Radical Innovation in Large Companies

Essay by kamer06University, Master's March 2004

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In order to grasp a glimpse of the concept of "radical innovation", I tried to make an extensive internet search and gather and combine the most useful and relevant parts together. Like Narayanan, the sources I exploited for this assignment begin with the definitions of the keywords as well. So, I think it'll reasonable to start with the short description of the key concept- radical innovation-, crystallize it and then discuss the factors that contribute to radical innovation in large, mature companies.

What is radical innovation

With respect to its knowledge and configuration dimensions, Narayanan has classified the concept of innovation into four major types, incremental, modular, architectural and radical. Like him, virtually all authorities on the issue have long distinguished between what we call radical and incremental innovations, although not always in these words. One can make a distinction between exploitation of existing technology and exploration of new technology (1).

Exploitation has to do with refining or expanding existing products or processes, whereas exploration involves something fundamentally new, including new products, processes, or combinations of the two. In my view, incremental innovation usually emphasizes cost or feature improvements in existing products or services and is dependent on exploitation competencies. In contrast, radical innovation concerns the development of new businesses or product lines - based on new ideas or technologies or substantial cost reductions - that transform the economics of a business and therefore require exploration competencies. For the sake of holding a more specific perspective of view, radical innovation can be defined as;

-an entirely new set of performance features;

-improvements in known performance features of five times or greater; or

-a significant (30% or greater) reduction in cost.

Thus, a radical innovation is a product, process, or service with either unprecedented performance features or familiar features that offer...