Innovation Management

Second edition

by Keith Goffin and Rick Mitchell

Chapter 4

Management recommendations

  • Understand the limits of your existing technologies or competences.
  • Be clear whether these limits may put the organization at a competitive disadvantage.
  • Be alert to the possibility that the market’s demand for further improvements may be not as strong as it was. Avoid going further than required and find new sources of competitive advantage as the old run out.
  • Consider early on how to defend your innovation from competition.
  • Choose a competitive stance to each innovation: whether to shape the future, adapt to it, or reserve the right to play.
  • Recognize how the management style and focus for success in established businesses are inimical to new ones. Set up separate activities for new businesses as far as possible.
  • Plan well ahead, using tools such as roadmapping and scenarios that encourage participation from all concerned.

Back to the top of the page

Chapter summary

This chapter has covered the first element of the Pentathlon – innovation strategy. We have discussed the various factors, some subtle and some not so subtle, that demand innovative change. These have the common feature that they stem from the blocking of pre-existing routes to competitive advantage either through loss of scope for improvement or through satisfaction of market demand. This chapter has shown that

  • An innovation strategy should identify and prioritize the needs for innovation, by examining the mismatch between the future as predicted and the future as desired.
  • Innovation strategy must be an ongoing process not a single-point event.
  • The need for innovative change often comes from slowly developing trends, which may be difficult to recognize and respond to. Among these are the Competence Ceiling, and Feature Fatigue (which opens the threat from disruptive technologies). Kano’s analysis provides a useful structure for understanding these.
  • Finding barriers such as intellectual property rights (IPR) to defend innovations from competition is very important, but strong complementary assets are required in the long run.
  • As companies and competencies mature the focus of innovation moves from products and services to business processes.
  • Organizations should choose the timing of innovations with care. Network and threshold effects can give advantages to earlier entrants.
  • Roadmapping is a flexible way to formulate and communicate innovation strategy. Different formats are available for different strategic issues. Scenario planning can help in charting the more distant future.

Back to the top of the page

Recommended reading

1. Bower, J. L. and Christensen, C. M., ‘Disruptive Technologies: Catching the Wave’, Harvard Business Review, January–February (1995). [Summary of the theory of disruptive technology. Christensen has also written two books on the subject: The Innovator’s Dilemma (1997) and The Innovator’s Solution (2004).]

2. Teece, D. J., ‘Profiting from Technological Innovation: Implications for Integration, Collaboration, Licencing and Public Policy’, Research Policy, Vol. 15 (1986) pp. 285–305. [Seminal paper on the role of IPR and complementary assets in determining the distribution of advantage from innovations.]

3. Utterback, J. M., Mastering the Dynamics of Innovation (Boston, MA: Harvard Business School Press, 1996). [Covers the evolution of markets and technologies, and the concept of dominant design. Good case studies.]

4. Kim, W. Chan and Mauborgne, R., Blue Ocean Strategy (Boston, MA: Harvard Business School Press, 2005).

Back to the top of the page

Learning objectives

  1. To understand:
    • a. The purpose and scope of an innovation strategy
      b. The use of the Kano model to identify possible limits to the organization’s ability to meet continuing customer needs; and the danger of providing features that no longer give competitive advantage c. Technology ‘S’ curves
      d. Dominant design
      e. Threshold and network effects
      f. Sustaining, discontinuous and disruptive change.

  2. To discuss the issues that may arise when a company adopts new technologies to escape from a technological limit. To discuss and explore possible responses to disruptive and discontinuous change. To gain some competence in roadmapping as a technique for developing innovation strategies.

Back to the top of the page

Multimedia material

  • Nespresso: Interviews with Rupert Gasser and Hank Kwakman IMD-5-0543-V. Useful interviews with the Nestle managers on how new start-up businesses need to be organised.
  • 3M Optical Systems Mgt Interviews 9-395-513. Last 3 minutes includes the top management view of the skills needed to create a new business.

Back to the top of the page