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Abstract

  1. Top of page
  2. Abstract
  3. 1. Introduction
  4. 2. Setting the stage: Selection and reframing
  5. 3. Method
  6. 4. Findings: innovation practices for selecting discontinuous innovation
  7. 5. Discussion and Conclusion
  8. Acknowledgements
  9. References

A key challenge in managing innovation is to explicitly identify ways to improve an organization's performance with regard to discontinuous innovation. However, discontinuous innovation does not fit the existing ‘frame of reference’ and hence requires a reframing of the traditional ways of innovating within the organization. More specifically, previous research shows that practices that work well in the context of incremental innovation do not work in the context of discontinuous innovation. Thus, the aim of this paper is to explore innovation practices that enable organizations to select innovation projects, which are ‘outside the box’ of its prior experience, i.e. are discontinuous in nature. Building on the experience of more than 150 firms across 12 countries, we have identified nine innovation practices for the selection of discontinuous innovation; these can be grouped into three clusters: enable, engage and experience. In sum, we identify that an organization needs to acknowledge that its choice to engage in discontinuous innovation will have consequences for the innovation practices chosen to select which discontinuous projects to carry forward.


1. Introduction

  1. Top of page
  2. Abstract
  3. 1. Introduction
  4. 2. Setting the stage: Selection and reframing
  5. 3. Method
  6. 4. Findings: innovation practices for selecting discontinuous innovation
  7. 5. Discussion and Conclusion
  8. Acknowledgements
  9. References

A key challenge in managing innovation is to explicitly identify ways to improve an organization's performance with regard to discontinuous innovation. Previous research has shown the benefits of discontinuous innovation, i.e. new products or services that lead to significant leaps in terms of customer familiarity and use (e.g., Veryzer, 1998; Leifer et al., 2000; Bessant, 2003). However, it also emphasizes the challenge that discontinuous innovation poses in as much as it does not fit the organization's existing ‘frame of reference’1 (Gioia, 1986), hence requiring a reframing of the accustomed ways of innovating within the organization. More specifically, previous research shows that traditional innovation practices2 towards the selection of innovation projects do not work in the context of discontinuous innovation (Leifer et al., 2000; Rice et al., 2002).

In general, the question of selection is not simply a matter of building a portfolio of projects with a mixture of risk. The process involves ‘choosing from all the things we could do those that we are going to do – and why’. Without some way of managing this selection process, firms are merely gambling – which carries a high risk of failure in firms (Cooper, 2001). Concern with selection has led to the development of a variety of different approaches to aid the selection process such as establishing decision rules and criteria, applying portfolio techniques, using stage gate review systems, etc. Different configurations to suit different stages, sizes and aspects of projects have also been explored, e.g. ‘fuzzy front end’ tools for early-stage selection (Koen et al., 2001), ‘fast track routines’ for simple small-scale projects (Griffin et al., 1996) and idea management funnels and systems to deal with the high volume of ideas created in high-involvement innovation (Bessant, 2003; Schroeder and Robinson, 2004).

When the innovation decision is about incremental innovation, along an established trajectory – doing what we do but better – or within an established technological paradigm (Dosi, 1982), there is relatively little difficulty. A business case with requisite information can be assembled, cost benefits can be argued and the ‘fit’ with the current portfolio or strategy can be demonstrated. As options move further away from established trajectories, this becomes more difficult, uncertainty and risk increase, and as a consequence, making decisions feels more like placing bets. This in turn leads to an increase in emotional arguments and political behaviours (Pettigrew, 1974; Van de Ven, 1999).

Organizations that want to pursue discontinuous innovation, innovation that is likely to create a new trajectory, face the challenge of having to move ‘outside the box’, beyond its prior experience (Tripsas and Gavetti, 2000; Hodgkinson and Sparrow, 2002; White and Bessant, 2006). The pressing issue is thus: what innovation practices could remove some of the uncertainties when selecting innovation projects that are positioned ‘outside the box’ of its prior experience, i.e. are discontinuous by its nature?

In this paper, our aim is to explore the challenge of identifying innovation practices for selection in the face of discontinuous opportunities. To this end, we first provide an overview of the link between reframing for and the selection of discontinuous innovation. Having set out what we regard as the selection space for discontinuous innovation, we discuss several innovation practices for the selection of discontinuous innovation that go beyond the traditional innovation practices for selection within organizations that we have observed in our work with 150 firms from 12 countries.

2. Setting the stage: Selection and reframing

  1. Top of page
  2. Abstract
  3. 1. Introduction
  4. 2. Setting the stage: Selection and reframing
  5. 3. Method
  6. 4. Findings: innovation practices for selecting discontinuous innovation
  7. 5. Discussion and Conclusion
  8. Acknowledgements
  9. References

Much of the recent discussion on strategy has a link to ‘sense-making’– the individual and, importantly, shared cognitive schemata through which the complex external world is experienced (Weick, 2002). Of necessity, such schemata are simplifications, as are business models, which provide lenses through which to make sense of the environment and guide strategic behaviour. The problem with discontinuous innovation is that it presents challenges that do not fit the existing ‘frame of references’ (Gioia, 1986) and hence require a reframing – something that existing incumbents find hard to do. In a process akin to cognitive dissonance, they will often selectively perceive and interpret the new situation to match or fit their established worldviews. As, by definition, discontinuous shifts usually begin as weak signals, picked up only on the edge of the radar screen, it is easy to continue interpreting the signals in the old frame for some time. By the time the disconnection between the two becomes apparent and the need for radical reframing is unavoidable, it is often too late. As Dorothy Leonard puts it, core competencies have become core rigidities (Leonard-Barton, 1995).

The problem is not that such firms have weak or ineffective strategic resource allocation mechanisms for taking innovation decisions – but rather that these are too good. For as long as the decisions are taken within the existing frame of reference, they are effective; however, they break down when the challenge comes from outside that existing reference frame. It is important to recognize that the justification for rejecting ideas, which lie too far outside the traditional frame of reference, is expressed in terms that are apparently ‘rational’– that is, the reasons are clear and consistent with the decision rules and criteria associated with the existing frame of reference. But they are examples of what Simon (1991) called ‘bounded rationality,’ and underpinning them are a number of key psychological effects such as ‘groupthink’ (Hodgkinson and Sparrow, 2002).

In addition, by their nature, such selection decisions for discontinuous innovation are being made under conditions of high uncertainty – there is simply not enough information early on to allow an unambiguous choice to be made. Therefore, most managers would want to learn about the technology, market or other challenge, but under competitive conditions, a delay in taking the decision may pose problems in terms of opportunity costs for other projects. Not surprisingly, resource allocation is carried out with strong reference to the existing frame of references because these have been a useful guide in the past – and so an implicit bias is set up that those offering more radical proposals need to overcome. It is here that the interpretative nature of decision-making becomes significant – individuals and groups have particular cognitive frames and they tend to reinforce these even in the face of conflicting information (Mathieu et al., 2000). To some extent, this means that they see the world as they wish to see it and adapt the ‘facts’ to fit their frame of reference – the process of ‘cognitive dissonance’ mentioned earlier. It is only when there is an unambiguous and strong challenge that the existing frame of reference is abandoned or modified, and a new frame of reference is introduced.

It is important to understand the problem of reframing in the context of innovation as it provides some clues as to where and how alternative innovation practices might be developed to support decision-making around selection under discontinuous innovation conditions. Using ‘rational’ innovation practices is likely to be ineffective because of the high uncertainty associated with this kind of innovation, meaning that it is difficult to assemble ‘facts’ to make a clear business case, while the inertia of the existing frame of reference includes the capacity to make justifiable rejection arguments. Some alternative innovation practices are needed to handle the exploration of opportunities outside the ‘normal’ decision-making channels in order to enable the selection of discontinuous innovation.

3. Method

  1. Top of page
  2. Abstract
  3. 1. Introduction
  4. 2. Setting the stage: Selection and reframing
  5. 3. Method
  6. 4. Findings: innovation practices for selecting discontinuous innovation
  7. 5. Discussion and Conclusion
  8. Acknowledgements
  9. References

The aim of our research is to gain a deeper understanding of innovation practices, which enable and aid the selection of discontinuous innovation. To study this phenomenon, we collect and analyse the innovation practices available in the selection process of discontinuous ideas among around 150 firms across 12 countries, which form part of the Innovation Laboratory Initiative (http://www.innovation-lab.org). Within this context, we are looking at emerging innovation practices that organizations are experimenting with to deal with the challenge of selecting discontinuous innovation. To derive our data set, we asked participating firms in each country to share their innovation practices for the selection of discontinuous innovation in two workshops, which took place over a period of 1 year in each of the participating countries. In particular, we ask them about new innovation practices for the selection of discontinuous innovation they have started to experiment with. In each of the countries, a panel of researchers collects the insights from these two workshops and develops a list of the most frequently mentioned innovation practices including a description how these innovation practices are being used. Following the principle of the constant comparison method (Glaser and Strauss, 1967), these findings are then compared and refined by a cross-national team with representatives from the German, United Kingdom and French Innovation Lab Initiatives merging or deleting those innovation practices that are not distinctive enough. By this iterative process of analysing, discussing and re-analysing the central elements of each innovation practice, we finally derive nine innovation practices for the selection of discontinuous innovation, which can be combined into three clusters: enable, engage and experience. As a final step, we undertake an in-depth literature analysis to align a clear description for each of the identified innovation practices.

4. Findings: innovation practices for selecting discontinuous innovation

  1. Top of page
  2. Abstract
  3. 1. Introduction
  4. 2. Setting the stage: Selection and reframing
  5. 3. Method
  6. 4. Findings: innovation practices for selecting discontinuous innovation
  7. 5. Discussion and Conclusion
  8. Acknowledgements
  9. References

Our analysis derives three clusters, in which the nine innovation practices for the selection of discontinuous innovation can be grouped. Table 1 provides an overview and a short description of the nine identified innovation practices:

Table 1.   The nine innovation practices for the selection of discontinuous innovation
Enable – the role of organizational processes
Using alternative decision-making pathwaysThe inability of conventional funnel systems to cope with more risky innovation has led some firms to create alternative pathways for selecting and developing discontinuous ideas, at least to the stage where they can stand up for themselves in the mainstream innovation funnel process. These parallel or alternative structures for discontinuous innovation vary in shape and form but essentially have a ‘fuzzy’ front end, which allows for building a potential portfolio of higher risk ideas and options
Using alternative/dedicated implementation structuresOne problem with making decisions about resource allocation for discontinuous innovation projects is that the ideas are not well developed when they first come up for consideration. A strategy for dealing with this is to make use of different mechanisms for incubation and early stage development elsewhere – off-line or at least away from the harsh environment of the normal resource allocation system
Using alternative evaluation and measurement criteriaSelection systems require decision-making criteria, and a general acceptance of these criteria as a good basis on which to take decisions. The high uncertainty associated with discontinuous innovation makes this problematic. As a result, a compromise is often reached, whereby existing systems are adapted, a solution that may be only partially effective. Firms are experimenting with deploying alternative criteria within their decision systems, using approaches like discovery-driven planning, where higher uncertainty is involved along technical, market or other dimensions. The idea here is that, instead of using stage gates when a simple ‘pass/fail’ decision is made, learning loops are used, where, at each loop, there is a discussion about what is known and what needs to be explored further – where to target the next stage of learning
Deploying alternative funding structuresResources are essential to allow further exploration of technical or market options, to develop and test ideas, to commit to full-scale preparation and launch and to support innovations in the long term as they mature and continuously improve. The pressing issue is how should resources be allocated? In order to do so, some firms have developed sophisticated alternative and parallel funding arrangements, which provide access to funding on a range of different terms. Examples are joint ventures, equity finance or development funding
Engage – the role of individuals
Mobilizing networks of supportIndividuals with discontinuous ideas need a great deal of personal energy, enthusiasm and passion to move their ideas forward, and get them beyond the organization's existing frame of reference. Support from other people can also be very useful, especially if those people happen to be powerful sponsors at high levels who can help promote their cause or ease some of the tensions it sets up
Mobilizing entrepreneurship inside and outside the firmEntrepreneurship is at the heart of the discontinuous innovation challenge – seeing opportunities and making them happen in the form of discontinuous innovation. It makes sense, therefore, to explore options that help the process forward, and build on the core principles of entrepreneurship – like being able to pitch an idea with passion and enthusiasm, as well as a good story. One strategy is to try to identify and work with entrepreneurs inside and outside the organization and allow their natural capabilities to help select and implement discontinuous innovation ideas
Experiment – the role of tools and methods
Building alternative visionsSome firms look at alternative mental models, consider different approaches and attempt to assess their relevance and salience for their business strategies. Here, the area of futures studies is useful, using tools such as forecasting, trend extrapolation and scenario building to create and explore alternative models of the future and the potential threats and opportunities that they contain
Probe and learn methodsA big part of the problem when making selection decisions about discontinuous innovation ideas is the scale of uncertainty. Given the choice, firms opt for more certain over less certain, a tendency that militates against more discontinuous innovation. One way in which firms are dealing with the uncertainty problem is to use ‘probe and learn’ approaches, taking small steps into the unknown, i.e. the new frame of reference. Probe and learn stages the risk attached to selection decision-making into smaller steps, rather than forcing a once and for all commitment
Bridge-building to/from outside the boxDiscontinuous innovation is essentially a leap into the unknown and part of the problem is that firms do not have anything against which to compare it. Short on facts and relying on imagination and guesswork, it should be no surprise that in the studied firms, there is often a tendency to play safe – especially if the imagined picture of the innovation looks like nothing ever seen before
In these cases, a useful strategy applied by some firms is to attempt to build bridges in the minds of potential supporters between the current state of affairs and what might be. Building bridges involves finding stepping stones between the two situations, and one way of achieving this is to use prototyping, creating stepping stones that allow people to better understand and shape the idea when it is still in its formative stages

Enable – the role of organizational processes: using alternative decision-making pathways, using alternative/dedicated implementation structures, using alternative evaluation and measurement criteria, deploying alternative funding structures.

Engage – the role of individuals: mobilizing networks of support, mobilizing entrepreneurship inside and outside the firm.

Experimentthe role of tools and methods: Building alternative visions, probe and learn methods, bridge-building to/from outside the box.

Even though all of the nine innovation practices are of high relevance to select discontinuous innovations, in this paper, we explore those six innovation practices that have been most frequently mentioned in the two workshops by the firms across the 12 countries in our sample.

We have structured the presentation of the innovation practices as follows: first, we provide a general description of the identified innovation practice grounded in previous research. Second, we provide illustrative examples of how a particular innovation practice is applied by the firms we studied in the Innovation Laboratory.

4.1. Enable – the role of organizational processes

4.1.1. Using alternative decision-making pathways

Firms increasingly recognize the importance of establishing structured innovation systems, which do not only help to select and build a balanced portfolio of innovation projects but also enable to monitor their progress through the innovation process (e.g., Cooper et al., 2001). However, because such systems were designed to manage risk and enable a decision based on market and technological facts, they bear the risk of not supporting ideas that are vague, hazy and speculative. In particular, even though such approaches are commonly used, the evaluation criteria applied have been found to be inappropriate for the selection of discontinuous innovation (Lynn et al., 1996; Christensen et al., 2008).

To help deal with this endeavour and to provide a pathway for developing discontinuous ideas at least to the stage where they can stand up for themselves in the mainstream innovation funnel process, many organizations have experimented with parallel or alternative selection structures for discontinuous innovation; this aspect of the innovation process is often referred to as the ‘fuzzy front end’ of innovation. Rather than being selected by prescribed organizational mechanisms, ideas at the ‘fuzzy front end’ are mainly brought into the firm by individuals (Reid and de Brentani, 2004). These individuals act as promoters and give the idea directly to the relevant decision makers (Reid and de Brentani, 2004), thereby creating a sort of a parallel funnel structure. In order to select discontinuous innovation, Leifer et al. propose an evaluation board composed of experts, ‘(…) whose combined capabilities bring both credibility and wisdom derived from experience in evaluating radical concepts (…)’ (2000, p. 42). Another promising approach is the use of larger groups of participants in the selection process. Methods like internal idea markets – where ideas are traded and their value is indicated as stock price (e.g., Soukhoroukova et al., 2007; Spann et al., 2009) – allow employees outside the R&D department to participate in the selection of promising discontinuous ideas. Customers can also be included in the selection process, which is increasingly being done in the form of innovation contests (e.g., Piller and Walcher, 2006).

In accordance with previous research, our findings show that the use of an internal jury of senior managers, who have the seniority and hence the ability to support and provide resources, and the integration of larger evaluation groups are used by the firms to allow for the selection of discontinuous innovation. In particular, we found the following alternative decision-making pathways: ‘Dragon's den’ (based on the TV programme model of presenting to a panel of experienced entrepreneurs and potential investors), presentation rounds, internal markets including virtual stock markets and open evaluation platforms.

4.1.1.1. Dragon dens. For example, the Ordnance Survey uses a panel of senior executives who convene periodically to assess competitive funding bids for discontinuous projects. Ideas generated by employees are initially assessed against predefined criteria by ‘innovation angels’. In a next step, these ‘innovation angels’ work along side the innovators to help them to prepare their presentation to the dragons' den. The idea is then pitched to the Dragon's Den, which decides on whether to support it with ring fenced funds. Not only are the projects selected using a forum that bypasses the corporate formalized decision-making routines, but they also gather considerable executive support from the outset.

4.1.1.2. Presentation rounds. Other firms such as O2 adopted a more informal approach by using Presentation Rounds. These were earlier stage forums in which both conventional and discontinuous ideas can be pitched to senior staff. In sharp contrast to Dragons' Dens, no formal screening criteria were applied and successful projects were generally allocated a ‘champion’ (who acted as a sponsor and advocate) rather than funding.

Another interesting development is to make use of internal markets to assess ideas. Building on principles of ‘crowd sourcing’ and ‘the wisdom of crowds,’ such models provide a radically different way of assessing – and also building support for – discontinuous ideas. A possibility is to open the selection to a broader set of people to obtain an aggregation of opinions as objective as possible. One approach used by the organizations in our sample is that of open evaluation platforms. Such platforms provide the possibilities for individuals to evaluate and select a product or a service quantitatively and qualitatively. For instance, Webasto offers its employees an intranet platform, a so-called Idea mapping platform, allowing all employees within the organization to become a part of the selection process. The positive aspect, besides the activation of every employee in the matter of innovation, is that the selection is made by an aggregation of hundreds of people with different backgrounds.

4.1.2. Using alternative/dedicated implementation structures

The use of alternative/dedicated implementation structures is another important innovation practice to facilitate the selection of discontinuous innovation. This finding complements previous research discussing whether or not to integrate the focus on discontinuous innovation in an existing business unit (e.g., Gavetti and Levinthal, 2000). Rice et al. (2002) observed that firms seem to make the decision on whether to attach the innovation to an existing business unit, to set up a new business unit or to spin off the innovation primarily by looking at strategic fit. Interestingly, the question of the extent to which the innovation project should be separated from the core business is not answered conclusively in the literature. Some researchers even argue that a discontinuous innovation inside an incumbent will not be successful as they lack the necessary capabilities to pioneer a market (e.g., Markides and Geroski, 2003). Another stream of literature suggests to completely spin off discontinuous ideas to keep them away from the core business as it is assumed that the corporate immune system is likely to kill such discontinuous ideas (Christensen and Raynor, 2003; Bessant et al., 2004). Denning (2005) for instance shows that it is unlikely that the venture will receive all the resources it needs if the parent organization intentionally wants to get rid of such ideas.

In line with previous research, our findings show that the firms in our sample recognize the importance of alternative implementation structures to support the selection of discontinuous innovation. Given that part of the difficulty of the selection of discontinuous innovation is that ideas are not well developed when they first come up for consideration, our findings show that one strategy for dealing with this is to allow them to incubate elsewhere – off-line or at least away from the harsh environment of the normal resource allocation system. These take the form of special external vehicles, which operate outside the existing corporate structure. Other variants that we have identified include setting up external ventures where such incubation can take place. For example, Siemens makes use of ‘satellite’, SMEs in which it has a share, to act as incubator environments to take forward some of its more discontinuous ideas.

Another participant in our study working for Unilever Ventures explained how their quasi-autonomous division was responsible for assessing, selecting and investing in discontinuous innovation' opportunities originating from within and outside Unilever. Endowed with a significant budget, it is essentially a corporate venture fund that co-invests in businesses outside the usual scope of Unilever operations. It has a long-term exit horizon of 5 years plus and a remit that accepts that early stage losses may be incurred; although these are specified in terms of upper limits (involving several million dollars), the underlying purpose is to ensure a relatively unconstrained operation of the fund. Unilever's approach, which we generically term Venture Works, is also ideally suited to engaging in partnerships. These confer a host of benefits including risk sharing, a higher probability of project success through shared skills/experience and a greater level of commitment than that found in solo ventures. Furthermore, the reduction in risk and uncertainty associated with effective partnerships may lead to a broader range of discontinuous innovation opportunities being considered and selected. At the end of the 5-year investment cycle, the mature businesses will either need to be sold off or bought out entirely and incorporated into Unilever's corporate structure. However, despite being effective vehicles for identifying and exploring discontinuous innovation, the operational, organizational and strategic disconnect of Venture Works and their projects from the corporation raises some serious issues, not least being the feasibility of assimilating a mature but discontinuous business into the parent firm. In a similar vein, SAP has set up a venture unit called SAP Inspire to fund start-ups with interesting technologies. The mission of the group is to ‘be a world-class corporate venturing group that will contribute, through business and technical innovation, to SAP's long-term growth and leadership.’ It does so by: seeking entrepreneurial talent within SAP and providing an environment where ideas are evaluated on an open and objective basis; actively soliciting and cultivating ideas from the SAP community as well as effectively managing the innovation process from idea generation to commercialization, looking for growth opportunities that are beyond the existing portfolio but within SAP's overall vision and strategy. In trying to open up new market and technology space to move beyond its current product range, Coloplast, the Danish medical devices firm, established a small group, Nebula – New Business Lab, with the remit to explore and bring back new options. These could be acquisitions, licences for new technologies, new alliances and partnerships or established product ideas. The group also had the mandate to explore licensing and spinning out.

4.2. Engage – the role of individuals

4.2.1. Mobilizing networks of support

Much of the literature around discontinuous innovation identifies the role of ‘champions’ of various kinds. Importantly, there are several kinds of champion roles – for example, ‘power’ promoters who can bring resources, backing, etc. and ‘knowledge’ promoters who have expertise and passion for a particular idea. Rice et al. (1998) identify several types of champions: technical champions, project champions, senior management champions, business unit champions and in some cases a single individual champion who takes on multiple championing roles. O'Connor and Veryzer (2001) observed three distinct roles of individuals who help formulate, articulate, sustain and select discontinuous innovation' opportunities: ruminators, champions and implementers – each important in the selection phase of innovation.

Our findings show that the challenge lies in developing ways to engage and use champion roles within the selection of discontinuous innovation in some kind of a planned fashion rather than hoping for their emergence. One approach we identified is to establish formal links with senior managers whose task becomes that of a ‘sponsor’ for discontinuous innovation projects, i.e. senior management champion. Another approach is to identify and use individuals with a high-profile reputation, i.e. technical champion. For example, a basic element of BT's ‘Wakaba’ (Japanese for ‘green shoots’) project to support innovative ideas within the firm was the creation of partnerships: every 8 weeks, the on-going innovative projects are reviewed by a jury of top executives. During these meetings, each project is allocated to one particular executive, whose responsibility it is to support and advise the project, as a partner. This process ensures the awareness and the involvement of the top management in the innovation activities as well as the permanent support for the innovation teams. O2 used a similar approach. Ideas are presented informally to senior staff at an early stage. After projects have been chosen, these projects are generally allocated to a ‘champion’, who acted as a sponsor and advocate to support the project.

4.2.2. Mobilizing entrepreneurship inside and outside the firm

One of the biggest problems in selecting and carrying out discontinuous innovation in established firms is that they lack individuals with entrepreneurial spirit (Birkinshaw, Bessant and Delbridge, 2007). Nevertheless, at its heart, the discontinuous innovation challenge is one around entrepreneurship – seeing opportunities and making them happen in the form of discontinuous innovation. Consequently, it makes sense to explore options for helping the process forward, which build on core principles of entrepreneurship – such as being able to ‘pitch’ an idea with passion and enthusiasm as well as a good story. Classically, entrepreneurs are those individuals who seize opportunities – often created by emerging discontinuities in technology or markets. Intrapreneuring aims to nurture this energy and drive inside the organization; however, previous research has pointed out that doing it often brings out some fundamental tensions between creativity and control, and between playing by the rules and creating new ones (Pinchot, 1999; Gundling, 2000).

Still, among those firms participating in our study, a number of organizations were trying to make explicit use of this approach to help with the selection of discontinuous innovations. For instance, BMW has a strong commitment to ‘bootlegging’– encouraging people to try things out without necessarily asking for permission or establishing a formal project. In BMW, these are called ‘U-Boot’ projects. This approach means that people deploy their natural entrepreneurial abilities and often come up with creative solutions, outside officially monitored projects. Novozymes is building an internal network of entrepreneurs. Besides identifying internal people, it also recruits people with entrepreneurial spirit from the outside – often people who had built up their own businesses. While they are aware that these people are likely to be very different from existing employees, which may lead them to want to leave after a short period of time, they decided that even a couple of years would be enough time to provide inspiration and learning, and perhaps even have an impact on firm culture.

4.3. Experiment: the role of tools and methods

4.3.1. Building alternative visions

As we have argued, a core difficulty in selection for discontinuous innovation lies in the problem of reframing – of seeing the world through different lenses and allowing for the possibility of alternative arrangements. One way to deal with this challenge is to engage in building alternative futures (e.g., Hamel, 2000). One powerful set of tools to help with this lies in the area of ‘futures studies’, using tools such as forecasting, trend extrapolation and scenario building to create and explore alternative models of the future and the potential threats and opportunities that they contain (Whiston, 1979; Wheelwright and Makridakis, 1980). The benefit comes not so much from specific innovations that emerge from the process as from the flexibility in framing that it helps to develop (de Geus, 1996). Working out in the ‘futures gym’ helps build a tolerance for ambiguity within the decision-making structures of the organization.

In order to deal with the challenge of creating an atmosphere in which the selection of discontinuous ideas is valued, our findings show that increasingly, future tools are being deployed in frameworks that are designed to open up new innovation space. We found that, if nothing else, firms ought to look at alternative models as an ‘insurance policy’– to at least consider different approaches and attempt to assess their relevance and salience for their business strategies. For example, BMW, Novozymes and Nokia all deploy a range of techniques including metaphors, storytelling and vision-building, and increasingly do so in a cross-sectoral fashion, recognizing that the future may involve blurring of traditional market or demographic boundaries. Siemens uses storytelling to create a setting in which discontinuous innovations are seen as visions and possibilities, not as threats. To do so, they identify pictures of the future, i.e. describing trends (such as, mega cities) and translate these in stories, to communicate the importance of selecting discontinuous ideas that can address the future challenges that go hand in hand with these trends.

4.3.2. Probe and learn

Probe and learn approaches, i.e. essentially making small steps into unknown territory to illuminate enough of the pathway to see where it might lead next, have always been used within the ‘traditional’ R&D or market research portfolio (e.g., Thomke, 1998). But increasingly, organizations are deploying such approaches as a deliberate strategy to explore and select uncertain but interesting future directions. There are plenty of methods to choose from but they all share the characteristic of being deliberate experiments in the unknown. It is here that ‘boundary objects’ become important – things that can act as ‘stepping stones’ between the two. Prototyping offers a way of creating such stepping stones towards that new option – and importantly stepping stones that allow both building up of better understanding and also shaping the idea while it is still in its formative stages (Schrage, 1999; Dodgson, Gann, and Salter, 2005). There are many different ways of prototyping including physical models, simulation and paper–pencil prototypes, and these span both manufactured products and service concepts (Neyer et al., 2009). These serve two functions – they provide new information about what does (and does not) work and so help build the case for selection along the ‘rational’ axis of the above diagram. But they also represent ways of mapping ‘unsafe’ territory and reducing the emotional anxiety. In this sense, they are investments in what Robert Cooper calls ‘buying a look’– and they help assemble the beginnings of a case for further support and exploration (Cooper, 2001).

Examples of probe and learn as an innovation strategy for the selection of discontinuous innovation that we have identified include work carried out by Nokia exploring different uses of mobile phones in Kenya and Vodafone exploring how their technology might provide new health care services to diabetes sufferers. Matthias Gold, senior manager of egozentrik, a German start-up firm that designs hybrid bikes, reports that they developed around 40 prototypes over a 5-year period to collect information about the unknown territory of hybrid bikes and to learn from the feedback gained. Information providers like the BBC or the Ordnance Survey in the United Kingdom are developing novel and open-ended partnerships to probe and learn around new services. Prototyping here becomes less a means of confirming and shaping an idea that has already been established than a planned experiment to test a hypothesis.

5. Discussion and Conclusion

  1. Top of page
  2. Abstract
  3. 1. Introduction
  4. 2. Setting the stage: Selection and reframing
  5. 3. Method
  6. 4. Findings: innovation practices for selecting discontinuous innovation
  7. 5. Discussion and Conclusion
  8. Acknowledgements
  9. References

In this paper, we have argued that in the context of the selection of discontinuous innovation, firms increasingly understand and value the need to reframe their existing innovation practices. Often, they are hampered in their attempts to do so by their given frame of reference that institutionalize the dominant assumption: that any discontinuous innovation can be seen as out-of-the-box thinking that is possible without reframing organizational routines. However, from our findings, we argue that the ability to select discontinuous innovations requires a radical shift in the core assumption that discontinuous innovation is a matter of simply building a portfolio of projects with a mixture of risk. By doing so, we have come up with nine innovation practices that can be structured along three clusters towards the selection of discontinuous innovation: enable (i.e., organizational processes), engage (i.e., getting the individuals involved) and experience (i.e., specific tools and methods for the selection of discontinuous innovation).

Our three clusters of innovation practices for discontinuous innovation lead to three core conclusions, which have important implications for research and management in the field of discontinuous innovation.

First, the nature of such new innovation practices needs to be analysed: faced with the difficulties of making selection decisions in favour of discontinuous innovation, what innovation practices can organizations use? Our experience with the Innovation Laboratory Initiative has identified three clusters of innovation practices around which firms are experimenting and that represent possible ways of meeting this challenge. It is important to note that these innovation practices can be combined and are complementary; successful discontinuous innovators manage a portfolio of these innovation practices, which enables them to react differently to different contexts. In particular, given the fact that different firms may have different assessments of what a discontinuous innovation is, a portfolio of innovation practices for selection will allow them to choose the appropriate combination.

The second point concerns the challenge of developing ‘ambidexterity’ in organizations. Not only is there a need for different innovation practices to deal with the selection challenge of discontinuous innovation, but there also needs to be an awareness that the deployment of both, i.e. innovation practices for incremental and discontinuous innovation, is likely to create tensions and conflicts inside the organization. In order to deal with the discontinuous end of the spectrum, many firms in our sample chose to operate separate or parallel selection regimes rather than attempt to run both within the same organizational framework. Further work is needed to explore the nature of these tensions and the mechanisms that might be used to balance effectively across them.

The third key conclusion involves the discussion of choosing the appropriate innovation practice (or set of innovation practices) to reduce the risk of adopting a ‘wrong’ discontinuous innovation, e.g. making a false technology choice. As our findings show, firms are using a variety of innovation practices to support the selection process of discontinuous innovation towards the ‘right’ choice. This variety would allow them per se to find an appropriate portfolio of innovation practices for the selection of discontinuous innovation for a particular organizational context. However, given the issue that most of the firms are still in the process of reframing their existing frames of references with regard to the management of discontinuous innovation, they have to be careful not to run the risk of focusing too much on the choice of the ‘right’ innovation practice while ignoring the main goal of choosing the ‘right’ innovation practice, i.e. the selection of the right discontinuous innovation.

We recognize several limitations that could be addressed through future research. It was our aim to gain a deeper and a more structured understanding of what innovation practices firms across a number of different countries apply to select discontinuous innovation. By adopting a very broad perspective as well as a qualitative research approach, we were able to develop such an understanding. However, future studies could focus in more detail on the relations among the identified three clusters of innovation practices for the selection of discontinuous innovation. In a similar vein, further work is required to shed more light on the correlations and interdependencies of the different innovation practices identified. Also, it would be interesting for future research to learn more about the potential factors influencing the decision for a particular innovation practice or a set of innovation practices. For instance, given the economic crisis in late 2008/beginning 2009, environmental uncertainty could be an interesting moderating variable to look at.

We began this paper by suggesting that we are observing a need to increase an organization's ability to select discontinuous innovations. Selecting discontinuous innovation requires firms to learn and adapt new innovation practices that allow them to embrace projects that reflect ‘out-of-the-box’ thinking. We suggest that this is a major challenge – for theory and for practice. In the long run, we identify the need for understanding the engagement in discontinuous innovation as an explicit decision made by a firm, which then allows to design and implement the appropriate innovation practices for the selection of the ‘right’ discontinuous innovation. This paper contributes to that important endeavour.

Acknowledgements

  1. Top of page
  2. Abstract
  3. 1. Introduction
  4. 2. Setting the stage: Selection and reframing
  5. 3. Method
  6. 4. Findings: innovation practices for selecting discontinuous innovation
  7. 5. Discussion and Conclusion
  8. Acknowledgements
  9. References

John Bessant and Bettina von Stamm would like to thank the UK Economic and Social Research Council (ESRC), the Engineering and Physical Sciences Research Council (EPSRC) and the Advanced Institute for Management Research (AIM) for supporting the research on which this article is based. Kathrin M. Möslein and Anne-Katrin Neyer thank all inside and outside innovators who are part of our ongoing innovation research journey and gratefully acknowledge support by the Advanced Institute of Management Research (AIM), the Peter Pribilla Foundation (project: Leading innovation in a boundaryless world) as well as the German Federal Ministry of Education and Research and the European Social Fund (project: Open-I: Open innovation within the firm, 01FM07054, 01FM07055).

Notes
  1. 1. In line with Gioia (1986, p. 50), we define frames as ‘definitions of organizational reality that serve as vehicles for understanding and action’.

  2. 2. In line with Benders and Vermeulen (2002), we define innovation practices to encompass different strategies, concepts, methods and tools that are implemented to support the innovation process.

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  3. 1. Introduction
  4. 2. Setting the stage: Selection and reframing
  5. 3. Method
  6. 4. Findings: innovation practices for selecting discontinuous innovation
  7. 5. Discussion and Conclusion
  8. Acknowledgements
  9. References
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John Bessant currently holds the Chair in Innovation and Entrepreneurship at Exeter University. Originally a chemical engineer, John has been active in the field of research and consultancy in technology and innovation management for over 25 years. In 2003, he was awarded a Fellowship with the Advanced Institute for Management Research and was also elected a Fellow of the British Academy of Management. He has acted as advisor to various national governments and to international bodies including the United Nations, The World Bank and the OECD. He is a regular speaker at corporate events, conferences and centres such as Cranfield, the Irish Management Institute and the Scandinavian Management Institute. Consulting clients include Toyota, Novo-Nordisk, Lego, Morgan Stanley, Coloplast, Corus, Danfoss, GSK, Grundfos, Hewlett-Packard and Kumba Resources. He is the author of 15 books and many articles on the topic and has lectured and consulted widely around the world. His most recent books include ‘Managing innovation’ (awarded the ‘best book’ prize by the European Association for Creativity and Innovation) and ‘High involvement innovation’ (both published by John Wiley and Sons).

Dr. Bettina von Stamm is Director of the Innovation Leadership Forum, UK, an organization dedicated to the furtherment of the understanding of innovation, focusing primarily on large organizations. She received her PhD as well as her MBA from the London Business School. In addition to her three books (The Innovation Wave, Wiley, 2002; Managing Innovation Design & Creativity, Wiley, 2008 2nd edn.; The Future of Innovation, co-edited with Dr. Anna Trifilova, Gower, 2009), her works have appeared in Strategic Direction, Strategy & Leadership, International Journal of New Product Development and Innovation Management, Design Management Review, Design Journal as well as Wallstreet Journal and the Rotman Magazine. In addition to research into discontinuous innovation as well as barriers and enables of innovation, she teaches innovation management at the post-graduate level, runs executive seminars and workshops as well as a networking initiative.

Kathrin M. Möslein holds the Chair for Information Systems I – Innovation & Value Creation and is currently the dean of research at the School of Business and Economics of the University of Erlangen-Nuremberg. She is also a professor of management at HHL – Leipzig Graduate School of Management, a member of the team of directors of HHL's Center for Leading Innovation and Cooperation (CLIC), a Visiting International Fellow of the UK's Advanced Institute of Management Research (AIM) and, among others, a founding member and, since 2007, a vice president of the European Academy of Management (EURAM). Her current research focuses on innovation, cooperation and leadership systems. For details, see: http://www.prof-moeslein.de

Anne-Katrin Neyer is Assistant Professor at the University of Erlangen-Nuremberg and a senior research fellow at the Center for Leading Innovation and Cooperation (CLIC) at the HHL – Leipzig Graduate School of Management. Before joining the University of Erlangen-Nuremberg, she was a post-doctoral research fellow at the UK's Advanced Institute of Management Research at London Business School. Her current research focuses on inter- and intra-organizational cooperative systems, multinational and virtual teams and innovation processes. She has published on these topics in journals such as Human Resource Management, International Studies of Management and Organization, R&D Management and European Management Journal.