Discontinuous Innovation in a Business

Discontinuous Innovation in a Business Organization

Scenario

DISCONTINUOUS INNOVATION

SCENARIO

Recently the CEO of a company, an OEM for the light bulb industry, attended a business seminar where everyone agreed that "there is a potential threat of disruption from new Light Emitting Diode (LED) technologies." Moreover, the CEO was told that "Many incumbent firms find it hard to spot or respond adequately to the threat of disruption, which often leads to loss of market share and in some cases total failure." The CEO decided to appoint an innovation consultant to help the firm understand what discontinuous or disruptive innovation is and how it could affect the company. The CEO also wants to know how his company should respond to the potential threat of being disrupted. The writer of this work will take the role of innovation consultant and will: (1) discuss what discontinuous and/or disruptive innovation is and whether or not it is likely to affect the firm you are a consultant for; and (2) Suggest how the firm should respond to the possibility of disruption. This brief will involve desk research and areas such as R&D, marketing activities, technology strategy, and organization - all related to new product development will be considered. Terms to use in this study include those of radical innovation, breakthrough innovation and high technology.

DISCONTINUOUS INNOVATION

EXECUTIVE SUMMARY

In order to understand the concept of discontinuous innovation it is necessary to research, examine and critically analyze the precise meaning of innovation as well as to define the various different types or grouping of innovations which may exist within one organization. Innovation is considered to be a fuzzy area of study most particularly in the state of conception or in the pre-project phase. This work examines the recent work of Herzberg entitled: "Towards a Mid-Range Theory of Method Selection for Innovation Pre-project Activities" published 2005-2006. Because competitive advantage for the organization is more often than not determined at least in terms of the longitude existence of an organization by the innovation potential of the organization it is necessary to follow this search of Herzberg in understanding the importance of the pre-phase innovation of a project or indeed of an organization itself in terms of its structural basis.

Also explored in this work are the concepts of:

Breakthrough Innovation,

Rapid Innovation;

Incremental innovation. And High Technology.

This work analyzes these different concepts as relative to discontinuous innovation and offers recommendations for further research in the study area of discontinuous innovation and specifically as related to innovative requirements in the high-tech markets for projects, organizations and teams that are successful in an ongoing enterprise.

DISCONTINUOUS INNOVATION

INTRODUCTION

Examination of the concept of discontinuous innovation informs the researcher that in order for innovation to be discontinuous it is necessary that innovation be structured into the very core of the organization. This is specifically considered to be a pre-phase consideration in the work of some researchers and is an aspect of the discontinuous innovation concept which has been little researched and due to the importance contained in this area of study is an area that research should be focused upon in disseminating the concept of discontinuous innovation. This however, is not to say that the organization should become locked into an inwardly-focused view and in fact the precise opposite is found to be effective if the organization is to realize 'breakthrough innovation' when needed. Radical innovation and incremental innovation are also phases of innovation that are examined in this work.

ANALYSIS & INTERPRETATION

Innovation is said to be importance as a source of "future competitive advantage" which will acknowledged "probably not recognized explicitly, since the first competitive activities of economic factors took place." (Herzberg, 2005-2006; p. 16) Yet there is stated to be a "high and long-lasting interest in the topic...." It is related that the term innovation "itself is used in very different ways." (Herzberg, 2005-2006; p. 16) Discovering precisely what innovation means is key in understanding the concept of discontinuous innovation. Herzberg states the aim of introducing innovation and states as well that intended is the illustration of the "importance of the pre-project phase." (2005-2006) Innovation is noted by Herzberg to be a process of "problem-solving" and therefore is a process of seeking solutions and in the case of discontinuous innovation the innovation sought is therefore never ending problem solving or solution seeking. One of the greatest challenges during the early phase of innovation according to Herzberg is the fact that this is a decision process which is made as to whether "the concept is going to be realized or not." Herzberg cites the work of Cooper (1992); Goffin et al. (1999) and Khurana/Rosenthal (1997). Therefore, this process is one that will either begin as innovative and continue as such evolving or it will not making the pre-project phase critical in determining whether innovation in an ongoing manner is possible throughout a project. During this phase of innovation the customer may not yet be a known factor according to Herzberg (2005-2006). Technological uncertainties exist as well as do product as there is "naturally a time lag between conception and exploitation." (p. 17) Herzberg notes that the environment related to the innovation is likely to experience a change and this "aggravates the problem of defining a good solution for sustainable future profit. These independencies between the factors make the early phase of innovation processes a complex problem to solve in an ambiguous environment, and so have often been called the fuzzy front-end of innovation." (Herzberg, 2005-2006; p.17 citing: Khurana/Rosenthal, 1997; Sheth/Ram, 1987) it is the organizational strategy which "sets the direction for how organizations generate and sustain profits in the market environment (Mintzberg, et al., 1998; as cited in Herzberg, 2005-2006; p. 17) the essence of the work of Herzberg (2005-2006) is the claim that the "conceptual perspective on pre-project innovation activities is not sufficiently researched." (p. 17) and furthermore that the various approaches chosen by organizations for 'innovation' is: "...almost uncountable, although not every approach may promise a successful realization." (Herzberg, 2005-2006; p.17) This is because the consideration of each individual approach as a singular problem that was solvable would mean "that each of these problem-solving approaches would require specific and individual methods, if methods requirements are individual to a problem." (Ibid; p. 17) Several views have been taken in research into innovation in the attempt to provide a description and analysis of the differential innovation processes and the outcomes of those processes. Examples related in the work of Herzberg include: (1) distinctions between the degree of innovativeness; (2) sectoral patterns; (3) the maturity of products and technologies; and (4) many more contingencies..." (Herzberg, 2005-2006; p. 18) all of which assist the organization in analysis and informing the decision-making and design processes. Because this is little researched from the view of researchers, "this unstructured context for evaluation raises the problem of understanding the pre-project phase in a holistic way. Therefore, research on the fuzzy front-end of innovation is still very vague and abstract, and recommendations can only be made of the level of creating an environment for innovation conception but not on explaining how to actually develop an innovation concept. Existing research focuses either on more organizational or on more strategic questions, the question of how to approach the problem of innovating from a problem-solving perspective is not researched sufficiently yet." (2005-2006; p. 18) Herzberg's line of study follows literature that relates that innovation is not only within the product or within the customer process but is something that is instilled deeply within the very structure of the organization and is something that is basic and fundamental to the organization in the manner of a core ethic that is bound within the processes of the organization. Herzberg therefore identifies not only products and services, but processes as all types or groups of innovations that exist within the innovative organization. Therefore, these groups are comprised by innovators who derive innovations for the promotion of the product or services, or processes. Innovation may also be characterized by pattern types of either 'radical' innovation or 'incremental' innovation. (1000 Ventures, 2008) Radical innovation has a project trajectory with rapid drops and rises within its path patterns while incremental innovation has a project trajectory that steadily builds higher as the project progresses. The following two figures illustrate these two project trajectories. (1000 Ventures, 2008) (1000 Ventures, 2008)

Radical innovation is characterized through the exploration of new technology undertaken and the high rate of uncertainty that exists and has as its focus the products, processes, or services with unprecedented performance features. Finally radical innovation creates a dramatic change that transforms existing markets or industries or creates new ones. Incremental innovation is characterized by the exploitation of existing technology that is familiar with low uncertainty and has as its focus the cost or feature improvements in existing processes, products or services. Finally incremental innovation improves the competitiveness within the market and industries on a current basis. The following figures illustrate the work of Kaizen on Radical Innovation relating to new product development synergies. (1000 Ventures, 2008)