an exploratory study of the barriers and facilitators that affect technological innovation by suppliers to the automotive industry and the adoption of such innovations by the industry. The specific focus in the study was on key decision and action points in the life of specific innovations or potential innovations (ideas for new products) which may affect their successful development and marketing. The major source of data for this study was in the form of brief cases obtained from interviews of managers and technical personnel in suppliers to the automotive industry. These cases related to specific projects engaged in or ideas proposed by the responding firms or others in their sector of the industry which were aimed at the introduction of new or improved products, components, systems, materials, designs, etc., to the automotive industry. The information and data for this study were collected by means of structured interviews with 15 managers in 13 first level supplier firms to the automotive industry. A total of 32 innovations were investigated and a corresponding number of 32 cases and additional information on barriers and facilitators were generated for these 32 innovations. In general it was found that the most important barriers and facilitators to innovating were federal laws and regulations. Overall, the two types of decisions that are made in the automotive supplier's environment which appear consistently throughout these cases are (1) the automotive customer's decision to accept, encourage development of, or adopt innovations, and (2) the government's decision to mandate changes in safety, environment or energy-relatedregulations or legislation. The policy implications of the results of this study are discussed as they relate to an evolving model of the effects of potential federal intervention in the R&D/innovation process.     

Advancement intentions and job attitudes – a study on the career setting of high‐tech engineers in Taiwan

Career ladders are built up on the premise of employees' interest in career mobility. The system, however, may not have the desired motivational impact when employees are hesitant or undecided to pursue them. In this paper, career issues in terms of the high‐tech environment in Taiwan were explored. The relationships between engineering career choices and job attitudes were quantified. The results confirm that engineers with clear advancement aspirations in either technical or general management careers offered by organizations have better job attitudes than engineers without clear aspirations. The finding appears to be more advancement vs. non‐advancement, and less technical vs. managerial. Adjustments for two types of engineers who hesitate to show their advancement aspirations are given. Other contextual implications are also discussed.     

The commercialization of user innovations: the development of the rodeo kayak industry

In this study, we analyze the commercialization process of user innovations in open communities. We have traced 16 cases of user innovators who have commercialized their own innovations or have been involved in the commercialization process to some extent. By developing and manufacturing new products, the user innovators in our sample created a fast-growing community. They used low-cost manufacturing techniques and were able to start a new industry before established manufacturers could enter the market. The transformation process from a user innovation community to a commercial and manufacturing community brought about a number of major changes. In this paper, we track those changes as: the motives for innovating, the community size and characteristics, the type of innovation, the type of assistance and the disclosure of information, the form of communication, and competition between innovating users.     

Understanding the Antecedents,Contingencies, and Performance Implications of Process Innovation: A Dynamic Capabilities Perspective

This paper examines one of the most important sources of competitiveness in dynamic industries—the capability of firms to introduce process innovations. While the management of product innovation has received considerable theoretical and empirical attention in the literature, our knowledge about how firms become process innovators—and why many firms fail to do so—remains underdeveloped. In order to provide novel insights into the configuration of firms' process innovation activities and their performance implications, this paper draws on the dynamic capabilities approach. More specifically, this study aims to shed light on the antecedents, contingencies, and performance consequences of interfirm differences in process innovation success, that is, firms' propensity and effectiveness of implementing new production, supply chain, or administrative processes. Particular emphasis is placed upon the analysis of potential complementarities or substitution effects between innovation activities such as internal and external research and development, prototyping, external knowledge acquisition, and employee training. Cross‐sectional data from a large‐scale survey of German manufacturing and service firms serves as the basis for testing the hypotheses advanced in this paper. Findings suggest that by engaging in a broad range of different innovation activities, firms can indeed increase the likelihood of achieving process innovation success, which is in turn positively related to firm financial performance. Yet decreasing marginal returns to innovation activities have to be considered as process innovation propensity was found to increase with the number of activities pursued simultaneously only up to a point, after which negative marginal returns set in (inverted U‐shaped relationship). Furthermore, while environmental turbulence was found to have surprisingly little influence when it comes to translating process innovation success into firms' subsequent financial performance, industry membership as well as the nature of the innovation process (i.e., internal generation, external adoption, or cocreation of an innovation) emerged as key contingency factors. These findings have important theoretical as well as practical implications for managing new process introductions.     

Making Up Is Hard to Do: Knowledge Acquisition Strategies and the Nature of New Product Innovation

Innovation creates significant challenges for firms in high‐technology industries. This article examines how the use of external knowledge acquired from mergers and acquisitions (M&As) and joint ventures (JVs) influence the nature of innovative competence in the global pharmaceutical industry. We create a unique database on never‐before approved products that measure the scientific merit of new, exploratory product innovations, ranging from radical to incremental. We then follow their market success by recording the number of new exploitative product innovations that stem from these product innovations and that are later approved and subsequently marketed. Using a large data set spanning a 15‐year period, we find that firms were able to “make up” for their lack of exploitation or exploration innovative capabilities through the use of M&As and JVs. These external knowledge acquisition strategies were found to overcome internal processes that otherwise could cause firms to overemphasize exploitation over exploration and vice versa. Our findings suggest that acquiring external knowledge via M&As is associated with diminished exploratory product innovation, while assimilating external knowledge sourced from JVs is associated with a reduction in new exploitative product innovation.     

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.     

A Taxonomy of Relationship Approaches During Product Development in Technology-Based, Industrial Markets

Effective relationship management during new product development (NPD) is an important determinant of new product success in technology-based, industrial markets. This article investigates whether different relationship approaches are used by sellers of high-tech innovations during the NPD process. The results of our empirical study reveal that sellers are resorting to two approaches during NPD: bilateral versus unilateral product development relationships. Furthermore, the approach used in a particular dyad is aligned with the seller's marketing strategy for the innovation, particularly aspects related to targeting (buyer knowledge and prior relationship history) and product strategy (the extent of product customization).     

The thin red line between success and failure: Path dependence in the diffusion of innovative production technologies

The wide variation in the success of innovations obscures similarities in the process of firms being influenced by other firms when choosing production technology. We argue that diffusion processes are similar across successful and failed innovations. Production asset innovation success results not only from innovation quality differences—early chance events and subsequent path dependence are also intrinsic to diffusion processes. Thus, diffusion processes do not reliably spread the best innovations, producing competitive advantage for firms with an early lead producing innovations and firms adopting high‐quality innovations. We test these predictions quantitatively by analyzing the diffusion of the DC‐10 and L‐1011 airplanes, and find support for our theory linking the social information provided by firm adoptions to the success of innovative production technologies. Copyright © 2014 John Wiley & Sons, Ltd.     

Successful Innovation Using Strategies to Reduce Consumer Resistance An Empirical Test

This article focuses on a relatively neglected concept in new product management: innovation resistance. Specifically, it examines why consumers develop resistance to innovations at the attitude formation and intention-to-buy stages of their decision process, and what strategies marketing firms have within their direct control to reduce this resistance. S. Ram identifies two major sources of innovation resistance: perceived risk and cognitive resistance. These are studied in the context of four product groups and two distinct strategies to reduce innovation resistance. The results show that a strategy of innovation modification works to reduce resistance caused by perceived economic and functional risk. On the other hand, communication strategies can reduce resistance caused by perceived social or psychological risk. Sources of innovation resistance and appropriate strategies vary across different product groups.     

Managing 'green' product innovation in small firms

The growing social and regulatory concern for the environment is leading an increasing number of companies to considering 'green' issues as a major source of strategic change. In particular, this trend has major and complex implications on the technological strategy of a company and on its product innovations. Indeed, most authors acknowledge that eco‐efficiency will be one of the major challenges for R&D practice and theory in the next decade. Unfortunately, studies usually focus on large corporations. There is a debate as to whether this factor will affect R&D practices and product innovation in small and medium enterprises (SMEs). A superficial glimpse at the problem could lead one to think that SMEs will not be major green innovators, especially as far as product technologies are concerned, and that they will simply try to comply with environmental regulations (mainly on production processes).
This paper shows that 'green' product innovation may occur and may also have strategic implications in SMEs. Starting from the analysis of four selected case studies and using a Precursors Events methodology, this paper illustrates why 'green' product innovation cannot be considered a marginal issue for most SMEs, even for those that are not directly affected by environmental regulations. Hence, the paper suggests a contingent framework to support SMEs in the analysis of the drivers of 'green' product innovation and in the choice of a proper R&D strategy that explicitly accounts for the eco‐efficiency of product technologies.     

Investigating the Drivers of Innovation and New Product Success: A Comparison of Strategic Orientations*

The notion of producing innovations and achieving new product success has received a great deal of attention. Though many have investigated these effects in marketing and various fields within management, there has been little cross‐fertilization between fields of study to explain the basis for this superior performance. Though research has examined the resource‐based view (RBV) and market orientation individually, none has evaluated and compared their effect on firm innovation and new product success in one study. Furthermore, although empirical work has been conducted between market orientation and organizational learning, comparatively less research has been conducted to evaluate the relationship between organizational learning and the RBV to examine their combined effects on a firm's ability to innovate and succeed. Subsequently, the purpose of the present article is to investigate whether a focus on the customer (i.e., market orientation) or the firm (i.e., RBV) will drive the ability to (1) innovate within the firm and (2) succeed in terms of new product success, financial performance, market share, and customer value. The present article examines the relationship between organizational learning and the RBV and market orientation. It presents an empirically testable framework that investigates the relationship that RBV and market orientation have with performance outcomes. Data were collected from 249 senior executives. LISREL was applied to evaluate the relationships. Confirmatory factor analysis and related techniques were applied to assess the robustness of the measures used. Findings show that organizational learning is strongly associated with market orientation, which in turn impacts various performance outcomes including customer value. The RBV had a significant relationship with new product success. These results suggest that managers seeking innovation and new product success should focus less on the provision of customer value. Instead they should look toward developing their resources within the firm, including investing in human resources, to ultimately provide value to the firm. Findings indicate that this unique offering—innovations—will have an indirect effect on customer value and financial performance. In contrast, those in pursuit of positive financial performance and customer value should focus on the development of market orientation. Even though this will not necessarily lead to the development of innovative processes and new product success according to the present study, this approach may lead to a greater market share in the long term. This article reviews theoretical and managerial implications in more depth, providing an impetus for further research.     

The role of taxes in corporate research and development spending

This study replicates prior research regarding research and development (R&D) spending by sampling R&D spending for a cross‐section of firms in non‐service related industries. Compustat data for 231 firms from 1992 to 1998 are used to test whether the US Federal tax credit for R&D meaningfully influenced R&D spending of the sampled firms. Firms' (1) effective rate of R&D tax credit, (2) rate of decay in R&D capital for firms' primary industry affiliation, (3) financial cost of capital, and (4) marginal tax rate are used to compute firms' user‐cost of capital for in‐house R&D. Results show that firms that were eligible for the tax credit spent more on R&D than non‐eligible firms as the user‐cost of in‐house R&D increased. These results add further evidence regarding the role of the tax credit in stimulating R&D activity and suggest that a tax credit for incremental research can be used to boost private‐sector R&D spending.     

What makes it so difficult? A systematic review on barriers to radical innovation

Radical innovation (RI) barriers are a complex phenomenon on which our understanding remains rather limited. Through a systematic analytical review on the extant research on RI barriers comprising a content analysis of 103 articles, this study develops a classification of barriers covering external barriers grouped by firms' influence potential, and internal barriers grouped by, for example, distinct RI competences. External barriers related to customer resistance and an undeveloped network and ecosystem, and the internal barrier relating to restrictive mindset have the widest influence. The results reveal that innovation barriers do not differ between radical innovations with different degrees of novelty, but that they vary according to the characteristics of firms, markets, and along the innovation process. This article contributes by generating an integrative framework of RI barriers, providing several propositions for further research, and developing implications for overcoming the barriers.