How to Innovate? Giant leaps or small steps?

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First part of a larger presentation / paper on the topic of incremental vs. radical innovation. The presentation is based on extant research and tries to answer a very simple question: how to innovate? The presentation is done from a product management point of view.

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How to Innovate? Giant leaps or small steps?

  1. 1. Small Steps or Giant Leaps?<br />
  2. 2. Our goal is to offer an overview of the extant literature …<br /> … while trying to investigate under what conditions a radical or incremental innovation strategy is more suitable.<br />Introduction<br />
  3. 3. Garcia, R. & Calantone, R. (2002). <br />A critical look at technological innovation typology and innovativeness terminology: A literature review. <br />Choice of Literature<br />
  4. 4. Banbury, C.M., & Mitchell, W. (1995). <br />The effect of introducing important incremental innovations on market share and business survival. <br />Brown, S.L. & Eisenhardt, K.M. (1997). <br />The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organizations. <br />Choice of Literature<br />
  5. 5. Chandy, R.K. & Tellis, G.J. (1998). <br />Organizing for radical product innovation: The overlooked role of willingness to cannibalize. <br />Chandy, R.K. & Tellis, G.J.. (2000). <br />The incumbent&apos;s curse? Incumbency, size, and radical product innovation<br />Veryzer, R.W. (1998). <br />Discontinuous innovation and the new product development process. <br />Choice of Literature<br />
  6. 6. Kleinschmidt, E.J., & Cooper, R. G.. (1991). <br />The Impact of Product Innovativeness on Performance. <br />Choice of Literature<br />
  7. 7. Punctuated equilibrium model of change: <br /> “long periods of small, incremental change are interrupted by brief periods of discontinuous, radical change” <br />(Brown & Eisenhardt, 1997)<br />dichotomous differentiation between <br /> 1. discontinuous (radical) and <br /> 2. continuous (incremental) innovation<br />(Garcia & Calantone, 2001)<br />Why Incremental vs. Radical?<br />
  8. 8. “products that provide new features, benefits, or improvements to the existing technology in the existing market” <br />(Garcia & Calantone, 2001)<br />-> marketing OR technological performance<br /> source of competitive advantage in:<br />mature markets<br />customer focused markets<br />Incremental Innovation<br />
  9. 9. “discontinuous innovation refers to radically new products that involve dramatic leaps in terms of customer familiarity and use” <br />(Veryzon, 1998)<br /> Marketing AND technological changes<br />“5-10 times improvement in performance<br />30-50% reduction in costs<br />new-to-the-world performance<br />long-lasting, large and positive effects on a firm’s financial<br />high risk<br />future-market orientation<br />Radical Innovation<br />
  10. 10. existing knowledge structures or resources<br />Internal Factors<br />Size??<br />
  11. 11. Market stability<br />Technological development of the market<br />Market structures<br />Stable markets = incremental innovation<br />Technologically sophisticated markets = incremental can result in large market shares<br />External Factors<br />
  12. 12. radically new vs. really new vs. continuous innovations <br />Kleinschmidt and Cooper (1991)<br />Highly innovative (30.2%) <br />Moderately innovative (47.2%) <br />Low innovativeness (22.6%)<br />U shaped effect<br />A Different Way of Looking at Innovation<br />
  13. 13. Veryzer (1998)<br />A Different Way of Looking at Innovation<br />Product Capability<br />Same<br />Enhanced<br />Technological <br />Capability<br />Same<br />Advanced<br />
  14. 14. Does it have to be white or black?<br />Dichotomous vs. alternative view?<br />Some Thoughts<br />
  15. 15. Thank you for your input!<br />
  16. 16. Anderson, P., & Tushman, M.L. (1990). Technological Discontinuities and Dominant Designs: A Cyclical Model of Technological Change<br />Banbury, C.M., & Mitchell, W. (1995). The effect of introducing important incremental innovations on market share and business survival. . <br />Brown, S.L. & Eisenhardt, K.M. (1997). The art of continuous change: Linking complexity theory and time-paced evolution in relentlessly shifting organizations. <br />Chandy, R.K. & Tellis, G.J. (1998). Organizing for radical product innovation: The overlooked role of willingness to cannibalize. <br />Chandy, R.K. & Tellis, G.J.. (2000). The incumbent&apos;s curse? Incumbency, size, and radical product innovation. <br />Ettlie, J.E., Bridges, W.P., & O’Keefe, R.D. (1984). Organization strategy and structural differences for radical versus incremental innovation. <br />Garcia, R. & Calantone, R. (2002). A critical look at technological innovation typology and innovativeness terminology: A literature review. <br />Kessler, E.H., & Chakrabarti, A.K. (1999). Speeding up the pace of new product development. <br />Kleinschmidt, E.J., & Cooper, R. G.. (1991). The Impact of Product Innovativeness on Performance. <br />Veryzer, R.W. (1998). Discontinuous innovation and the new product development process. <br />References<br />

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