Articles

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Radical Innovation: How Mature Companies Can Outsmart Upstarts

Richard Leifer, Christopher M. McDermott, Gina Colarelli O'Connor, Lois S. Peters, Mark Rice, and Robert W. Veryzer. Harvard Business School Press.

The Challenge of Volatility

Reviewed by James F. Doyle

"Radical Innovation" is a book that addresses the long-term survival of today's giant business enterprises. Under the leadership of Richard Leifer, the respected management consultant from Rensselaer Institute, the book is the product of a diverse team of experts with backgrounds in R&D management, entrepreneurship, product design, marketing, organizational behavior, and operations and project management. Their objective in writing the book was not the usual consultant advisement on improving management practices, staying competitive in market share and product quality, and maximizing profitability. Instead they have taken on the far more forbidding challenge of teaching currently thriving companies how to remain dominant in a business environment characterized by rapid technological change and shifting customer priorities. Over the past 20 years, the giants of the business world have watched with some incredulity as small start-up companies have beat them to the punch in recognizing and meeting market place needs for new products and services. This book comes along at a time when the behemoths of the business world are gradually, and sometimes grudgingly, acknowledging that their organizational size and complexity may be more of a handicap than an advantage when staying competitive depends on the early recognition and rapid adaptation of promising innovations, especially those resulting from technological discoveries.

Radical innovation means a lot more than improving the features or lowering the cost of existing company products or services. Such improvements represent relatively predictable incremental innovations with little or no risk of failure and do not compare with the high risk changes a company makes when it undertakes novel enterprises, such as entering a new market arena, or risking the loss of extensive amounts of capital and other company resources on projects that may fail or prove not to have commercial benefits. When technological breakthroughs were less frequent and less revolutionary it made sense for large stable businesses to remain confident that any threat to their dominant position was minimal. They could take a wait and see position, knowing that most of the small entrepreneurs would fail and believing that the successful ones could generally be bought out at less than it would have taken to engineer the innovation in house. The authors of this book think that established organizations are mistaken in leaving radical innovation to the entrepreneurs. They make the case that the established organization actually has far better resources to do the job and with significantly higher probabilities of success. They base their argument on case study research conducted over the past five years in major companies engaged in projects seeking radical solutions to their business operational problems and developmental needs.

What the authors have done in this book is lay out a paradigm for established companies to develop within their own organization a capacity for initiating and executing successful radical innovations. Their recommendations are comprehensive and specific, but with the necessary flexibility to accommodate a wide variety of business situations and exigencies. They do not constitute a rigid blueprint as much as a manifesto of wise principles and good counsel, the product of their collective analysis of the 12 radical innovations they examined so intensively. It is doubtful that a company engaged in a radical innovation project will encounter a problem that this book will not have dealt with in some fashion. The key feature of the book's paradigm for successful innovation is what the authors call the "radical innovation hub", which houses all the players assigned roles in making an innovation happen. This "hub" will operate much as if the members were working in a small entrepreneurial firm with the informality, easy access and other features of that environment. In addition to coordinating the many specific activities of an innovation project, the "hub" will also manage project interface with the mainstream organization, helping free up company resources and reducing any negativity towards the project.

"Radical Innovation" can be read with profit by managers with an entrepreneurial flair, whether they work in established companies or one of the "upstart" firms competing against them. The two work environments have obvious differences, but when attention is concentrated on moving a radical innovation to a successful outcome, many of the book's suggested procedures apply with little or no modification in either work setting. The most appropriate readership for this book, however, might be an assemblage of managers meeting as a study group preparing to set up a "radical innovation hub" within their company.


James F. Doyle is a member of the Clark Atlanta University faculty.