The given wisdom that large mature companies must bow to new start-ups, especially new high tech start-ups, for breakthrough innovation is flawed. It is true that corporations are severely challenged when it comes to sustaining an innovation capability. Past large company initiatives aimed at conducting breakthrough innovation on a systematic basis in most cases have been shut down within four years. Our ten year study of breakthrough innovation in large mature firms has led us to see how large companies can organize programs or put in place a function that will allow them to develop high impact innovations over and over again. To do this they need to do three things. Develop a spectrum of innovation competencies knitted together as a Breakthrough Innovation Capability, monitor their innovation capacity and harmonize this capacity with how they structure and invest in their innovation competencies.
First though what do we mean by breakthrough innovation? We define radical or breakthrough innovation as the ability for an organization to commercialize products and technologies that have a) high impact on the market in terms of offering wholly new benefits, and/or b) high impact on the firm in terms of their ability to spawn whole new lines of business. Consultation with chief technology officers of major corporations led us to operationalise these impact levels as projects with the potential to offer either a) new to the world performance features; b) significant (e.g. 5-10x) improvement in known features, or c) significant (e.g. 30-50%) reduction in cost. The three competencies required to lay a foundation for disciplined high impact innovation are discovery, incubation and acceleration Discovery competence involves activities that build skills of imagination and creativity and the ability to link sources of ideas to market and application spaces. Incubation is a competency of experimentation that will help the organization understand how identified opportunities may play out as businesses. Acceleration is a competency of building a solid foundation for a fledgling business to grow and sustain itself. To achieve timely project pacing and learning these competencies bust be knit together into a system that feeds a portfolio of options for transformation and growth.
But to really reap the benefits of an innovation capability firms need to understand their own capacity for innovation. Culture, business environment, and attention begetting things such as things lawsuits and mergers and acquisition are features determining capacity which changes over time. Capacity sets the stage for managerial strategies for deploying BI outcomes. The failure of firms to sustain a disciplined innovation system is because these programs have not been continually attuned to the firm’s ever changing innovation capacity. To optimize the value of breakthrough innovation programs firms must strategically employ and design their Breakthrough Innovation Capability in accordance with the firm’s capacity to leverage and build innovation projects into high impact outcomes.
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