At Corning, GE, Motorola, and Searle, it was a learning-driven strategy that led to major innovation success.
OVERVIEW: Successful new product development is tough, especially for truly new products. How can a company successfully develop and commercialize such products? An examination of four radically new innovations-Corning's optical fibers, GE's computed axial tomography, Motorola's cellular telephones, and Searle's (now Monsanto's) NutraSweet-reveals that in each case a learning-driven strategy was critical to success. Leaders who wish to improve their company's ability to develop the kind of products that can create entirely new industries are urged to create conditions under which teams can learn from past experience, even failures.
Innovate quicker and better than your competitor and you can secure a competitive advantage in the marketplace; lag or stumble and your company can be relegated to playing catch-up for years. What can companies do to improve their ability to innovate, and to do so successfully?
Over the past 20 years, many studies have been completed to determine the critical drivers of innovation success. Four innovation strategies varying in their orientation have emerged from this research: 1) customer-driven, 2) process-driven, 3) pioneer-driven, and 4) learning-driven. This article explores which of these strategies is most appropriate for the complex and challenging form of innovation called really new, or radical, innovation development and commercialization.
Four Innovation Strategies
In a customer-driven strategy, the focus is on uncovering customer needs and wants and then meeting those needs. Philip Condit, president of The Boeing Company, summarizes his company's customer-driven strategy in the development of the 777: ". . . we defined this airplane by aggressively listening to the airline customer" (1). Customer-driven strategies are rooted in marketing and marketing research. Formal and informal surveys are used to identify market segments and uncover demand drivers, market gaps and customer dissatisfactions. Buzz words such as "voice of the customer," and "market focused," describe this approach (2). In a customer-driven strategy, the innovation effort is typically initiated by a customer request (3). The meeting between Coming people and Thomas Edison in 1879, to discuss his requirements for a glass light bulb, is a classic example of a customer-driven strategy. A few months following that meeting, Corning's shop was producing bulbs to Edison's specifications (4). In a process-driven strategy, the innovation effort follows a systematic process beginning with idea generation, screening/evaluation, development, testing, and launch. Many studies have demonstrated the importance of having a rigorous, systematic new product development (NPD) process, one in which all the phases are completed and each phase is completed proficiently. Cooper studied 103 projects from 21 firms and found that how well each NPD process activity was performed affected the probability of overall new product success (2). His findings have been replicated by many others (e.g., 5,6, 7,8).
In a pioneer-driven strategy, being first to market is key. However, company executives frequently struggle over which order entry strategy to choose-pioneer or follower? Many scholars assert that a pioneer strategy is better because a firm can capture a larger market share and achieve greater long-term profits (e.g., 9). A pioneering strategy can yield competitive advantages that last throughout a product's life (10). This entry order can also have a critical impact on long-term market share as well (11). Gruenwald states that the most amazing new product and the best marketing plan do little against a competitor who is first to the market (12). There is, however, evidence that suggests that a pioneering strategy may not always be better because the follower can correct faults in the pioneer's product and enter the market later but with a better product (13). …