5 Reasons Companies Should Forget About Radical Innovation
Radical innovation is too difficult for most companies and they should play it safer when it comes to innovation. You can read why I think so below–and you can get a few ideas how to do it should you decide to give radical innovation a try.
First of all, let me say that I define radical innovation as projects that had an identified team and budget, and were perceived as having the potential to offer either:
- New to the world performance features
- Significant (5-10x) improvement in known features
- Significant (30-50 percent) reduction in cost
The definition is developed by the Radical Innovation Group which works hard to establish innovation as a management discipline. They know a lot about radical innovation.
Most companies should forget about radical innovation because…
- It usually takes 5-7 years before you see results on radical innovation projects. Consider the typical process of such projects which takes 3-5 years: you start a project when times have been good for at least a couple of years (you dare to invest), you hesitate as good times come to an end and you shut it down when we hit a crisis like now. This gives you no results despite heavy investments and you have to deal with frustrated employees.
- Only few executives, leaders, managers and employees have successful experiences with radical innovation. As this is still such a new discipline companies simply lack the skills, mindset and knowledge needed to make radical innovation projects survive beyond 3-5 years and thus being able to prove themselves. The projects get too little time to show results while they become obvious targets for cost-cutting done by executives and leaders lacking the skills, mindset and knowledge to make radical innovation successful.
- Innovation projects that range between incremental and radical innovation are more likely to succeed, making such projects more acceptable to risk-adverse executives and managers. I even suspect such projects could give a better return on investment than radical innovation projects, but I have not found data to prove this. Let me know if you can help on this.
- Companies can simply buy startups with radical projects and try to integrate them into their core business utilizing their well-established brand and sales channels. This could be a dangerous approach as companies tend to make such projects fit their organization rather than to the needs of the customers. The chances of success increase when you develop entirely new platforms based on several radical innovation projects and let them live their own lives.
- It is not only difficult for big companies to create radical innovations, it is often contrary to their best interest and culture. Big companies have no incentive to change their markets. Read more about this in Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets, a new book by Markides and Geroski.
Companies should do radical innovation because…
Many companies have been successful with radical innovation projects providing others with the opportunity to learn and adapt to their own situations. Check these links to learn more about such cases and how to do it:
When radical innovation is done successfully, companies can dominate industries and earn huge pay-offs.
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