Clay Christiansen in his book The Innovator’s Dilemma, showed clearly why great companies can fail. He points out that is companies go through their normal technology maturity S-curve there reaches a point in which a new disruptive technological change provides greater value to the end-user or customer. He further points out that the responsibility for utilizing disruptive technologies falls to those organizations whose customers need them.
R&D managers who confront disruptive technology change must be leaders, not followers, and commercializing disruptive technologies. Doing so requires implanting the projects that are developed such technology inside commercial organizations that match and size the markets they are to address. These assertions are based on two key findings of his studies. First it leadership is more crucial in coping with disruptive technologies that was sustaining one’s and second the small emerging markets cannot solve the near term growth and profit requirements of large companies. Said another way, small skunk work startup entities are much more likely to succeed in commercializing disruptive technologies than larger organizations are.
In work that Gina O’Connor from the University of North Carolina reported to the Industrial Research Institute she and her team found that an organization’s leadership needed to possess three competencies for radical / breakthrough innovation to occur. The three competencies they require are in the areas of discovery, incubation, and acceleration of radical innovation projects, see the “Radical Innovation Capability” figure.
Thus a full radical innovation capability consists of these three distinct capabilities, which not only need to be effectively managed, but the transitions and interfaces between these three capabilities need to be well connected into a seamless process. The business leadership must also truly understand that radical innovation is not a linear process. They must additionally understand that radical innovation projects need different management systems from those of incremental and next-generation research. As is pointed out in the book Radical Innovation by Richard Leifer et al, it is extremely difficult for large organizations to conduct radical innovations that are commercially successful. That said, the “Level of Radical Innovation Maturity and Associated Management Mechanisms” figure shows the level of radical innovation maturity and associated management mechanisms necessary for success.
In the discovery phase of radical innovation business leaders need to create and articulate the opportunities in front of them. They need to support exploration of such opportunities in both the market and technical arenas. This means supporting basic marketing and technical research studies using both internal and external company resources and personnel.
In the incubation phase of radical innovation is necessary in order to a ball opportunities in the business propositions. A business proposition is a working hypothesis about what the technology platform could enable in the market, but the market space will ultimately look like, and what the business model will be. The management team must support evolving the opportunity into a true business proposition and plan. This means conducting market experimentation with focus groups and other methods, and technical proof of principle using internal and external capabilities. The key is to learn rapidly what the market will and won’t want in the product and on the technical side will it be possible to create a solution ahead of competition.
A last competency a management team needs to possess is in the area of acceleration of projects. Acceleration is defined is ramping up of the fledging business two point work and stand on its own relative to other business platforms in the ultimate receiving business unit. The skills needed are those required for managing a high-growth business. The real challenge Gina found was that a management team needs to keep projects alive. This is often the time where the project falls into the Valley of Death is Hewlett-Packard describes it. When the chips are down and nothing seems to be working the management team needs to continue to drive and apply resources to move the project forward. As the project goes commercial the challenge is to continue to apply the resources necessary to accelerate commercialization and take full advantage of the first mover’s position in the market.
Most firms excel at one or two of these three competencies. Few are good all three. The research showed that it’s really important before embarking on a radical innovation strategy to make sure that company capabilities are in fact in place. If they are not, projects stall and fail. If the capabilities are needed they should be built before projects are undertaken.
A more comprehensive set of guidelines was developed by Mel Perel at Battelle who studied multiple organizations which had successfully commercialized Breakthrough products. The “Elements for Breakthrough Projects” figure shows these. The most important success factor was that successful corporate breakthrough efforts were strongly supported by the CEO and executive management. The projects themselves reported to a high-level executive and employed a dedicated, full-time team, led by a champion, and supported by a clear charter. This strong support was clear and unwavering. Efforts that did not have such high level clear, unwavering, and strong support almost universally resulted in failure. This point cannot be made emphatically enough.
With respect to the variation amongst projects, insight can be gained as to how radical innovation projects can be done in different business environments by looking at the columns in the chart. Using the R&D Games section of this website explains those differences.
For companies interested in managing the front end of innovation internally, a large group of companies in the early 2000s working on breaking apart the elements of that process, and came up with a model for doing so. The key insight that this group of Industrial Research Institute members came to was that the process was actually a random walk amongst five categories of work. This is shown in the “Fuzzy Front End of Innovation Model” figure.
In this model the engine is shown at the center. This connotes the corporate leadership behaviors, the type of culture that the leadership has created, and the clarity by which their business strategy is articulated. This insightful and supportive structure has to be present or the fuzzy front end of innovation will commercialize nothing. For those individuals involved in creating new concepts they make a random walk between idea genesis, identifying opportunities, analyzing opportunities, concept enrichment, idea selection, and concept definition. It cannot be emphasized enough that this is not a linear or straightforward process. Successful innovators walk around the elements of this model seemingly at random, spending time in each of these five areas.
For company to develop a strong front end of innovation it needs individuals that are comfortable and practiced in this process. Hence comes the argument that it is more productive for a company screen for such people and such ideas from outside the Corporation versus finding these individuals and ideas from within. This was articulated clearly in Clay Christiansen’s the Innovators Dilemma. Large companies typically do not select personnel based on their capability for front end of innovation. They are usually selected for their ability to carry projects successfully down a stage-gate type process.
The influencing factors around the exterior of the model are meant to point out the large variety of resources that are needed for innovators to succeed. They have to have deep insight in to customers, competition, substitute technology, suppliers, societies needs, constraints and regulations. Without this background knowledge, oftentimes innovations are unique but not commercially viable. It is an interplay of all these factors that finally winds-up with a concept that is defined well enough and robust enough to enter into the new business development or stage gate process. Supporting tools for this process are found in the competitive intelligence and intellectual property chapters of this book.
One of the best and most concise studies put together to describe clearly what’s needed to do breakthrough research was done by Karen Zien and Dr. Perry. Although they did this work for the Xerox Corporation in 1994 it still one of the best resources to use two decades later. In their work on what nurtures or restrains invention and innovation in a company, they did over 100 on-site interviews across three regions, US Japan and Europe, with 16 companies and multiple divisions and regional subsidiaries. The interviewees were cross functional, including inventors, technical, marketing, business management specialist, heads of companies, divisions, research laboratories and subsidiaries.
They focused on three areas. These were the external environment, the internal environment, and individuals. The external environment studied included customers, markets, competition, standards, and partners. The internal environment studied had to elements culture and conduits. Under culture they studied values, history, reward and risk, and learning. Under conduits they studied structure and processes, pathways, decision-making, and communication.
The third focus area, individuals, was broken down into heroes and heroines, characteristics, and circumstances. Visual picture of these three areas in their relationship is shown in the “Focus Areas Important for Discontinuous Innovation” figure.
The key learnings from the study were the following:
1. The fuzzy front-end is inseparable from implementation.
2. Truly innovative companies have customer intimacy.
3. It is really difficult to build a shared conceptual model portrays nonlinear aspects.
4. Individual creative spirit is at the core; motivation is personal.
5. Creative cultures are regenerated by the stories told.
6. An invention and innovation culture is a system that must be called for and energized from the top.
7. Continuity in roles such as project champions, sponsors, project leaders, internal customers, external consultants, and teams is critical. Continuity must survive reorganizations, changes in membership, and departures from the company.
8. Always beginning at the beginning of each project with some individuals.
9. Senior executives must create pathways for ideas that have no home in the current business structure.
10. Executives must stay connected and form new connections.
11. Continuously understand the system and reformulate change strategies continuously
12. Storytelling, anecdotal data, is a most important form of transferring learning.
13. Working with qualitative data is labor-intensive.
14. Videos bring stories to life.
15. The work of getting beyond one’s own organizational paradigm never stops.
16. Innovative companies are fascinated by innovative methodologies.
17. Qualitative data is not well understood and business, thus the need for storytelling and graphic display of information.
18. Maintain a coherent team in spite of comings and goings.
19. Teams have to survive more than one crisis of commitment.
20. Barriers continually lead team members to continuously invent new structures for participation.
21. Beginning skills and competencies of team members become shared among all members.
22. Getting to work on the project was a reason to come to work.
23. Learning to sit with uncertainty and discomfort and commitment to hold the course is critical.
24. Experiment, seize opportunities, be driven by vision.
25. Struggle to hold onto the commitment that changes possible in the face of history, current events, and the natural flow of things.
26. When the project creates truly new openings be prepared for strong reactions.
27. The whole process presents unpredictable, unforeseen challenges and opportunities.
Because of the difficulties in doing radical innovation, it was said by Frederick Buggie in his RTM article, Set the fuzzy Front-end in Concrete, that any fuzzy new product concept is a lamb led to slaughter by the stage gate review committee. Instead if a company is serious about doing fuzzy front end or radical innovation work, a company’s top executive team, those who know most about the organization’s capabilities and have the authority to set objectives and make go/no go decisions, must sit down to draft, then refine and confirm the new initiative. They must cover the financial goals, dates, company’s unique technologies it should be leveraged, production processes that can be utilized, the kind of market the company is comfortable with serving, and any deep-seated predilections or prejudices. Finally an acceptable means of implementation must be decided upon. This includes producing the radical new product inside the company, outsourcing it, partnering, or some combination. More often than not the company is best to move an internal team outside the company, or partner with a venture firm or others to form a joint venture outside the company’s walls. If the venture’s successful, a company may take the option to bring it back inside the company once it is standing on its own two feet. Connecting radical innovation in this way is now common practice among the leading companies in Silicon Valley in the second decade of the 21st century.
In closing this section on radical innovation the topic of technology readiness must also be covered. Technology readiness addresses the fact that for any new product innovation go into development without a full assessment of their technological readiness, the likely result is wasted time, and dissatisfied internal and external stakeholders. Although the concept of technology readiness can be applied to any Horizon One, Two Or Three project, it is often most useful when applied to Horizon Three or Breakthrough projects. This is because in strategic planning many companies can identify product functions that they want to incorporate into new products and services, but for which no technology to do so is known. In fact, typically a quick assessment of the patent and technical literature often shows that there is been no work yet done in the area, an IP Desert. Thus funding breakthrough technology projects makes sense to explore if it will be possible for science and engineering personnel to fill this needed gap before other resources are committed to a business development project. This work is often done where it is clear that the market trend is strong enough to justify technical expenditure without concurrent business development. In such a case the “Technology Readiness Assessment Matrix” figure is used to track progress of science and engineering team in developing a new technology. The degree of rigor required for technology readiness can depend upon the situation. A company may make a strategic decision to accept increased uncertainty associated with an unready technology if, for instance, the technology is radically new and promises a large competitive advantage. In this case the vertical line in the “Technology Readiness Assessment Matrix” figure indicates to the development team the minimum requirements for their seed project to meet. In this example the team has yet to successfully complete two of the requirements before management will consider the technology close enough to commercialization to be incorporated into a business development project. When using this methodology, it is best practice to incorporate an external peer review by people knowledgeable in the relevant markets and the science governing the technology. This is done because the exact level of technology readiness is uncertain until a true business development team is put together to utilize it. Government organizations involved in engineering disciplines such as NASA and the United States military use technology readiness Levels of 1 to 6 to characterize readiness as shown in the columns of the table. The assessment from the table becomes the input criteria for project selection processes.