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New Market Creation for Breakthrough Innovations: Enabling and Constraining Mechanisms

Authors

  • Gina Colarelli O'Connor,

  • Mark P. Rice


Address correspondence to: Gina Colarelli O'Connor, Lally School of Management and Technology, Rensselaer Polytechnic Institute, 110 8th Street, Troy, New York 12180-3590. E-mail: oconng@rpi.edu. Tel: 518-276-6842.

Abstract

While the technological development associated with breakthrough innovation (BI) is truly challenging, creating markets to stimulate their use may be an even more daunting barrier to successful commercialization. Co-development partners, distribution channel agents, and ultimate users are all required to adopt new processes and to change behaviors in many cases, and the outcomes are unknown. In this paper, the processes and challenges associated with creating new markets for BIs are explored in a qualitative prospective cross-case comparison of 12 breakthrough projects under development in 10 large established companies. A number of activities that take place in implicit fashion that create both enabling and constraining mechanisms for BIs are observed. The data suggest, for example, that the earliest application choices that scientists make in the project's development ultimately affect the revenue model, that scientists are unaware of the impact of these decisions, that business model development is a very exploratory process, that criteria used to choose initial market entry points conflict with the expectations of operating units, and that the concept of a killer application can be rather dangerous to the health and well-being of a BI in its commercial infancy. It is argued that new market creation is the result of managing a specific set of events and activities, which are identified in a grounded theoretic fashion. The companies studied, however, were neither fully aware of nor systematically attentive to these activities. A framework is presented of enabling and constraining mechanisms that teams and organizations impose through the processes and decisions they take in the course of the project's development, and a series of propositions regarding the dynamics of successful new market creation for BIs is offered.

The implications of these results are far-reaching. These results show that market creation for BIs may require as much time and investment as their technical development. We do not find evidence of large established organizations’ awareness of or willingness to make these investments as readily as they invest in technical development. The result is research and development labs at large established firms with stockpiles of potentially game-changing technologies. To evolve a mature BI commercialization competency, a firm must recognize and address the implications for managerial processes, for personnel recruitment, for setting leaders’ expectations, and for developing appropriate performance metrics for those responsible for market creation that go beyond technical discovery and engineering development. Implications for each are discussed.

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