New Perspectives in Innovation Failure Analysis: A taxonomy of general errors and strategic management for reducing risks

Abstract

In turbulent environments, one of the fundamental problems is the high risk of failure in new innovation projects that affects organizational behaviour and performance of firms and also nations. The study here clarifies the theoretical structure of project-level failure proposing a new definition, based on systems approach (Innovation failure is when organization does not achieve the main goal of project because of a set of errors), and a taxonomy of three general types of error in innovation failures: errors in planning and/or design, in project execution/implementation and in marketization. A case study research clarifies the proposed framework of innovation failures with examples from pharmaceutical sector, aerospace and aircraft industries, and information & communication technology sector. Results suggest that the failure in innovation projects is due to proposed errors associated mainly with bounded rationality of organizations in dealing with goal difficulty, environmental complexity and uncertainty. Different strategies of problem solving to reduce errors and risks leading to innovation failures and improve technological development are proposed, such as learning processes, adaptation perspective, game theory approach, stage-gate method, etc. The proposed systemic concept of innovation failure and related taxonomy of general typologies of error can guide R&D managers, designers, analysts, and policymakers etc. to know main determinants of failure in innovation projects and how appropriate strategies can improve organizational performance and R&D processes of firms for competitive advantage in markets and society.