Sustaining Breakthrough Innovation

Abstract

More than 100 practitioners of innovation assembled in Cambridge, Massachusetts in November 2008 to discuss the importance of innovation as a management discipline and share leading-edge practices critical to its future ( 1 ). In this rich environment, I had the opportunity to deliver a keynote address, in which I positioned innovation as an emerging business function, just as marketing emerged as such in the mid-1950s. Innovation as a distinct and separate management discipline is moving from an academic concept into realworld practice at major corporations. The focus of our research program at Rensselaer Polytechnic Institute has been to understand how firms can build a sustainable breakthrough innovation (BI) capability, knowing that back in 2001 the average life expectancy of these initiatives was only about four years. I am pleased to report that the life expectancy is increasing as companies embark upon a more systematic approach to innovation, become more strategic about it and learn how to orchestrate their innovation capacity. Research Insights Our insights are based on the cumulative learning of 28 companies directly participating in this research and over 100 companies involved in validating the research and tools through the Industrial Research Institute (IRI). We learned, first, that breakthrough innovation can be characterized by high uncertainty, which is no surprise. But our initial insights led us to identify four distinct categories of uncertainty (market, technical, resource, and organizational uncertainty), which fuel a host of management challenges. In addition to technical and market issues that project teams typically face, resource (accessing talent, partners and money) and organization (establishing and maintaining organizational legitimacy) uncertainties must also be managed. In fact, the latter two are the ones most likely to impede project success. Along with the importance of reducing uncertainty across multiple dimensions, the management challenges we observed include: 1) capturing breakthroughs (clarifying and articulating breakthrough concepts); 2) managing projects that experience the chaos of multidimensional uncertainty and ambiguity; 3) learning about markets that do not yet exist; 4) developing new business models; 5) acquiring resources (both funding as well as appropriate competencies); 6) transitioning projects successfully from RD and 7) harnessing the contributions of individuals. We noted in our first book ( 2 ) that an innovation focal point, or group, is needed to screen and evaluate new business opportunities, create the right environment for these projects to be successful, and manage an open innovation model with multiple interfaces. We ultimately defined a mature breakthrough innovation capability as an embedded system for initiating, supporting and sustaining BI activities. The problem is, most firms are designed to meet the objectives of oper ational excellence: customer intimacy, responsiveness to market needs, and strict cost containment. Such a system may tend to snuff out breakthroughs. When leadership clarifi es that BI is important to the firm, we observe that one or two design elements of the management system may be put in place, but rarely, if ever, are all of them installed simultaneously. In order to have a sustained innovation management function, all the elements of a management system must be attuned to that objective, and they must work in parallel with the management system for operational excellence as well. We identify the elements of the BI management system as follows: * Defining mandate and scope. * Ensuring a supportive leadership/culture. * Establishing an appropriate organizational structure and managing interfaces. * Developing governance and decision-making mechanisms. * Introducing learning-based processes and tools. …