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Despite differences in definitions, researchers understand that radical innovation within an organization is very different from incremental innovation [13,17,21] 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.
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Managing radical innovation: an overview of emergent strategy issues
Christopher M. McDermott*, Gina Colarelli O’Connor
The Lally School of Management and Technology, Rensselaer Polytechnic Institute, Troy, NY 12180-3599, USA
Received 29 July 1999; accepted 4 December 2001
Despite differences in definitions, researchers understand that radical innovation within an organization is very different from
incremental innovation [13,17,21] 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. © 2002 Elsevier Science Inc. All rights reserved.
1. Introduction
The development of new businesses and product lines
based on breakthrough innovations—which is critical for
renewal of a firm’s competitive position—requires manage-
ment practices that differ substantially from those required
for incremental innovation. While incremental innovations
are typically extensions to current product offerings or log-
ical and relatively minor extensions to existing processes
[13,17], radical product innovations involve the develop-
ment or application of significantly new technologies or
ideas into markets that are either nonexistent or require
dramatic behavior changes to existing markets. These rad-
ical innovations, in turn, provide the foundation upon which
future generations of products are manufactured. Firms that
hold the largest share in one product generation often fail to
maintain leadership when there is a shift to a new technol-
ogy [1,6,11,39,41,49]. Effectively developing radical inno-
vations, therefore, is critical to the long-term survival of
many of today’s firms. The present research examines how
firms manage the new product development process for
potential game-changers. Using a multiple case study
method, we explore and document the development process
within twelve projects in nine manufacturing firms over the
course of four years.
2. Radical innovation and the firm
Innovation is defined as a new technology or combina-
tion of technologies that offer worthwhile benefits. This
definition does not delineate the degree of departure from
existing technology and practices [13,17,18]. Major inno-
vations require new skills, levels of market understanding,
leaps in new processing abilities, and systems throughout
the organization. The newly developed product or process is
* Corresponding author. Tel.: 1-518-276-4861; fax: 1-518-276-
E-mail address: (C.M. McDermott).
The Journal of Product Innovation Management 19 (2002) 424438
0737-6782/02/$ – see front matter © 2002 Elsevier Science Inc. All rights reserved.
PII: S0737-6782(02)00174-1
so distinct from current and existing activities within the
rm that the process of bringing the product to market may
not closely parallel that of any existing products within the
rm. Examples of more radical innovations include the shift
from piston aircraft engines to turbojets, the change from
steam to diesel electric locomotives, or the move from core
to semiconductor memory [49].
2.1. Definitions
Researchers are far from a consensus regarding a formal
denition of radical innovation [13,15,17,21]. Recently,
there have been attempts to understand and develop a con-
sistent and reliable multidimensional measure of radical
innovation. One reliable and valid measure developed by
Green et al. [21] incorporates four dimensions: a) techno-
logical uncertainty, b) technical inexperience, c) business
inexperience, and d) technology cost. The operational def-
inition of radical projects used in this study was consistent
with this denition.
Most breakthrough innovations require long-term (typi-
cally ten years or longer [38]) development time and mil-
lions of investment dollars. The projects longevity means
that there is turnover among development team members
and senior management that may typically be expected to
protect such a risky project. With new management come
changes in priorities. These, coupled with other exogenous
events, add to the unpredictability of the process, and result
in numerous stops and starts, deaths and revivals before
such projects are ultimately commercialized [44].
2.2. Importance of understanding radical innovation
Despite differences in denitions, researchers understand
that radical innovation within an organization is very dif-
ferent from incremental innovation [13,17,21] and that it is
critical to the long-term success of rms. Unfortunately,
research has also shown that it is often difcult to get
support for radical projects in large rms [14], where inter-
nal cultures and pressures often push efforts toward more
low risk, immediate reward, incremental projects. Interest-
ingly, we know considerably less about the effective man-
agement of the product development process in the radical
than in an incremental context. Much has been written
regarding the integrated, cross-functional approach to new
product development [12,18,20]. Concurrent engineering,
Design-For-Manufacturability, and the Stage Gate Model
[12] all aim to bring the functional areas together early and
frequently in the new product development process. This
stream of research has helped improve our understanding of
the new product development (NPD) process but has im-
plicitly focused on the development of products that are of
an incremental, evolutionary nature.
It is unclear, however, what the landscape for radical
NPD looks like, much less if these popular management
practices are at all appropriate in developing radical prod-
ucts where uncertainty, risks, and potential rewards are
much higher. In fact, there is growing evidence [2,31,45]
that these common practices may be detrimental in some
environments. In the search for speed to market, researchers
and practitioners may have been too quick to generalize the
utility of these practices across very diverse environments.
Gaining a better understanding of the landscape of radical
NPD is a critical rst step in being able to judge the
appropriateness of these common practices in this turbulent
Since 1995, we have been engaged in a longitudinal
study of the managerial processes associated with radical
innovation. The specics of the study are outlined below.
Previously published works based on this research program
study radical innovation from a variety of perspectives,
including, among others, the role of manufacturing in rad-
ical innovation [30], market learning [40], and the radical
innovation process compared to conventional stage gate
approaches [24].
The discussion in the present paper out-
lines ndings from a high-level, strategic perspective.
3. The study
The research presented in this article was conducted in
cooperation with the Industrial Research Institute (IRI).
This study presents the results of a longitudinal (since
1995), multidisciplinary study of the management of radical
innovation. Projects were selected for observation while
they were on-going and as a result, nal outcomes of the
projects were not yet known. We chose to collect data in
real time rather than retrospectively to control for history
effects that so often weaken case study research. While this
design parameter was chosen to limit biases that might
emerge from respondents tainting their comments in light of
the ultimate success or failure of completed projects, it also
ultimately limits the extent to which we can be prescriptive
in our analysis, at least within the context of an academic
audience. Our ndings and analysis, therefore, to a large
extent describe the managerial challenges and activities we
observed in managing these projects.
Data were gathered at multiple times within each of the
ongoing projects to effectively track both progress and
learning that occurred as the project moved toward the
marketplace. Most projects have not yet been introduced to
the market and data collection will continue until they are
introduced and market and nancial performance can be
For the purpose of this study, we dened discontinuous
innovation as the creation of a new line of business, both for
the rm and for the marketplace. To be selected as a study
participant, R&D management in rms identied projects
that were formed to the point of having a formal budget, an
identiable team and the potential to impact the market in at
least one of the three following ways: offer an entirely new
set of performance features, offer a ve to 10-fold improve-
425C.M. McDermott, G.C. O’Connor / The Journal of Product Innovation Management 19 (2002) 424438
ment in known performance features, or offer a signicant
(3050%) reduction in costs. As such, the projects chosen
for study tend to be new technologies (or previously untried
combinations of technologies) focused on either latent or
well-known needs, as opposed to new internal business
systems innovations.
All but two of the projects studied
emerged from the rms R&D lab, having moved from the
realm of pure scientic research to becoming a business
case. They were viewed internally as products being devel-
oped for the market, facing both technical and business/
market hurdles along the way. Thus we differentiate this
activity from corporate support of basic research (for which
there are few directed outcome requirements), which has
greatly diminished in American rms in the past 15 years.
3.1. Participating rms
Nearly all the rms that participated in this research were
members of the Industrial Research Institute (IRI), a con-
sortium of Fortune 1000 Research and Development man-
agers. IRI representatives volunteered projects on the basis
of hearing a proposal about the study at their annual meet-
ing. Volunteered projects were initially screened for appro-
priateness according to our operational denition described
above. Ultimately, the development teams selected were
from twelve ongoing projects within ten large, established
rms, including Air Products, Analog Devices, Dupont, GE,
GM, IBM, Northern Telecom, Polaroid, Texas Instruments
and United Technologies Corporation. Researchers signed
condentiality agreements prior to the interviews, so that
management practices tied to any specic project or rm are
not so identied. The projects and rms span a variety of
technologies, markets (consumer and industrial) and pro-
duction environments (materials processing, fabrication and
assembly, and both). This variety in the participating rms
technical and market base was a deliberate research design
parameter chosen to increase the external validity of the
studysndings, and to assure that our ndings are gener-
alizable and not specic to any one type of manufacturing
process, market, or industry [29,53]. Each project is more
specically described in Appendix I.
Many of the projects we studied have been underway, in
some form or another, for ten years or more. GMs hybrid
electric vehicle, for example, has origins that can be traced
back to the late 1960s. In an age where speed to market is
an increasingly powerful competitive priority, these projects
might appear to lumber slowly along like behemoths. This
is due largely to the magnitude of newness in the projects
themselves. In the hybrid vehicle, for example, GM clearly
recognized the appeal of the product, yet needed to work
patiently until both technologies and market infrastructures
became receptive. While other competitors strove toward
the same goals, they also faced the same stumbling blocks
along the way. It is important to acknowledge the fact that
the high levels of uncertainty surrounding these projects
drive them to be extremely long term. Even Nortels Ne-
tActive Channelware product, purely software based, has
not yet recouped any nancial rewards after more than six
years. Simply put, negotiating the uncertainties takes time
[7,9]. Funding stops and starts, senior management and
corporate contexts change, technical setbacks occur, and
market infrastructures must be built [33]. Not one of these
projects arose in response to a customer response or a direct
competitive threat. They persist on the basis of the nature of
the big ideaand what it can offer to the marketplace [40].
This is one of the characteristics of these projects that makes
them so different from their incremental counterparts, and in
turn makes their effective management so difcult.
3.2. Methodology
A multiple case study design was used to explore the
similarities and differences between management practices
across radical projects within the sample of large rms. The
study of radical innovation in large rms is rather early in its
development, and as such there exists little theoretical back-
ground upon which to draw. Case study research is espe-
cially appropriate for this type of exploratory research, with
a focus on 1) documenting a phenomenon within its orga-
nizational context, 2) exploring the boundaries of a phe-
nomenon, and 3) integrating information from multiple
sources [16,29,34]. McCutcheon and Meredith [29] argue
that case studies are a powerful tool for gathering informa-
tion and understanding the real conditions that are occurring
in organizations.
To learn about each case, we interviewed senior man-
agement (including Directors and Vice Presidents of R&D
and Corporate Development), project managers, and indi-
vidual team members. Using multiple interviewees in such
a way reduces the risk of undue inuence that an individual
interview may have on the case study, and brings a richer
portrait of each case [16,19].
3.3. Data analysis
Academics from several functional areas within manage-
ment were involved in conducting this research, including
manufacturing, marketing, strategy, organizational behav-
ior, entrepreneurship, and technology policy. Observations
were compared among members of the research team at the
conclusion of each visit. Developing a convergence of opin-
ions from the various researchers involved can enhance
condence in the ndings: as conicting views can keep the
research from premature closure [16]. Multiple investiga-
tors made visits to case study sites in teams; this allowed the
case to be viewed from different perspectives. To uncover
and examine the key themes in the data, we used the ap-
proach outlined by Miles & Huberman [35], Yin [53] and
McCutcheon and Meredith [29]. We used a cross case or
multicase method for exploring and describing themes. This
approach allows us to understand the phenomena beyond
426 C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
each individual rms context and increases the generaliz-
ability of our observations [16].
The interview data were transcribed and a representative
set of the interviews was used to establish common themes
emerging from the data. From the themes, seven general
categories emerged in which to classify the data. Each
interview was then reduced, analyzed, and coded separately
by one of the authors and a doctoral student. The results of
each independent analysis were then compared. This pattern
of coding and data reduction was repeated two more times.
This process followed the procedure suggested by Miles and
Huberman (35], pg. 57). These codes were then used to
retrieve and organize the groupings of data within each rm.
Following the same approach described by Miles and Hu-
berman [35], the second author independently developed a
set of themes from the data set that were then merged with
those developed by the rst. Observations and emerging
themes were cross-checked with other researchers involved
in the innovation study. It is important to note that, as the
study continues to evolve due to the ongoing nature of the
projects, themes will continue to emerge and evolve as well.
4. Findings
The ndings from the study are framed by the three
overarching themes, summarized in Table 1. First, we de-
scribe issues that emerge as a result of the projects choice
of market scope. Projects can be directed at markets that are
familiar territory to the rm, or may require the creation of
entirely new ones. Secondly, the rms approach to compe-
tency management drives a number of strategic issues. Rad-
ical innovations stretch rms beyond their current scope of
capabilities. Third, we identify that people issues at a num-
ber of levels emerge as critical strategic challenges in man-
aging Radical Innovation in the large established organiza-
tional context. Because careers advance, for the most part,
on managing efciency and meeting clearly stated goals, the
development of people who understand and thrive in the
more chaotic world of radical innovation, fraught with un-
certainty and risk, is foreign to the large established orga-
nization. Thus each of these issues, and the choices rms
make within those domains, become key strategic concerns
in managing RI. Within each of these themes, a variety of
observations emerge, that, we hope, can enlighten the reader
regarding challenges and opportunities associated with cre-
ating a context wherein RI can be more effectively man-
4.1. The choice of market scope
The issue of whether or not a market exists for an
innovation is an early, critical differentiator in the chal-
lenges that project teams face in managing this process. We
observed two kinds of radical innovation. The rst serves to
strengthen the rms position with familiar markets by
bringing breakthrough technologies to them and advancing
the state of the art with big leaps. The appropriate SBU
home is clear, and the infrastructure for contacting custom-
ers, understanding markets, and developing sales forecasts
is understood. Five of the twelve projects were directed at
existing markets in which the rm either already partici-
pated or had the infrastructure in place to enter. The second
type of project is an innovation for which the market is not
clearly identied or developed. While these are the riskier
and more uncertain efforts, they are the ones with the
potential to move the organization in new directions that
provide rich platforms for growth. Seven of the twelve cases
t into this set. See Table 2.
4.1.1. The challenge of familiar markets
Projects targeted at familiar markets face three sets of
challenges, all of which revolve around countering resis-
tance and breaking down barriers, both within and outside
the organizations boundaries. These include 1) ensuring
delivery of a perceptible benet, 2) managing the threat of
cannibalization, and 3) overcoming market resistance to the
In two of the ve projects that have been commercialized
so far, the benet that was delivered did not measure up to
the promised level, or was not immediately perceptible by
customers. In both cases the technology was incorporated
into an existing platform as the next incremental innovation
in the natural progression of a product family. Depending on
how the technology is presented by R&D in terms of ap-
plication market possibilities, this is the easiest course of
action for the business unit. Rather than considering poten-
tial application markets that may benet in discontinuous
ways from the technical discovery, we observed in these
Table 1
Summary of strategic themes
Theme Issues
Strategic choice regarding market scope Existing markets
Delivering perceptible
Threat of cannibalization
Overcoming market
New markers
Finding a divisional home
Identifying an appropriate
business model
Competency management Competency stretching as part
of radical innovation
Managing project risk
Project management tools and
The people side of radical innovation Leadership roles
Team composition
Role of informal networks
427C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
cases that rms opted not to invest the additional resources
to develop new potential markets, but rather allowed the
potential of the technology to be suboptimally marketed as
a next generation product in a familiar market.
Secondly, the project must manage the cannibalization of
the current line of business and the associated resistance to
the new technology by the operating unit designated to
receive the project from R&D and bring it to market.
Chandy and Tellis [10] show that a rms willingness to
cannibalize its current investments in products, assets and
organizational routines is, in fact, more important than a
rms size in determining its likelihood of successfully
commercializing radical innovations. We noted in one case
that the determination of which operating unit the project
team elected to work with rested on their judgment regard-
ing which one of several potential operating units would
more readily adopt the project. In another case, the R&D
team worked hard to convince the operating unit that there
really wasnt that much new about this,so as to diminish
concerns among operating unit people that theyd have to
adopt new procedures. Again, the risks associated with
these activities lie in not fully exploiting the market oppor-
tunities associated with the innovation because of the fear of
reprisal from the operating unit.
The nal challenge we identied in this market scope
category is the question of whether users will adopt the new
technology. Are the benets big enough to warrant the
change and risks associated with adoption of new usage
patterns and extreme price levels? We observed that the
familiarity of markets breeds, in some cases, an assumption
on the part of the project team that the market will clamor
for the technology even given new usage requirements that
are perceptibly less convenient than customerscurrent sit-
uations offer. In addition, there is a lack of understanding of
the level of investment required to develop a market under-
standing to sufciently build demand. In these cases, the
promises of the big market potential that drove the project at
the outset can fail to materialize, and the rm risks the
withdrawal of the operating units support.
4.1.2. The challenge of market creation
We identied two challenges unique to project teams that
chose market applications unfamiliar to the rm. In contrast
to the challenges of familiar markets, in which project teams
were required to counter resistance and barriers, the chal-
lenges of unfamiliar markets lie in requirements to proac-
tively invest in building and creating new domains both
within and outside the corporation. Specically, these in-
clude 1) where to locate this business within the rm, given
that it has no obvious operating unit home, and 2) how to
build an effective business model that takes advantage of
the potential the innovation offers.
Unlike most incremental new product development ef-
forts, project teams on most of these radical innovation
projects found the need to actively search for a divisional
home for their products. Too often, they simply did not t
neatly within existing business structures. Some were
avoided because they were a threat to existing operations,
and others were viewed as an obligation for the potential
host to take on short-term debt. Yet the projects pushed on.
[Divisions] cant look away from us because they do
recognize there is a competitive threat. They really wish
that we would go away along with all the other compet-
itorsR&D people, but we wont and our competitors
wont. So they have to face the fact that there may be a
paradigm change. When it comes time to try to transfer
this technology to [the division], that technology had
better be good and it better sell itself, because they dont
understand it, they didnt develop it, they dont neces-
sarily trust us.
Table 2 illustrates the divisional home for each project.
(One project ended up with multiple product platforms,
each tting into a different part of the organization, and so
this is indicated as 1a, 1b and 1c). There were new divisions
Table 2
Divisional homes for projects
Natural home
in a current
operating unit
Force t into
a current
operating unit
New division New market
targeted Spin out Unclear/not
yet resolved
P1A ●●
P1C ●●
P5 ●●
P7 ●●
P10 ●●
P11 ●●
P12 ●●
428 C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
created for two of the projects, and one was spun out of the
organization, but the vast majority were either clear ts or
force-tted into an existing division.
We observed a gap in attention to this transition process.
There was no recognized mechanism in place to move the
development of the project forward to a level acceptable by
the operating unit. Operating units typically require a focus
on the development of the initial entry application, the
development of the list of initial potential customers, the
eshing out of the business plan, complete with forecasts for
which there is some comfort level, and some additional
engineering development effort. Yet R&D was often pri-
marily focused on technical feasibility. When transitions to
the business unit were made before this market development
effort is invested, we observed two consequences. One was
that the project was allowed to wither in the operating unit
because the level of effort required to further its develop-
ment was not rewarded by conventional operating unit
based performance metrics. The second was that the project
manager is forced to comply with conventional SBU pro-
cedures and submit a business plan with a forecast that he
had no condence in. In one case we observed, the forecast
numbers were not met, and the project manager (who had
been associated with the project almost from its origin and
was transferred with it to the business unit), was sidelined
and ultimately left the company. While it is beyond the
scope of this study to state conclusively what would help in
such situations, our observations certainly tend to support
the proposition that a formally recognized transition group
of some form might provide assistance in bridging this gap.
The second critical issue that arises in moving into new
markets is how the opportunity should be leveraged to make
money, or the form that the business model should take.
There are typically many choices and many unknowns. The
initial promise of a large market may have driven the
project, but how to develop it, capture it, and ensure that
returns are worth the effort are not trivial issues. Seven of
our twelve projects can be categorized as projects that were
directed at creating new markets.
Deriving the best business model takes time and exper-
imentation. One project is developing a product platform
that will offer entirely new features to the entertainment
industry. The project teams business model has changed
four times. It has gone from the concept of selling its
technology to the public via the internet and gaining reve-
nue from internet merchants, to selling it to producers of
music and video games on a contract basis, to creating a
series of alliances that will allow the rm to collect a small
fee every time a consumer uses their technology, and ulti-
mately, returned to the rst model as the infrastructure has
developed to support it. Discovering how the market struc-
ture works, guring out how the rm will participate in it in
terms of what it will offer and how the rm will ally with
other partners to complete the offering is a critical part of
new market creation. Interestingly, many project teams did
not recognize the signicant investment of time and talent
required to do this successfully. As one project team mem-
ber told us
Weve invested $60 million in developing this technol-
ogy. I dont want to have to invest another $60 million
to develop the market!
Even when the project team did recognize these require-
ments, their expectations and those of the management of
the ultimate business unit that would commercialize the
technology frequently were misaligned regarding how much
time and investment was required to build new markets.
4.2. Competency stretching and risk management
The second overarching strategic decision is how com-
petency development is managed. The idea of competencies
has been discussed extensively in the literature [26,42], and
there is much debate about its denitions and key elements.
Prahalad and Hamel [42] dene core competence as the
collective learning in the organization, especially how to
coordinate diverse production skills and integrate multiple
streams of technologies.(pg. 82) Two dening attributes of
competencies are that they are not easily imitated and that
they provide rms access to new markets. This idea of core
competence is frequently used to explain the process by
which rms extend product lines in an incremental way.
However, this notion of core competence was also an ob-
servable phenomenon within our study. Consistent with the
Prahalad and Hamel denition above, we observed the
projects building extensively off their respective rms
unique scientic, manufacturing, and market knowledge to
effectively move their radical products toward the market-
In their popular work on the subject, Tushman and
Anderson [47] suggest that competencies can either be en-
hancing, where they further a rms leadership position
through extension of strengths, or destroying, where they
replace existing strengths and incumbent rms. While the
projects we studied clearly provided support for these con-
cepts, an additional phenomenon emerged as well, which
we label competency stretching. This stretching took the
form of moving to a new direction for the rm (either
technologically or through markets). It was not strictly com-
petency enhancing, because it required the creation of truly
new abilities and knowledge within the rm. This is one of
the key elements of radical innovation projects, and is one
that distinguishes them from more incremental efforts. They
are more than just enhancing or destroying. The very nature
of many of the projects stretches the rm into new direc-
tions and ventures. Every project team we observed engaged
in learning and stretching the rm into new competency
Our observations imply that competency destruction, en-
hancing, and stretching are separate, yet critical activities
for long-term growth and renewal of large established or-
ganizations. As we will discuss, we observed a number of
429C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
activities that were used to reduce the risk associated with
stretching. Further research is needed to explore this rela-
tionship between competency destroying, competency en-
hancing and competency stretching more deeply. For exam-
ple, the increasingly popular notion of spinning out
breakthrough innovations poses signicant questions when
put in the light of competency stretching, as it might imply
that this practice undermines long-term internal competency
growth and development.
4.2.1. Managing risk associated with competency
Fig. 1 depicts project characteristics classied along di-
mensions of technical and market uncertainty. This gure
derives from a long history of researchers and consultants
attempting to classify new product initiatives. Moriarty and
Kosnik present a taxonomy of marketing [36] and NPD [37]
situations based on technological and market uncertainty.
The authors note that the quadrant of high uncertainty on
both dimensions requires high-techmarketing principles,
skills and tactics, which differ from the marketing strategies
applied to the other three quadrants. Finally, Veryzer [50]
classies innovations along the dimensions of newness of
product capability and newness of technological capability.
He labels those innovation efforts that operate in the ad-
vanced technology and enhanced capability (as perceived
by the market) as technologically and commercially discon-
tinuous. Projects operating in this realm encounter high
degrees of uncertainty, in that perceived value from the
market may focus on features of the technology not antic-
ipated by the developers [50].
This conceptual framework is useful not only to aca-
demic researchers, but also to those in industry as well.
When presented with the generic form of this matrix, mem-
bers of the Industrial Research Institute found it familiar,
and labeled the upper right quadrant suicide square,
indicating their understanding of the risk in working in
contexts characterized by high levels of uncertainty on mul-
tiple fronts.
We observed three approaches to reduce these risks.
These include 1) leveraging from known capabilities, 2)
outsourcing, and 3) choosing not to face all the issues of
uncertainty concurrently. Leveraging from known capabilities
Each rms unique, historical knowledge of the enabling
technologies served to lower their risk. All projects in the
study built upon some form of strong technical competence
(as opposed to innovating in a completely new area). By
building off of existing strengths, rms effectively shifted
their projects location on the grid in Fig. 1 away from the
upper right quadrant (high technological and market uncer-
tainty). Unique manufacturing knowledge and history in
working with a material, for example, acted to make devel-
oping the project less uncertain for the innovating rm than
it would be for a competitor. In one case, the rm had
acquired a number of scientists with unique capabilities in
ceramics research. When the rm went through a divesti-
ture, these scientists were retained rather than retired, and
were told to focus on a very specic problem for which the
rm had no solution. Within a very short period, the project
we studied was initiated, due to those unique capabilities
that allowed for a wholly novel approach to the problem.
R&D managers apply the label hingingto the concept of
leveraging the known in one area to strengthen ones pros-
pects as they move into unknown territory.
Outsourcing was a second approach we observed for
managing risk. It is less and less common for rms of today
to perform all of their critical development activities in
house, yet this notion of outsourcing poses distinct chal-
lenges for more radical projects [10]. In every project we
studied, alliances of some form or another were created to
ll competency gaps deemed absolutely critical to the suc-
cess of the project, yet not available in house. These gaps
could be either technical or market based. Through the use
of alliances, rms were able to progress their breakthrough
projects without having all the skills internally, and were
able to reduce their own risk and move out of suicide
square, at least temporarily. In most cases, these were very
tightly managed partnerships, to the extent that the team
chose to use them to develop competencies and learn over
time. In one project, for example, the team leader believed
that the majority of value in the business his invention
would enable would not be in manufacturing the novel
computer chip, but rather in designing the newly enabled
applications onto the chip. His team, therefore, strived to
ndarst customer/partner who would design the applica-
tion, and who would fully disclose the know-how for cre-
ating that design to the project team. Other potential part-
ners appeared to offer applications with bigger market
promise earlier, but they were not chosen because the
project team chose to strategically partner to maximize
learning and competency development. In other cases, how-
Fig. 1. Uncertainty reduction in radical innovation.
430 C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
ever, the teams managed the partners with a more hands off
relationship, and depended on the partner to take on the risk
and concomitant learning that resulted. This occurred in
three of the projects we observed. In one project, the team
recognized that the application possibilities for the technol-
ogy they were developing were far removed from any mar-
kets the rm had previous experience with and, in fact, the
project team recognized that they likely could not envision
most of the more interesting ones. Rather than choosing to
probe and learn [27,40] on their own, they hired an outside
agency with marketing expertise to identify the most likely
applications areas and the key potential customers in those
The third mechanism project teams used to manage risk
was simply to ignore it and choose not to learn for a period
of time, that is, to shelter the project team from some of the
risks and issues by not attending to them. For example, one
project team expected their technological innovation to re-
sult in a substantial cost reduction to the customer. The team
worked for more than seven years on the assumption that
the cost reduction would be realized, without ever testing it.
By simply ignoring one set of uncertainties (or assuming
them away), teams could focus their energies on addressing
another. While, at many levels, this may seem like danger-
ous behavior, it was nonetheless a common mechanism we
observed. Actively managing so much uncertainty was un-
palatable, so they would choose to ignore an entire set so
they could at least make progress on something.
The observation that radical innovation projects do not
operate constantly in the high market, high technology un-
certainty quadrant of Fig. 1 may seem surprising since we
have used that conceptual framework to dene radical in-
novation. But the dynamic nature of the projects evolution,
and the management techniques applied to this chaotic en-
vironment are what we document here. What is reected in
the cases we observed is a way to temporarily suspend parts
of the uncertainty so that attention can be focused on one or
two problems at a time; not all of them simultaneously.
4.2.2. Project management tools and interfaces
The tools and techniques associated with good project
management in incremental NPD could not be applied in the
same manner in radical innovation projects. Traditional
approaches are based on planning and controlling resources,
based on clearly dened objectives, a set schedule and a
known budget. Such techniques as PERT/CPM are staples
of classic project management, yet seemed largely unwork-
able in environments wrought with such uncertainty and
large-scale changes. Uncertainties that crop up are treated as
exceptions to the well-dened development path, and are
handled via appropriated slack timethats built in to the
budget [43]. Various approaches have been proposed for
managing innovation projects under conditions of high un-
certainty [8,32,46]. Each of these writings denes a disci-
plined approach to innovation development, allowing for
mistakes, discovery of false assumptions, and unexpected
outcomes through actions described as recycleor redi-
rect.Similarly, Leonard-Bartons [25] concept of failing
forwardand Lynn, Morone and Paulsons [27] concept of
probing and learningare tools that require exible, trial
and error approaches to managing projects with high levels
of uncertainty.
Consistent with these writings, managers in the projects
we observed were oriented toward a different set of issues
than allocating resources and controlling them towards pre-
dictable outcomes. In fact, many of them were concerned
about protecting their team from scrutiny if and when they
experienced failure. One team leader, for example, main-
tained two sets of Gantt charts. One he used to manage
senior managements expectations, and the other he used to
really track progress on the team. He did not put anyones
names next to the tasks listed, because he didnt want
anyone to get targeted as failures if deadlines were missed.
He knew his team was engaged in very highly uncertain
technical development, and the only thing that was certain is
that they couldnt predict with accuracy the pace at which
progress would be made.
We also observed that, due to the critical contribution of
alliance partners in radical innovation, project managers
devoted signicant time and effort to nding partners for the
purpose of accessing competency based resources, and ne-
gotiating appropriate relationships. Beyond nding the part-
ners, managing the relationships for competency develop-
ment was a continuing challenge. In one case, the
partnership and codevelopment work went extremely well,
but in others, the project team found themselves oftentimes
having to develop the intellectual property themselves and
handing it off to the partner, or oversee the relationship very
tightly such that there was no reduction in workload. In two
cases where development was outsourced completely,
project teams expressed regret because they not only had
not gained the expertise they desired, but, in both cases,
were unhappy with the result offered by the partner. In one
of those cases, the project shut down completely due to the
failure of the partner to deliver the necessary technology.
Intellectual property concerns that previously caused rms
to steer clear of alliances for breakthrough projects are now
a critical challenge for RI project managers and their parent
companies. Thus the well-intentioned desire to reduce un-
certainty through outsourcing needs to be closely moni-
tored, as it can result in a drain on managerial time and
resources, as well as a potential loss of control and missed
opportunity for competency stretching.
In addition to the project management challenges posed
by external partners for accessing new competencies, we
observed project leaders working to manage interfaces be-
tween the radical project and the mainstream organization
for the same purpose. We noted a tension across the projects
between the need to incubate them and the need to interact
with the mainstream. Other writers have also noted that
boundary-spanning activities vary widely across types of
teams [4,5]. Isolation may protect the project from the
431C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
counterproductive forces within the mainstream, but it also
cuts the project off its most important sources of learning,
competencies and resources. Further, projects that remained
in protection mode too long had trouble gaining legitimacy
when seeking a home. A key aspect of an RI project man-
agers job, we observed, was to manage this balance appro-
priately. Sometimes the environment was hostile, and other
times apathetic. Both had to be overcome in order for the
project manager to be able to leverage the rms assets
4.3. The people side of radical innovation
Three issues emerge from the data with respect to the
role of individuals in radical innovation. These include
leadership roles, the composition of the team, and informal
4.3.1. Leadership roles
There were two primary, critical groups of leadership
roles we observed in these projects. In our discussion below,
we discuss not only what function these Sponsors and
Champions played in the development process, but also
situations where the uncertain environment posed unique
challenges or inefciencies to these activities.
The sponsors (a senior management level project sup-
porter) position within each rm varied from the director
level all the way up to CEO. Across cases, team members
could point to an individual who provided encouragement
from above, and nancial backing for the projects when
traditional measures would point to termination. This was a
particularly critical factor in projects with long payback
periods. Rather than base decisions on promises of specic
economic payback hurdles, sponsors commonly cited con-
tinued investment based on a gut feel that the project could
have signicant impact on the long- term success of the
rm. Many of the projects would fall between the cracks
of the existing businesses of their corporations. The sponsor
of each of these projects worked to keep them alive (even
unofcially), and encouraged business units to adopt them.
In ve of our cases, senior management sponsors created
new business units or spin-off companies to house the
innovation. In our sample, we observed that it was critical
that each project have someone willing (and in a position) to
identify and promote these high-risk, high-potential projects
within the rm.
While it is important to recognize the critical role of such
sponsors to these projectssurvival, it is also interesting to
consider the effectiveness of this practice. Over time we
began to term this the patronage model,in reference to the
artists of the Renaissance period who sought out wealthy
patrons to support their ideas and efforts as they worked on
their lifes masterpieces. While patrons were critical to the
artists success, there was no system for connecting artists to
patrons. The search for a patron was not a well-dened
process, and there were no clear standards for convincing
such a person to fund the artist.
This sponsorship model is similar in the radical innova-
tion projects that we observed. First there is the issue of
identifying the appropriate patron. Then there is the more
difcult challenge of getting access to him. Finally, there is
the challenge of convincing the sponsor of the importance
of the project. Our observations suggest that this is not
managed in a very systematic way, or with any prescribed
set of tools.
Champions provided the operational level enthusiasm
and persistence to keep these projects alive in the trench-
es.In lieu of conventional nancial projections that prom-
ise returns above accepted hurdle rates, we found across
most projects that the patron had faith in the projects be-
cause of personal characteristics of its champion, a lengthy
historical relationship between the two, and the champions
track record. Again, this raises obvious questions as to the
effectiveness of this practice, both from a standard operating
procedure perspective, and also because projects that are
kept alive by a senior management patron are extremely
vulnerable once the patron retires or moves on. Money, time
and individualscareers devoted to the project are wasted.
Six of the twelve projects we studied were affected by
senior management turnover. In two of those cases, the
turnover resulted in increased attention and resources to the
project, but in four of them, the result was in the opposite
direction. Aside from nding and convincing a patron, the
role of the champion was critical in other aspects as well.
When funding went away, they worked on the projects on
their own time, and lobbied extensively to get the project
back on the map. When funding returned, they became
project leaders, and were instrumental in creating and hold-
ing together a development team. Their enthusiasm for the
projects was palpable. One champion boasted: People go
their whole career, 30 or 40 years, and never have a chance
to work on things like this.
While the research on the importance of champions in
innovation is inconclusive [22,28], their criticality to the
projects we observed is undeniable. We expect that, where
support systems, process and infrastructure are lacking for
managing radical innovation systematically within a com-
pany, its success and drive is dependent on strong, persistent
individuals, and thus the importance of individual champi-
ons for radical innovation is heightened.
4.3.2. Team composition
While much has been written about the importance of
teams in traditional NPD projects, we were curious what
practices we would observe in the more uncertain environ-
ment of radical innovation. Our ndings in this area point to
some interesting characteristics of the people on the projects
and their backgrounds.
Our observations revealed that the people who sought to
join radical innovation development teams were character-
ized by breadth of experience, in addition to depth. For
432 C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
example, former plant managers, or others who had spent
signicant time working on operational issues at the plant
before moving on to other roles were selected for the team
ahead of individuals who might have the greatest or most
current knowledge of the operating system. It was clear that
a combination of product development skills and functional
sophistication (with an emphasis on the former) was what
was sought after for this liaison position.
The role of marketing differed depending on whether the
project was bound for an existing market with which the
rm had experience, or for an as yet undeveloped market.
For familiar markets, efforts were made to involve market-
ing people from the business unit in an informal way very
early on, to validate the value of the innovation, and to
provide links to customers that would provide input. Still,
there was only one example of an individual from a business
unit joining the team while the work was in being done
within R&D. Scientists were the rst ones to approach
potential users in most cases. This observation is in align-
ment with Workman [52], who observed a limited role for
Marketing in NPD activities in high-tech rms.
Projects directed at new, undeveloped markets added
team members from outside the rm that had marketing
experience in related markets, relied on scientists to initiate
potential contacts in the earliest stages, or relied on the
commercial development individuals within R&D to help
drive the business related activities of the projects. Thus, the
type of marketing expertise required, much like that of
manufacturing expertise described earlier, is more broad-
based in nature. This result supports Burgelmans [9] ob-
servation that this activity is less like New Product Devel-
opment and more like New Business Development.
4.3.3. The role of informal networks
Individuals who operated most successfully in these po-
sitions had been with their rm for many (at least 15) years
and had typically rotated through a number of positions in
several business units before joining a business develop-
ment group within R&D. The deep informal networks that
they could access for information at any time, and experi-
ential knowledge of most of their rmsbusinesses was
invaluable. Said one manager Because of the way in which
managers have grown up around here, you have all these
internal networks and webs, and you work them, and thats
what makes the place work. It really does.
Team members on every project relied on the existence
of large, informal networks of individuals, both inside and
outside the company, which could be tapped into as needed
to help the development process. These networks provided
early validation of business opportunities, in some cases, or
helped projects survive when shoestring budgets were in
place [30]. Manufacturing networks allowed these projects
to make pilot runs at very low costs, which was especially
critical when budgetary belts were tightened. As the follow-
ing quote shows, these networks also had strong ties to the
rms unique production expertise and knowledgeits
manufacturing competencies.
Ive developed a lot of links to discover whose equip-
ment can I use. Well, a new [piece of equipment] is
going to cost me 50- to $60,000. Im not going to get
money to do that on [this project], not until an SBU
maybe takes it over and has ownership for it....Were
not there right now.
Others writer have noted the importance of these net-
works within the R&D setting, and the importance of pro-
fessional networks of scientists [3]. We observed that com-
munities of practice[51] transcended laboratory
boundaries. Technical experts found one another across
organizational divisions, though this happened in an ad hoc
manner. Most of these projects required the integration of
multiple developing technologies from numerous divisions
or research groups within the rm.
5. Discussion and conclusion
The ndings of this study provide insight into key stra-
tegic issues faced by large rms as they develop radical
products. The study describes a breadth of themes that we
observed in our sample of projects relating to choice of
market scope, competency creation and managemet, and
people issues. While the design of our study prohibits pre-
scription per se, our observations and analysis highlight
emerging practice, and point to several propositions that
appear worthy of further exploration. It is our hope that the
themes that emerged from this study will help lay the
foundation upon which later research on this important topic
can be built. Specically, this study provided unique insight
in several key areas.
We observed that even though it may be that the driving
technology is radical, the manner in which the project is
managed, and the challenges that the team may expect to
encounter, vary dramatically by whether the market exists
or requires development. In the case of familiar markets,
issues of threat of cannibalization or familiarity with the
current business model may cause projects to be managed
suboptimally because of inertia provided by mainstream
operating units. In the case of completely new markets, the
project may proceed more slowly than planned due to lack
of attention to market development activities that neither the
R&D based team nor the operating unit team are tradition-
ally expected to perform.
The projects in this study extensively utilized existing
competencies in the creation of radical products. Firms
consistently built off existing internal knowledge of markets
and technologies to launch into radical new product and
process areas. In addition, they sought ways to stretch their
competencies as the development of the invention into a
commercial innovation pulled them technically or market-
wise somewhat aeld from completely familiar turf. Build-
ing on internal competencies together with the creation of
433C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
alliances are methods rms use to reduce the overall risk
associated with engaging in radical innovation. While con-
ceptual frameworks used to dene radical innovation indi-
cate that it is set in the context of high technical and high
market uncertainty [36,37], our observations of the dynamic
nature of the process reveal that project teams work hard to
reduce uncertainty on some dimensions so that they work on
other aspects of the project. Whether or not this is appro-
priate, or what the decision criteria ought to be for choosing
where to close off learning for a time, are clearly issues for
future investigation.
The study also illustrates some mechanisms that helped
projects, but that may not be explicitly recognized as NPD
tools. For example, informal networks within the rm
played a large role in the development of these radical
projects. These networks were seen as a critical means to
gain both market and technical insight, ultimately moving
the project forward. The ndings of the study as they relate
to the integrated approach to NPD were also quite interest-
ing. Interviews with team members across the sample gave
credence to the proposition that the commonly held belief in
the benets of getting functional experts in manufacturing
and marketing involved early and often in the NPD process
might be less appealing in these radical products.
We noted that traditional project management priorities
of evaluation, monitoring and control, take on a more minor
role in comparison to the concerns about managing market,
resource and organizational uncertainties along with the
natural technical uncertainties associated with break-
throughs. This observation points to the need for rethinking
appropriate management skill sets for radical innovation
projects. It may be that negotiation, handling ambiguity,
setting a course of action amid skepticism, and managing
boundaries between the project team and outsiders (includ-
ing senior management, the ultimate divisional home, alli-
ance partners and funding sources) in order to set expecta-
tions and utilize available resources are among those critical
skill sets.
This study also documented the unique difculties these
projects faced as they prepared to leave their respective
rmscorporate R&D labs to become part of a division. The
timetables, metrics, and people involved in these projects
were often incongruent with those of existing divisions,
resulting in a host of challenges for the project team. As a
result of our observations, we identied a gap that might be
lled by some form of interim incubating mechanism in
organizations that would serve to bridge the transition from
R&D and the business unit. As stated above, however, it is
beyond the scope of this study to test this proposition, but it
is our hope that this question does receive more research
attention in the future.
Taking our observations as a whole, it appears the new
insights we bring to light regarding the management of
radical innovation point to key ideas. First, weve identied
apparent gaps between current practice and what our study
participants view as effective practice. In the big picture, it
appears that large established rms too often assume the
practices that have worked well for their incremental
projects will be useful in more radical environments as well.
Instead, our preliminary observations point to the idea that
rms might need to create different sets of rules for the two
types of innovation. Many incremental practices seem dys-
functional in this arena.
Similarly, these observations highlight the importance of
the need to develop and test new practices that managers
bringing radical projects along can use with condence.
Time and again, the individuals we studied decried their
own lack of condence in the practices they were using to
move their projects forward in their rms. Unlike their
incremental counterparts, these projects are rare in their
rms, and the organization as a whole does not have the
internal experience and expertise to move with condence.
In short, they appear to be pushing toward the need for
developing a competency in managing radical innovation.
The challenge goes beyond this. It appears important that
rmsmanagement recognize the need to build this compe-
tency while simultaneously excelling at incremental inno-
vation, with its focus on current customers, speed to market,
and intense competition. In our estimation, as well as that of
many other writers [23,38,48], it is not an impossible task.
Organizations have not been sensitive to the need for dif-
ferent systems, and instead have relied on maverick indi-
viduals, working with senior management patrons against
the organizational context, to push these through, and then
retroactively rationalizing[9] them into the rms strat-
While this study highlights a number of important issues
and observations regarding the conduct of radical innova-
tion, it treats the issues at a high level. More research is
needed in this area. Although our data are notable for its
richness and longitudinal nature, it has its limitations. Be-
cause we observed ongoing projects, it was not possible to
gather data regarding perceptions of product success. Such
data would permit examination more akin to hypothesis
testing, as opposed to exploratory analysis. The rms in the
sample obviously do not represent all mature rms in their
respective industries, and the projects clearly do not repre-
sent the population of discontinuous innovations. In addi-
tion, the process by which we selected these projects may
introduce some bias to the ndings. Since the projects were
volunteered by their rms, for example, it is likely that they
were of higher prole and more strategically critical to their
respective rms than those that we might have studied
through a random sampling process. This in turn, for exam-
ple, may increase the likelihood of a sponsor in the organi-
zation. These limits may force constraints on the interpre-
tation of the ndings, and suggest topics for future
Our observations about the importance of internal net-
works, generalists and business development experts on
radical NPD teams also raise key questions. In what ways
do these needs change in radical versus incremental NPD?
434 C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
These observations regarding networks and generalists also
raise questions about the extent to which rms need to do
more work to actively develop the type of personnel who
can become a part of radical NPD teams. For example,
further research might explore whether activities such as job
rotation effectively encourage both informal networks and
act to create the type of generalists seen in these teams. In
addition, there is much to be learned about the difcult
process we observed relating to moving radical projects
from R&D to the divisions. To what extent are these nd-
ings transferable to smaller rms pursuing radical NPD?
How might incubating structures be created to effectively
facilitate this transfer? These and similar questions are
clearly worthy of more investigation.
It is our hope that these ndings stimulate more research
on the dynamic environment and challenges surrounding the
development of radical products. Effectively managing rad-
ical innovation is absolutely critical to the long- term suc-
cess of the rm, and, as echoed by the project members of
the teams we studied, there is much to be learned.
1. For a complete listing of papers published from
this research program, see the annotated bibliog-
2. Our thanks to an anonymous reviewer for pointing
out the need for this clarication.
3. These were R&D managers attending a meeting of
the Industrial Research Institute in the Spring of
1995, at which we presented our original proposal for
this research program.
4. These were R&D managers attending a meeting of
the Industrial Research Institute in the Spring of
5. Again, wed like to credit an anonymous reviewer for
this helpful comment.
Appendix-case descriptions
YAir Products and Chemicals Corporation developed
an ionic transport membrane (ITM) using ceramic
materials for separating oxygen from air. AP was
working on systems to meet the needs of three dif-
ferent application domains. The business model
projects new to the world features in two of those
application areas, and a greater than 30% cost savings
in the third.
YAnalog Devices has developed a microelectro-me-
chanical (MEMS) accelerometer, which is a small
microchip that can measure changes in speed. While
the application possibilities are nearly endless (e.g.,
virtual reality games, medical applications to detect
changes in the rate of heart pulse), ADI initially used
this technology to help move itself into the automo-
tive market space. Even there, potential applications
are numerous, but the initial market disruption was to
replace current airbag sensors with accelerometers.
The cost to the automotive market for the airbag
system fell from approximately $500 to $100 per unit.
YDuponts Biomax®is a polyester material that can be
recycled or decomposed. It holds up under normal
commercial conditions for a time period established
through product specications. The material decom-
poses at the right time and under the right conditions.
It is environmentally safe at every stage of its decom-
position. Chemically, Biomax®represents a new
family of highly versatile polymers based on tradi-
tional polyethylene terephthalate (PET) technology.
Its biodegradable qualities are made possible by the
water soluble (hydrolyzable) linkages in its molecular
chain. These linkages dissolve as they make contact
with water, causing the entire molecular chain to
break apart. The remnants are consumed by microbes,
which convert them into carbon dioxide and water.
The material itself can be made into bers, lms or
resins. This makes it suitable for countless agricul-
tural, industrial and consumer product applications:
mulch containers, mulching lm, seed mats, plant
pots, disposable eating utensils, blister packs, yard
waste bags, parts of disposable diapers, blown bottles.
In the United States alone, where the average house-
hold creates over three tons of disposable waste each
year, the number of potential applications for Bi-
omax®is immense; its development represents a po-
tentially huge business for DuPont and an important
solution to the mounting problem of solid waste in
developed countries.
YDupont was also home to a second project of our
study. This was the development on an electron emit-
ting material with properties that made it attractive in
electronic display applications.
YGE is well known for its advances in medical diag-
nostic technology, particularly with respect to imag-
ing systems. One of the most controversial recent
innovations in that industry is the advance of Digital
X-ray technology. Digital X-ray not only allows for
dramatic improvement in the specicity of the image,
but also can be sent as a stream of data to a diagnostic
bank. That alone allows for remote diagnosing, and
has wide ranging implications for stafng of highly
paid radiologists at local hospitals and clinics. GE has
found a way to combine Digital X-ray technology
with Fluoroscopy, a technology that allows the lm-
ing and digitization of movement within the body.
The combined benet provides a leap in benets in
the medical imaging eld that GE believes will be the
next game-changer.
435C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
YGMs focus on alternative power systems for auto-
mobiles is widely known. One of the innovation paths
down which they, and their counterparts, have been
traveling for some time is that of the hybrid electric
vehicle. The concept is that power comes from both
electrical and conventional engines, each of which is
drawn upon at the speeds at which it performs most
efciently. Those technologies, combined with sev-
eral others such as regenerative braking, could serve
to offer a vehicle capable of exceptional gas mileage
(5080 miles/gallon) and exceedingly low emissions
of pollutants.
YIBM has commercialized a new microchip based on
an alloy of Silicon and Germanium (SiGe), which
promises to become the basis for high-performance
new transistors with switching speeds up to four times
faster than those of traditional semiconductors. SiGe
chips also offer several other important additional
benets. First, they can operate using only a fraction
of the normal power requirements for competing tech-
nologies, such as Gallium Arsenide (GaAs) based
chips. Secondly, SiGe can be manufactured with the
same costly fabrication equipment used to make con-
ventional silicon chips, potentially avoiding billions
in new capital investments. The most promising ap-
plication arenas are in telecommunications, which is
based on analog technology, an arena in which IBM
had not previously participated.
YIBM was the second rm that entered two projects for
study. The second project was the development and
integration of display, memory and battery technolo-
gies to enable the creation of an electronic book,
though the development of utmost interest was the
advance in the display technology.
YNetActive is a spin-off venture of Nortel Networks,
though it began as an internal organizational innova-
tion. The innovation is a software capability that al-
lows NetActive to encode game publisherssoftware
in such a way that a user could obtain the application
for a fraction of the normal purchase price. The cus-
tomer must then initialize its use over the internet, and
choose from a variety of usage options that allow
single use, usage for a specied period of time, or
purchase, all with differing fee structures. The cus-
tomers credit card is then charged for the given usage
selection. Game software and utility software such as
tax ling programs are the current most promising
YPolaroid applied highly innovative manufacturing
technologies from its traditional product arena to the
creation of low-cost, high-capacity computer memory
storage devices.
YTexas Instruments Digital Light Processor is based
on the MEMS device described above. The TI pro-
jector creates a screen image by bouncing light off of
1.3 million microscopic mirrors squeezed onto a 1
square inch chip, each with the ability to angle itself
independently in order to best reect light. Potential
applications exist in the hard copy markets, home
movie projection systems, and large screen movie
theaters, to name but a few. The rst that TI is com-
mercializing are large screen movie projection sys-
tems. Movie theater owners can now receive movies
from Hollywood producers on Digital Video Disks or
even by satellite rather than on heavy reels. Theaters
will no longer be limited by a nite number of lm
prints, so they have increased exibility in show times
and the number of screens showing a particular
YUnited TechnologiesOtis Elevator division has de-
voted considerable energy to solving the problem of
the mile high building.In the commercial construc-
tion industry, limits on building height are not based
on any technical constraints other than the problem of
the elevator systems. Current systems are limited by
the weight of the cable that pulls the elevator. Once
the cable gets too long (more than 130 stories), it
becomes too heavy to lift. Designing parallel elevator
shafts and moving people from one shaft to the other
is the current solution to very tall buildings, but at
some point, that solution becomes uneconomic be-
cause the amount of the buildings real estate needed
to house the shafts is too high in proportion to the
amount available for rent. Otis has developed a sys-
tem of people movement that solves the problem. It
allows for elevator cars to become separated from the
shaft, and to move onto other shafts. A combination
of horizontal and vertical movement allows for a
conservation of shaft space, and opens up the oppor-
tunity for thinking about conveyance systems in a
completely different light.
This research was funded by the Sloan Foundation, with
access to rms provided by the Industrial Research Institute
(IRI). The authors would like to thank the other faculty on
the research team: Ron Gutmann, Richard Leifer, Joe Mo-
rone, Lois Peters, Mark Rice, and Bob Veryzer as well as
research assistant Theresa Coates for their assistance in data
analysis and comments on earlier drafts of this article.
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Biographical Sketches
Christopher McDermott is an Associate Professor in the Lally School of
Management, and Technology at Rensselaer. His elds of interest include
New Product Development, Radical Innovation, and Operations/Technol-
ogy Management. He earned a BS in Engineering from Duke University,
and a PhD in Business from The University of North Carolina. Prior to
returning to academia, Dr. McDermott held positions at Westinghouse
Electric Company and at Fairchild, where he was an on-site contractor at
NASAs Goddard Space Flight Center. He is the current coordinator of the
437C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
Lally Schoolsagship MBA course in New Product Development and has
taught other courses at the Undergraduate, Masters, PhD, and Executive
levels. His research has been published in such journals as IEEE Trans-
actions on Engineering Management, Journal of Operations Management,
Journal of High Technology Management Research, Business Horizons, and The
International Journal of Production and Operations Management. Dr. McDermott
is co-author of the book Radical Innovation: How Mature Companies can Out-
smart Upstarts. He can be contacted at
Gina Colarelli OConnor is assistant professor in the Lally School of
Management, and Technology at Rensselaer Polytechnic Institute. Her
elds of interest include New Product Development, Radical Innovation,
and Strategic Marketing Management in High Technology Arenas. Before
joining RPI in February 1988; Dr. OConnor earned her Ph.D. in Marketing
and Corporate Strategy at New York University. Prior to that time, she
spent several years with McDonnell Douglas Corporation in Contract
Administration, and at Monsanto Chemical Corporations Department of
Social Responsibility. The majority of her research efforts focus on how
rms link advanced technology development to market opportunities She
has articles published in The Journal of Product Innovation Management,
California Management Review, Academy of Management Executive, The
Journal of Strategic Marketing, The European Journal of Marketing, Psy-
chology and Marketing, Business Horizons, The Journal of Advertising
Research and The Journal of Advertising, and is one of the authors of the
book Radical Innovation, How Mature Firms Can Outsmart Upstarts,
published by HBS Press in December, 2000. She can be contacted at
438 C.M. McDermott, G.C. OConnor / The Journal of Product Innovation Management 19 (2002) 424438
... Breakthrough innovation is the result of a systematic study, which Frontiers in Psychology 03 focuses on the reorganization and creation of knowledge (McDermott and O'Connor, 2002) and is characterized by discontinuity and nonlinearity (Linton, 2009). From the research on the knowledge management, Huibin and Daming (2014) study the relationship among team knowledge conflict, organizational learning and breakthrough innovation performance, and found that team conflict can have an effect on breakthrough innovation performance, while organizational learning plays an intermediary role in the relationship between them. ...
Full-text available
Breakthrough innovation is the focus of the society in the era of knowledge economy. Employee innovation of the enterprises is the starting point of enterprise innovation behavior, and it is the result of the combination of complex psychological capital. Meanwhile, breakthrough innovation often comes from the result of knowledge sharing brought by teamwork. At present, existing studies mainly reveal the influence of knowledge and knowledge structure on the performance of radical innovation. However, the relationship between psychological capital, knowledge sharing and the breakthrough innovation performance needs to be systematically studied. Therefore, this study adopted a research approach, that is, statistical analyses were performed by using SPSS Version 18 and AMOS version 26 (Statistical analyses performed by using SPSS Version 18 and AMOS version 26).This study collected data on employees of 345 different new high-tech enterprises to explore the mechanism by which psychological capital and knowledge sharing affects the breakthrough innovation performance. The research results respond to a positive correlation between psychological capital and knowledge sharing affects the breakthrough innovation performance. Moreover, knowledge sharing has a mediating effect on the effect of psychological capital on breakthrough innovation performance, and the effect is weakened. which is of great theoretical significance for exploring the relationship between psychological capital and knowledge sharing affects the breakthrough innovation performance.
... However, despite the substantial impact of recent technological advancements on strategic decision-making, there is currently a scarcity of economic theory on the intersection between information technology and entrepreneurship -and in particular with respect to high-impact entrepreneurship -which has recently been identified to be of particular importance for innovation and economic growth (Acs, 2010). Within this literature, high-impact entrepreneurs are considered to be those that have growth ambitions and to carry out innovations with the potential to transform industries and economies, i.e., radical innovations (e.g., McDermott and O'Connor, 2003). 2 This is to be contrasted to routinised or repetitive enterprising, which subsequently refers to low-or non-entrepreneurial action (Henrekson and Sanandaji, 2014). ...
In this study, essential factors of healthcare supply chain have been investigated. Factors were selected through an integrated approach, in which experts played a pivotal and decisive role in each phase. A novel hybrid methodology comprising Best-Worst-Method (BWM) and Interpretive structural modelling (ISM) is employed. Best-Worst-Method is utilised to determine the different weights of healthcare supply chain agility factors, and ISM and MICMAC analysis are utilising to examine interrelations among final selected factors. A case study in local pharmacies examined the effectiveness of the proposed hybrid model in the real world. The application of the hybrid BWM-ISM method demonstrates that ‘Proper IT infrastructure’ and ‘Strategic planning’ are the most significant factors, respectively. They will facilitate local pharmacies to accomplish agility practices in the healthcare supply chain thus, increasing effectiveness and adaptability to a variety of situations. This research helps public healthcare decision-makers by changing the organisation’s response to critical situations and unexpected events by implementing corrective measures within local pharmacies.
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To date, few researchers have linked open innovation approaches with triple bottom line corporate sustainability objectives in terms of economic, social, and environmental performance. A systematic review suggests that the businesses' collaborative relationships with external consultants or organizations can increase their competitive advantage, as external stakeholders could assist them in the development of sustainable innovations, diversification into different markets, and in the generation of new revenue streams. At the same time, they can support them in addressing numerous deficits in society. On the other hand, this contribution implies that an organizational culture that promotes open innovation approaches could expose practitioners to risks and uncertainties, like revealing sensitive information to outsiders, among others. In reality, it may prove difficult for the businesses to trust new partners, as they are not subject to their organizations' codes of conduct, rules, and regulations. K E Y W O R D S corporate social responsibility, corporate sustainability, creating shared value, open innovation, stakeholder engagement, strategic CSR
Purpose The purpose of this paper is to conceptualize sport event innovation and propose a fruitful future research agenda for scholars. Design/methodology/approach Following Gilson and Goldberg's (2015) criterion of a good conceptual paper, the authors (a) provide a review of the central tenets of innovation and sport innovation literature and link them together within a new definition of sport event innovation, (b) expand the field by suggesting several theoretical perspectives for studying this area and (c) visually represent the links between each aspect of our conceptualization in a figure. Based on our definition, the authors also highlight illustrative examples of sport event innovation. Findings This paper provides an initial working definition of sport event innovation and offers avenues of sport event innovation research underpinned by various research perspectives (i.e. process of innovation, institutional theory, stakeholder theory, interorganizational relationships and knowledge-based view) likely to prove useful for the advancement of scholarship in sport event management. Additionally, a general recognition of the potential practical implication related to this paper is discussed. Originality/value This conceptual paper bridges the knowledge gap between sport event and innovation research by merging the independent literature and conceptualizing sport event innovation. In doing so, the authors provide an advantageous starting point for future research on innovation in the sport event context with a view towards advancing both theory and practice in this area.
Despite extensive research focus on the role of resource integration and combination in service innovation, the influence of decision-making logic has not been scrutinized. This study aims to examine the influence of effectuation, a distinct control-oriented decision-making logic, on small and medium-sized enterprises’ (SMEs) service innovation. Based on a survey of Chinese manufacturing SMEs, the findings show that effectuation has an inverted U-shaped relationship with incremental service innovation but a linear positive relationship with radical service innovation. Moreover, environmental uncertainty reinforces the relationship of effectuation with incremental and radical service innovation. Finally, the relationship with business customers’ value perception is positive for incremental service innovation but inverted U-shaped for radical service innovation. The findings offer unique insights into the importance of effectuation for SMEs’ service innovation in uncertain environments, as well as for customers’ value perception in the business market.
Following a stream of research that analyzes the effect of humble leaders on innovation, the central value of this study is to expand the current knowledge of this relationship by elucidating the impact of this type of leadership on radical innovation and innovation success (considering both financial and non-financial performance). The study was conducted in Spain. 263 different organizations participated in the research. The authors tested and confirmed the hypotheses using structural equations. Humble leadership promotes radical innovation and, in turn, innovation success.
Innovation management is a priority type of management implemented in highly competitive markets. Despite the relative stability of the content and structure of innovation management, it can be implemented in various variants and is subject to evolution depending on the state andtrends of the environment. Timely identification of prerequisites for adjusting the content and structure of innovation management is an important condition for ensuring the competitiveness of enterprises, regions and the country as a whole. The hypothesis of research is the possibility of determining the quantity and interrelation-ships of the principles of innovation management depending on it qualitative attributes, as well as the attributes of the environment. The research methods are methods of analysis and synthesis, induction and deduction, as well as classification, and the tools are binary matrices that provide for the joint use of two qualitative attributes of the studied objects and it dichotomies. The subject of research is the structure of the principles of innovation management implemented at the institutional level. The result of research is the structure of principles of innovation management, characterized by the validity of its hierarchy, the quantity of principles, as well as the relationships between them, due to the combination of qualitative attributes of studied objects and it dichotomies. The obtained results make it possible to reduce costs, time, as well as lost profits for the creation of innovations due to clear structuring of principles of innovation management at the management levels of an economic entity and the implementation of systematic approach to innovation management. In addition, the article lays the foundations for the design of innovation management systems using computer software.
Purpose The purpose of this study is to examine the effect of organizational readiness (OR) dimensions (organizational culture, climate and capability) on three types of innovations (INs) (service, process IN and entering new markets) in telecommunication companies. The study also tests the mediating role of employee engagement (EE) in the causal relationship between OR and IN. Design/methodology/approach In the theoretical framework, a deep and broad review of the literature was presented to determine the study variables and hypotheses that were tested in the field study. The study sample consisted of 306 respondents distributed to the headquarters of the three companies (Zain, Orange and Umniah) working in the Jordanian telecommunications sector. The number of questionnaires retrieved and valid for analysis was 255 (83%). Findings Results indicate a positive effect of organizational climate and organizational capacity on process IN and entering new markets. While organizational culture had no significant effect on the three types of IN EE did not have a mediating role in the relationship between OR and IN. Research limitations/implications The results of this study are related to the telecommunications sector as a highly competitive service sector and more able to work remotely with regard to customers, so its results cannot be generalized to other sectors such as the industry sector, which has suffered in recent years from the epidemic more than other sectors. Practical implications The study of OR as a concept, dimensions and effects provides great experience for leaders and managers facing the challenges of competition and threats posed by the Covid-19 pandemic. This study also helps researchers to study OR in new areas and in relation to other concepts. Social implications The OR covers a wide field that includes the individual, the group and the company. Therefore, readiness includes a social experience that can extend from the company to the community. Originality/value The study gains an important value by revealing that organizational culture as a dimension of readiness does not have a significant impact on IN. With the readiness to respond quickly to challenges, culture can be more inclined to the status quo and the prevailing routine than to IN and change.
Purpose The purpose of this paper is to develop Delphi methodology toward a holistic method for forecasting market change. Delphi methodology experienced its culmination in marketing research during the 1970s–1980s, but still has much to offer to both marketing scholars and practitioners in contexts where future market changes are associated with ambiguity and uncertainty. Design/methodology/approach This study revives the Delphi methodology by exemplifying how a recently developed framework on market change can be combined with the Delphi technique for data collection to support forecasting activities and research. The authors demonstrate the benefits of the improved methodology in an empirical study on the impact of the fifth generation of wireless communications technologies (5G) on the Finnish media market. Findings The developed methodological approach aids marketing scholars in categorizing and analyzing the data collected for capturing market change; and better guiding experts/respondents to provide holistic projections of future market change. The authors show that using a predefined theoretical framework in combination with the Delphi method for data collection and analysis is beneficial for studying future market change. Originality/value This paper develops Delphi methodology and contributes with a novel methodological approach to assessing market change.
Full-text available
This study explores and documents the processes by which large manufacturing firms develop and produce radical products. Seven projects from five Fortune 500 firms were analyzed over a 3‐year period. Through the use of these case studies, we found common themes emerging in the way these firms manage their new product development (NPD) process in this turbulent environment. Our observations suggest that these high levels of uncertainty result in several unique challenges in developing the project, especially in the areas of managing functional integration and finding a divisional home for the emerging product.
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The marketing literature has traditionally assumed that people in marketing and sales play a central role in product development activities. Though recent work has recognized that marketing may be less central in high-tech firms, there has been little empirical examination of the role marketing does play in these situations. This article, based on nine months of participant observation in a computer systems firm, first provides an overview of the product development process and then describes impediments that prevent marketing groups from exerting greater control over product development decisions. The author then turns to ways in which marketing groups work within these constraints, exerting their influence through informal networks, coalition building to champion specific projects in engineering, and going to the external market to “complete the product” for their respective market segments. He concludes by assessing the implications for research in high-tech firms and considering managerial implications.
Full-text available
OVERVIEW: The process of managing breakthrough, or discontinuous, innovation differs dramatically from managing incremental changes in products and technologies. We have learned a lot about the latter; but know little about the former. It seems obvious, though, that what is sound management practice for incremental innovation-where speed, cycle time, and quick cash recovery are primary objectives-might actually hamper the radical innovation's progress. The study reported here identified mechanisms and practices under management's control that can help to further the discontinuous innovation process. These include mechanisms for directing the technology-market arenas in which these projects occur, mechanisms for proactively stimulating discontinuous innovation, criteria for project evaluation and screening that differ from currently used criteria, mechanisms for protecting projects that operate in highly uncertain regimes, and the importance of recognizing the key role of multiple champions over time and at different organizational levels.
Recently, there have been numerous calls for more empirical field‐based research to be conducted in operations management (OM). Knowledge of how operations systems work can be enhanced significantly through contact with the “real‐world” conditions that OM models seek to describe. Case study research is a primary means of exploring field conditions but is an unfamiliar methodology for many in OM. Moreover, the case study method is viewed with scepticism by those who consider it to be a weak form of research, one that lacks rigor and objectivity. Here, we offer an introduction to the case study method for OM researchers who may have little background in field based research. We provide an outline of the procedure and cite some excellent sources that cover case study design, data analysis and the philosophical rationale for the methodology. We also identify some recent examples of OM case studies that illustrate our points. We then contrast the various uses for case study research and their different design and theory requirements. An appendix provides a listing of case studies that have appeared in some OM journals in recent years, classifying the studies by their research purpose. However, regardless of their purposes, case study research need to be conducted in a manner that assures maximum measurement reliability and theory validity. We describe some of the steps that must be taken to ensure that a study is as rigorous as possible. We also argue that, properly conducted, a case study is a truly scientific research approach. We conclude by pointing out some areas of OM research where case studies might be particularly valuable.
Why are some firms more successful at introducing radical product innovations than others? Following Schumpeter (1942), many researchers have suggested that firm size is the key organizational predictor of radical product innovation. The authors provide an alternate view and argue that one key variable that differentiates firms with strong radical product innovation records from others is the firms’ willingness to cannibalize their own investments. The authors identify three organizational factors that drive a firm's willingness to cannibalize. Results from a survey of three high-tech industries tend to support the alternate view that willingness to cannibalize is a more powerful driver of radical product innovation than firm size is. These results suggest a need to reconsider conventional wisdom on firm size, cannibalization, and organizational synergy.
- This paper describes the process of inducting theory using case studies from specifying the research questions to reaching closure. Some features of the process, such as problem definition and construct validation, are similar to hypothesis-testing research. Others, such as within-case analysis and replication logic, are unique to the inductive, case-oriented process. Overall, the process described here is highly iterative and tightly linked to data. This research approach is especially appropriate in new topic areas. The resultant theory is often novel, testable, and empirically valid. Finally, framebreaking insights, the tests of good theory (e.g., parsimony, logical coherence), and convincing grounding in the evidence are the key criteria for evaluating this type of research.
Although many new-products professionals may harbor hopes of developing "the next big thing" in their respective industries, most product development efforts focus on incremental innovations. Accordingly, most research on the new-product development (NPD) process focuses on the development of evolutionary products. For new-products professionals seeking insights into the means for achieving breakthrough innovations, a fundamental question remains unanswered: Does the NPD process for discontinuous products differ from the process for incremental, or continuous, products? To provide a better understanding of managerial practices associated with discontinuous innovation, Robert Veryzer presents findings from an in-depth study of eight discontinuous product development projects. The study explores the key factors that affect the discontinuous NPD process, as well as the methods that the firms in this study use for assessing the radically new products they have in development. From the findings in this study, he develops a descriptive model of the discontinuous product development process, and he offers insights into the requirements for effective management of discontinuous innovation projects. Although half the firms in the study use a formal process for evaluating radically innovative products, the participants in the study generally do not employ a formal, highly structured process for managing discontinuous NPD efforts. However; these firms do follow a consistent, logical process in the development of radical innovations, and their process differs significantly from incremental NPD processes. The processes used by the firms in this study are more exploratory and less customer driven than the typical, incremental NPD process. The impetus for all the projects in this study comes from the convergence of developing technologies, various contextual or environmental factors (for example, government regulations), and a product champion or visionary. Starting from these drivers, the discontinuous NPD process focuses on formulating a product application for the emerging technologies. In all cases, these firms developed prototypes at nit earlier stage than the typical, incremental NPD process. To aid in the formulation of a new product application from emerging technologies, prototype construction in these discontinuous NPD projects precedes opportunity analysis, assessment of market attractiveness, market research, and financial analysis. (C) 1998 Elsevier Science Inc.
The image of the project champion fighting corporate inertia, rallying support, and leading a project to success makes for a great story, but that story may not reveal the true nature of the champion's role. All those off-tom tales about champions fail to provide hard evidence of the techniques that champions use, the activities they, perform, and the effects that champions have on project success, Stephen K, Markham addresses this knowledge gap in a study that examines how champions influence other people and what effects champions have on projects and the people those projects involve. The study uses responses from 53 champions of innovation projects in four large firms as well as team members from those projects. Rather than look at the champions' work oil project tasks, the study focuses on the influence champions have oil other people to support their projects, The results of the study only partially support the idea that champions affect projects by influencing people. In the four firms studied, champions use cooperative rather than confrontative tactics to influence other people. However, the champions' choice of influence tactics does not affect the level of compliance or the willingness to participate in the project that those people demonstrate. On the other hand, the champions appear to have a strong influence on their target's behavior if the champions enjoy positive personal relationships with those people, In general, the tactics used by the champions do not seem to play an important role in the projects studied. Front the perspective of the team members, the results of this study do not support the notion that champions make a positive contribution to project performance. However, the champions in this study consistently hold a more positive view of the project than those of the team members. (C) 1998 Elsevier Science Inc.