Looking Beyond the Focal Industry and Existing Technologies for Radical Innovations
Radical innovations lead to path breaking products and services that may differ from what a firm is currently offering. Such innovations provide the innovating firm the opportunity of gaining a sustainable competitive advantage. These innovations are often foundations that serve as the basis for many subsequent technical developments. However, it takes years to objectively determine whether an innovation was indeed radical.
Thus, firms find it challenging to determine a-piori whether an innovation was radical is worth investing on. Thus, predicting whether an innovation is radical would be of substantial assistance and this study seeks to answer this question.
Dr. Datta and his co-author find that to maximize the chance of radical innovations, firms must get access to technologies whose applications exceed current definitions by venturing outside their focal industry. Therefore it is important for a business to create networks with firms and institutions outside their own industries.
They do caution that management should only commit to such networks only when they can create incentives which outweigh the frictions and frustrations of dealing which come from information overload, integration problems, and the difficulty of comprehending technology that is drastically different from managers' current stock of expertise. They suggest creating incentive programs for managers for identifying technologies with future potential and new radical markets and finding potential partners outside the industry that will help gain access to such technologies.
Such programs can encourage managers to move out of their comfort zones with existing technologies and search for complementary knowledge, integrate that within the firm's boundaries, and develop novel products that create superior value for customers.
Datta, A and Jessup. L. (In Press) Looking beyond the focal industry and existing technologies for radical innovations. Technovation. http://www.sciencedirect.com/science/article/pii/S0166497213000618