Strategies for Managing Discontinous Innovation

Lead Investigator : John Bessant

Project Investigator: Bettina von Stamm

Co-researchers in Denmark, Germany, France, Benelux, Spain, Norway, Finland, Sweden, Australia and Switzerland

Timescales: Continuing until end 2008

Project Outline:

Research has highlighted the managerial challenges posed when conditions move beyond a 'steady state' in terms of market, technology or other dimensions.  Christensen's work on the innovator's dilemma, for example, suggests that at certain times the close interaction with players within the value network may act as a filter which blocks firms seeing the salience of new signals about emerging but very different potential technical or market trajectories.  This echoes earlier work such as that of Henderson and Clark which highlights knowledge management problems when fundamental architectural links in a product concept are reconfigured.  There is also the well-known issue of "not invented here" suggesting that under conditions in which significant shifts occur in the technological trajectory existing incumbents often fail to capitalise or even to adopt.  The problem is not simply one of missing important signals about emerging shifts in innovation trajectories in the environment.  In a number of cases the information was available to the enterprise but its decision-making and resource allocation prcesses failed to deal adequately with the new information.

However there is also evidence which suggest that incumbents are not always on the defensive.  Tushman and Andersen studied discontinuous technology shifts across a wide range of industries over an extended time period and noted that under some conditions major technological shifts could be 'competence destroying' - at which point new entrants would dominate the new industries enabled by radical technology.  But under other conditions the radical technologies were 'competence enhancing' and strengthened the hand of existing incumbents.  And although there is a strong pattern in Christensen's studies there are also exceptions where major players were able to ride with the new trend and strengthen their market position.  Recent work by Markides explores the strategic advantages offered by 'fast followship' in this context.

This suggests that disruption is not always a 'changing of the guard' between existing incumbents and new entrants - and that appropriate and timely management intervention may avoid such an experience.  The question of search routines represents a particular example - put simply, under discontinous conditions firms may not know here or how to seek out signals which may represent important innovation triggers.  Simply covering their existing search space more efficiently may not help - and may divert resources from where they are most needed for exploration.  Much seems to depend on the firm's ability to pick up on and respond  effectively to weak signals which often came 'out of left field'.  The problem is that existing incumbents may find that their commitment to incremental exploration of an established trajectory may lock then into this mode and militate against their ability to move in more radical directions.

Similar difficulties face the organization as it tries to manage the problem of strategic selection and resource allocation.  How can it make informed choices when its existing systems for portfoio management and stage-gate risk control are geared around 'steady-sate' developments along familiar trajectories?  And how does it handle implementation of such high risk projects within an existing framework of competencies and skills around 'steady state' project teams and management?

There are two aspects of the challenge of discontinuity which have a bearing on enabling sustained innovation - first, which new routines are needed to cope with challenges of discontinuity and second, can these be (and if so, how) aligned with existing routines for dealing with 'steady state' innovation.

Proposed Methods: 

The purpose of this research has been to develop a clear theoretical model of 'discontinuous innovation' and on the basis of that model, to identify the approaches companies can use to manage this kind of innovation more effectively.  Case examples here incuude several major international firms in the UK, Germany and Denmark and the research also makes use of an experience-sharing and research 'learning network'.  In its original (2005) form this was called the Discontinuous Innovation Forum and involved around 20 UK firms draw from a range of sectors (Bessant, Lamming, Noke and Phillips 2005).  In 2006 the DIF model was extended to include new UK firms and parallel learning networks in Germany and Denmark, involving a total of 45 firms.  Details for this 'Discontinuous Innovation Laboratory' activity are on the website http://www.innovation-lab.org  A further 8 countries (Sweden, Norway, Finland, The Netherlands, Belgium, France, Switzerland and Australia) joined this international programme during 2007.  One consequence of this expansion has been that the numbers of firms involved will now permit a degree of survey-based quantitative research to complement the largely qualitative case-based activity thus far.

In outline the DI Labs process involves:

• recruiting companies in each country
• an initial workshop surfacing the DI challenge and capturing experience, issues and experiments in progress within participating firms.
• a data collection phase using the 'benchmarking' framework which has emerged from early DIF/AIM work, which will compile a snapshot of each firm in terms of its approaches and routines for dealing with key DI challenges.
• a review meeting with the firm
• a second networking workshop which will facilitate experience sharing and identification of cross-company learning opportunities.
• repeat and development of the research agenda.

The result of the multi-country networking activity forms the basis for a large workshop to which participating firms and researchers participating countries are invited.

Key Messages from Our Research so far…

Emerging from this work (which continues with a total of 140 firms across 9 countries) have been a series of reports and publications dealing with experimental routines for search, selection and resource allocation, implementation and networking (Bessant and Francis 2005; Philips, Bessant, Lamming and Noke 2006; Bessant and Von Stamm 2007; McClaughlin, Smart and Bessant 2007 forthcoming; Bessant and Von Stamm 2008 forthcoming).  The project website also includes a wide range of tools and techniques to help support development of these routines, and a 'benchmark' assessment tool which helps firms identify where they can develop their DI capability further http://www.innovation-lab.org.

In particular the first phase has identified 12 key strategies through which firms can extend their search activities and enhance their ability to pick up and act upon weak signals about discontinuous innovation.  These are explained in a recent AIM Executive Briefing, dowloadable from the AIM website (or by clicking here).

 Future Plans

Member Profile

Links to other researchers

News and upcoming events

Outputs:

Journal Contributions – Refereed 

• Bessant, J. (2006).  Discovering new ways to play the innovation game.  CPO Agenda.  2: 34-39.
• Bessant, J., J. Birkinshaw and R. Delbridge (2006).  Innovating beyond the steady state.  The exceptional manager.  R. Delbridge, L. Gratton and G. Johnson.  Oxford, Oxford University Press.
• Bessant, J. and A. Davies (2007).  Managing service innovation.  DTI Occasional Paper 9:  Innovation in services.  C. Connolly.  London, Department of Trade and Industry.
• Bessant, J., R, Lamming, H. Noke and W. Phillips (2005).  "Managing innovation beyond the steady state."  Technovation 25(12): 1366-1376.
• Bessant, J. and J. Tidd (2007).  Innovation and entrepreneurship.  Chichester, John Wiley and Sons.
• Bessant, J. and T, Venables (2008).  Creating wealth from knowledge:  Meeting the innovation challenge.  Cheltenham, Edward Elgar.
• Bessant, J. and B. Von Stamm (2008 forthcoming).  Search strategies for discontinuous innovation.  Creating wealth from knowledge: Meeting the innovation challenge.  J. Bessant and T. Venables.  Cheltenham, Edward Elgar.
• Birkinshaw, J., J Bessant and R. Delbridge (2004).  "Innovation as unusual."  Business Stratefy Review(Autumn).
• Birkinshaw, J., J. Bessant and R. Delbridge (2007).  "Finding, Forming, and Performing:  Creating Networks for Discontinuous Innovation."  California Management Review 49(3): 67-83.
• Phillips, W., J. Bessant, R. Lamming and H. Noke (2006).  "Discontinuous innovation and supply relationships:  strategic dalliances."  R&D Management 36(4): 451-461.
• Phillips, W., H. Noke, J Bessant and R. Lamming (2006).  "Beyond the steady state:  Managing discontinuous product and process innovation."  International Journal of Innovation Management 10(20: 175-196)
• Tranfield, D., M. Young, D. Partington, JU. Bessant and J. Sapsed (2006).  'Building Knowledge Management Capabilities for Innovation Projects'.  From Knowledge Management to Strategic Competence (2nd Edition).  J.E Tidd.  London, Imperial College Press.
• White, A. and J. Bessant (2006),  Change is closer than it seems.  Financial Times.  London: 6-8.
• White, A. and J. Bessant (2006).  Managerial responses to cognitive dissonance:  Causes of the mismanagement of discontinuous technological innovations.  IAMOT 2004.  T. Khalil.  New York, Elsevier.

Conference Contributions – Refereed 

• Bessant, J. and B Van Stamm (2007).  Beyond the lamp-post:  Search routines for discontinuous innovation.  7th European Academy of Management Conference, Paris.
• Bessant, J. (2006).  The Innovation and Productivity Grand Challenge.  t. June. Glasgow, European Operations Management Association - annual conference, special session.
• Bessant, J. (2006).  The new challenge of open innovation.  Irish Academy of Management Annual Conference.  t. September.  Cork
• Bessant, J. (2006).  Managing innovation.  Band & Olufsen annual technical conference.  Struer, Denmark
• Bessant, J. (2006).  Managing innovation beyond the steady state.  CIPS Annual Conference, London, Chartered Institute of Purchasing and Supply
• Bessant, J. (2006).  Search strategies for discontinuous innovation.  7th CINet Annual Conference, Lucca, Italy.

Working/Work in Progress Papers

•  Sapsed, J., A. Grantham and R. De Fillippi (2007).  "A bridge over troubled waters:  Bridging organisations and entrepreneurial opportunities in emerging sectors."  Research Policy forthcoming.
• McClaughlin, P., P. Smart and J. Bessant (2007 forthcoming).  "Developing an Organization Culture to Facilitate Radical Innovation."  International Journal of Technology Management.