A group of six faculty members of Rensselaer Polytechnic Institute's Lally School of Management and Technology began work on something they called the "Radical Innovation Research Project" in 1994, focused on finding out how game-changing innovation occurs in established, mature organizations. The results of the project are reported in a new book from Harvard Business School Press entitled "Radical Innovation: How Mature Companies Can Outsmart Upstarts" and written by the six faculty members: Richard Leifer, Christopher M. McDermott, Gina Colarelli O'Connor, Lois S. Peters, Mark P. Rice, and Robert W. Veryzer. To find out more about the project, we talked with Richard Leifer, who has been at RPI since 1983 and whose academic specialties include organizational behavior, high-performance management, and leadership.
UBIQUITY: How did the project come about?
LEIFER: The project came about because we noticed a gap in the practice of implementing innovation in established firms. While these firms recognized the importance of breakthrough innovation, there was almost nothing written about how to do it. They were trying different activities, none of which was very organized. We went to the Industrial Research Institute with a proposal to study radical innovation and 10 member companies (such as IBM, GE, Texas Instruments, DuPont, Air Products, General Motors) volunteered to participate. The project was supported with an $800,000 multi-year grant from the Sloan Foundation to study 12 radical innovation projects in real time over a period of years. It is unique because most studies are done by one or two people with similar backgrounds. We have six researchers from management with quite different backgrounds.
UBIQUITY: Tell us about the different backgrounds.
LEIFER: My background is in organizational behavior, the people part of things. My concern is organizational culture, leadership and management. Another person has a marketing background. Her concerns are how you market a product where you can't ask customers what they think because they have no experience with the product, and the set of problems with regard to that. A third person is concerned with the implications for radical innovation on the operations or manufacturing side of the house. The fourth person has a background in entrepreneurship and is concerned with taking what we know about start-ups and applying it to a corporate setting. He wrote a book on incubators. In fact, RPI was one of the first incubators in the country back before they became popular. Another person has background in technology development and alliances, and another person is concerned with product design.
UBIQUITY: Are there any problems integrating those different views?
LEIFER: Academics don't work together naturally -- you know the old story about herding cats. But we have been able to work well together.
UBIQUITY: Has anyone wondered whether the title of the book and the project is redundant? Isn't all innovation radical?
LEIFER: Not at all. In fact, most people would class innovations into two major kinds. One set are incremental innovations, which are improvements and follow-on to what firms are already producing -- getting things to be faster, cheaper, better, that kind of thing. In those cases, the technological and market uncertainties are fairly low. We know who the customers are and what their needs are. Many of those incremental innovations are, in fact, generated out of experience with customers. That whole sequence of events doesn't work with radical innovation.
UBIQUITY: Where does radical innovation come from?
LEIFER: Radical innovation generally comes from an individual in a firm who gets a breakthrough idea. Ideas come from many different places. They could be from somebody realizing the confluence of existing technologies. That's what happened with the hybrid vehicle that General Motors was developing. They said, "Electrical systems and controllers have progressed, our understanding about engines has progressed, and our understanding of drive trains has progressed; why don't we bring those together in a new combination?" So that's one way radical ideas happen; somebody recognizes a confluence. In another case, a guy at Analog Devices went to a brown bag lunch, and a professor type from a local university was talking about some obscure technology. And this guy sat back and said, "If we use that and we couple it with this, we could come up with something." He went back and played with it for three or four years before it emerged as a technology that has found its way into the automobile industry as a solid state accelerometer used to initiate airbags saving some $75 per car over what had been used. Another source of ideas is for leadership to put a challenge to the company to come up with game-changer proposals. So ideas come from different places, but I don't think it comes from customers, per se, which is the case in incremental innovation. By the way, the term "radical," while we like it, is not without its controversy, particularly for older managers who grew up in the '60s and '70s when radical had a particular connotation.
UBIQUITY: If you went into a company that you had no previous experience with, that you hadn't studied, and had to go in World-War-II-style and get something new going, what would be the first thing you would do?
LEIFER: It would depend on why we were there and who brought us in. You just can't drop yourself in on some place and say, "Here I am." You generally come in as a result of somebody having some pain; either they're not getting innovations out or product development is too slow, something like that. It depends on what the needs are of the company at that point. Let me tell you what our experience has been. We deal with large and for the most part successful companies. They're saying, "We're doing OK today, but we see the technological innovations coming up from small companies, and we want to know how to do that within our larger company?" It's a really good question because large companies have a great wealth of information and a depth of competencies. How do we use those to come up with new products and ideas? That's really the challenge. In any case, one of the first places we would look at is the degree of emphasis and support for radical innovation by top management. If they don't emphasize and support it, chances are radical innovation won't get done very well.
UBIQUITY: What do you think of companies that have superb R&D outfits, but have trouble applying them in a way that is good for the company? Xerox is a famous example.
LEIFER: R&D has two or three major roles. One role is to support ongoing operations for process and product improvement, the incremental innovation stuff. Unless they do that well, they're probably not going to be seen as very successful within their organization and hence won't be supported for radical innovations. As we heard at one of our companies, if you can't hit the singles and doubles for your organization, they won't support possible home runs. The second role is to come up with new ideas. As I see it, Xerox PARC is located a long way from the mainstream company. The mainstream company is in upstate New York and Xerox PARC is out in Palo Alto, California. The geography, coupled with the fact that a lot of those ideas were very far from any competence that Xerox had at the time, didn't allow it to have a home within the organization. So the first things that we're concerned about with new technologies are: Where's the home for this? Who's going to be the champion of it? Where is the support within the organization going to come from to overcome the resistance of the people who are committed to the existing products and technology? These people became successful based on existing products and technologies. That's how they got promoted. A lot of radical innovation technologies will overthrow the tried and true. Will people switch easily to the new technologies that may cannibalize what the firm, and these people, have been successful at? How do we overcome resistance? How do we get the money to support projects that might be long-term and cost a lot? If you're far away from headquarters, you don't have everyday contact with the people who can get those innovations through the organizational and resource maze. By the way, that is how we differ with a lot of people who suggest that radical innovation should be incubated or developed as skunk works. We think that for the most part radical breakthrough innovations should be incubated within the mainstream organization where they can take advantage of the funding and intellectual resources of the firm and where champions can protect and support the projects.
UBIQUITY: How do you find those champions?
LEIFER: That's the real problem. What we've seen is that the champions emerge out of their own personal needs. They recognize the opportunity and the importance. It's hard to know a priori who your champion is going to be because we don't know who's going to have a passion for the idea. Ultimately, it's got to be a very senior manager. You've got to pitch the stuff to them, or you've got to get people who they trust to support the project.
UBIQUITY: It seems that a case could be made that while it would be almost impossible to find a CEO of a large, successful company who doesn't endorse the idea of radical innovation, very few can actually carry it off.
LEIFER: I think you're basically right that the rhetoric for most senior managers is that innovation is good. However, when it comes time to implement it, that's far different. It oftentimes is expensive. It oftentimes requires a lot of personal support by the CEO to overcome the natural resistance. We call it the natural antibodies in the organization that help stamp out the radical innovation viruses. Those things happen at mid and lower levels due to the reasons I mentioned earlier. It takes a lot of personal support of a CEO. If the CEO has as his main focus making the donuts, getting out the product, selling it, keeping up the price of shares, et cetera; this is sometimes seen as a distraction. So they have the rhetoric, but where they spend their time is on the everyday activities. That's really the challenge.
UBIQUITY: What's the answer to that challenge?
LEIFER: The answer to that challenge is that rather than relying on individual initiative to make it happen; we make it an organizational activity. It includes setting up a culture that encourages radical innovation, a reward system for doing it, organizational mechanisms, one of which we call a radical innovation hub.
UBIQUITY: What is a radical innovation hub?
LEIFER: A radical innovation hub is an organizational unit composed of people whose responsibilities are to bring forward breakthrough innovations. Those people have their own funding. They have a portfolio approach to innovation. They go to hunt and gather ideas for innovations. They recognize the market opportunities in the ideas. They fund them to a point where they can be demonstrated, oftentimes within six months, fairly cheaply. They evaluate those projects in terms of their viability for the marketplace. They oversee development of them in terms of overseeing the projects evolve.
UBIQUITY: How does one keep this radical innovation hub from being a disruptive force?
LEIFER: It is a disruptive force. But it is understood in the organization that it's a disruptive force to the current way of thinking about the world. Clayton M. Christensen, who wrote "The Innovator's Dilemma," calls it disruptive technology. At some point, we must have a force within an organization that allows a disruptive technology to emerge. If they don't, then we don't get breakthrough innovation.
UBIQUITY: Do the radical innovations sometimes break out of projects that begin as minor improvements?
LEIFER: Not in our experience. They've all emerged out of a breakthrough technology. That breakthrough technology may be based on new science or it may be based on the realization of the confluence of existing technologies. But they've all emerged out of a breakthrough idea. Now, that breakthrough idea did not necessarily generate a breakthrough product. That would come later. But somebody recognized that this is something interesting that we should investigate further.
UBIQUITY: So would you say that innovations generally are bottom up rather than top down?
LEIFER: Yes, they're bottom up. Top management can provide the framework and the instigation. Top management can act as provocateurs for people to come up with new ideas, but not what those ideas are. For example, on a Friday, the president of the Otis Elevators division of UTC said, "I want some new ideas. On Monday, come back and bring me some breakthrough ideas." Over the weekend, the staff thought and thought and thought and came back with the idea that, "Hey, we can do an elevator that goes horizontally and vertically in the same shaft." That would allow an elevator to eliminate cables, which would then allow an elevator to go up to very high buildings. Plus, there's a natural limit to traditional cable driven elevators. So we see the role of top management as setting the context, setting up organizational mechanisms such as the radical innovation hub, as providing the motivation, and as supporting these kinds of activities but not actually coming up with the content of what they should be.
UBIQUITY: Do the project time spans vary quite a bit?
LEIFER: Quite a bit. Some of the projects go on for 10 or 15 years. Some of the projects go on for a year. It depends on the scope and on the industry. In the consumer products industry, for example, those products generally can come to market very rapidly within a year. In capital-intensive industries such as the chemicals or the gasses industries where you have to build a demonstration plant, they might go on for 10 or 15 years.
UBIQUITY: Does the radical innovation leadership group tend to suffer periods of slumps and discouragement during long projects?
LEIFER: Absolutely. Further than that, as the top leadership group changes, priorities in the organization change. One leader may want to cut costs rather than innovate, while another supports innovation. One guy might simply not like the project supported by the previous person who started it.
UBIQUITY: How do you cope with that and keep up the level of intellectual excitement?
LEIFER: That's a good question. We've seen cases where projects have languished when new people came along and didn't believe in the project. On the other hand, we've seen where a new person came in and said, "That's really good; let's bring it to market" and invigorated the project. However, if there is an organizational system -- like the hub arrangement -- that is somewhat independent, and if there is a cultural and organizational commitment to innovation, then it eliminates the personalities of the top management. Corning, for example, has had a corporate value about technical innovation for 100 years. They keep innovating because they have that. 3M has a similar culture. It doesn't matter who becomes the CEO. My guess is they choose CEOs who espouse those values that allow innovation to continue, whereas in other companies the CEO may have a big influence on innovation.
UBIQUITY: One final question: How do you keep up your own intellectual excitement?
LEIFER: Our project is continuing. We have a number of other questions that we are trying to answer. What we've done with the project so far is document what is going on in industry which resulted in our book. The second part of the project, which is what we are involved with now, concerns questions of implementation. We want to see the degree to which our suggestions work for service innovations. We also want to see what it takes to implement our suggestions in established companies. That's where we get data for improving innovation practice. Our goal is provide firms with a set of proven strategies for implementing radical innovation. We want to change the world. Radical innovation can do that.
For further information, see http://www.mgmt.rpi.edu/ and also http://hbsp.harvard.edu/. Richard Leifer's e-mail address is [email protected]