From The Author

“Our position – which is based on decades of management research as our own observations – is that innovation can be effectively managed . . . There are no easy recipes for doing this but there are some emerging practices that appear to help . . . These practices are organized into three categories, around three principal challenges that a firm faces: (1) the cognitive challenge – becoming aware of opportunities and ideas that lie beyond the firm’s comfort zone; (2) the political challenge – generating support for these new ideas inside an established and risk averse organization; and (3) the technical challenge – developing the necessary skills and capabilities to commercialize the new innovations” (Bessant et al., 1).

Discovery

• Managing Idea Generation
• The author’s propose that the idea generation process can be managed through the use of available idea generation techniques. They give as examples Startegos’ (a consulting firm) computerized idea generation methodology and IBM’s use of WebFountain technology.
• Develop External Scanning Capabilities
• The author’s recognize that although it is typically a good idea to listen to the customer, that in the case of a discontinuous innovation, the firm needs to look beyond the “established relationships with customers, suppliers and other partners” (Bessant et al., 1). The author’s suggest that firms look to pre-early adopters in emerging markets; and technology labs and science institutes “far away from the core expertise of the firm” (Bessant et al., 1).
• Tune into Weak Signals Inside the Firm
• The author’s suggest that firm’s need to make better use of the information within the firm. That information that eventually makes it to top executives is often filtered to include only the information that employees felt their bosses wanted to hear. In addition, firm’s need to put into place mechanisms that allow for information in the peripheral part of the firm to be heard. That it is often the information in the peripheral parts of firms that are the most innovative. So firms should look to their foreign subsidiaries, smaller business units and affiliates for new ideas.

Evaluation, Elaboration and Acceleration

The authors do not go into detail on how to manage these activities. They do refer to some examples such as Roche (see “Build Entrepreneurial Skills in Employees” below) where the company went through an evaluation, elaboration and acceleration process but their focus was the skills produced and not the process used.

Human Resource Management

• Build a Culture that Tolerates Uncertainty
• Bessant states that “most large companies do a good job of killing off the entrepreneurial spirit of their employees.” They point to 3M, Virgin, WPP and Vodaphone as cases in which firms do a “decent job of creating a stimulating environment for individual initiative, while still capturing the benefits of size and scope” (Bessant et al., 1).
• Foster Divergent Thinking
• Bring in outsiders to break from the narrow mindset gained over years of working for the same firm.
• Build Entrepreneurial Skills in Employees
• A big problem “in skill development is that most employees in large firms have never attempted to act entrepreneurially. . . Some firms have directly addressed this skill deficiency by putting hundreds, sometimes thousands, of employees through innovation programs” (Bessant et al., 1). The author’s site as an example Roche, a Swiss pharmaceuticals company, who in 1999 developed an innovation program that generated thousands of ideas for the company. “[Roche] formed teams of people around the most promising sets of ideas, put them through “action labs” to give them the skills to develop business plans, and then after sixty days they had an “idea fair” at which the ideas were presented to senior executives in the company. The most promising were given the seed money to take to prototype stage, and those that made the next cut were then set up as businesses in their own right. While there is a clear expectation that new businesses will emerge from the process, the broader purpose behind the whole initiative is to get employees across the organization thinking in terms of new ideas and business models” (Bessant et al., 1).
• Develop New Technical Capabilities within the Firm
• Discontinuous innovation is a “shift away from a firm’s traditional areas of strength and into domains that require new capabilities. The challenge therefore becomes one of getting hold of capabilities that are needed to be successful in the new domain” (Bessant et al., 1). The authors propose three options for obtaining these skills – Acquisition, Partnering and Building.
• Acquisition: Buy up an entire firm or a team of people.
• Partnering: try to develop the skills through a joint venture. The authors warn that such ventures rarely succeed in terms of acquiring new skills.
• Building: Build the new capabilities organically. This typically takes more years than a firm is prepared to put up with before pulling the plug.

Innovation Infrastructure

“Even if the firm is successful at opening itself up to new ideas, it faces the equally difficult challenge of gaining widespread support for those ideas within the corridors of power. The issue here is not whether the ideas are commercially or technically possible – it is whether the political process can be handled in a sufficiently skillful way to defuse the critics and the skeptics” (Bessant et al., 1).

• Build Pluralism into Decision Making Process
• Open up important investment decisions to large number of employees and thus make your decision making process more pluralistic.
• Decentralize Seed Funding for New Projects
• Bessant suggests that by moving funding decisions to lower levels the firm does two things (1) it acts as a clear signal that the firm is keen to promote innovation and (2) it gives individuals working on a new idea additional time to work it through before presenting it to senior executives.
• If the project fits well within an existing business unit, then business unit level investments may be appropriate.
• If the project does not fit well within an existing business unit, then corporate level investments is required.
• Build Dual Structures
• Separate out discontinuous innovation projects from existing business units through the use of new venture divisions; special project teams; incubator; or corporate venture units. This type of structure “has one primary advantage – it protects the new and often unpopular new ideas from the mainstream organization until they have achieved some measure of commercial viability” (Bessant et al., 1).
• The authors suggest that such structures work best when “they have CEO-level support, clear objectives and their own separate pot of money. They fail horribly when parent company managers meddle in the evaluation and selection of ventures, and when they are expected to support multiple (and changing) objectives” (Bessant et al., 1).
• Develop New Partner Networks
• “Discontinuous innovation requires the firm to develop new relationships, and typically to break off some of the old ones at the same time.” Firms should try to achieve a hybrid network “which consist of a combination of both close long-term partnerships and a large number of looser connections that may be developed should resource needs arise” (Bessant et al., 1).

Technology Development

• Managing Idea Generation
• The author’s propose that the idea generation process can be managed through the use of available idea generation techniques. They give as examples Startegos’ (a consulting firm) computerized idea generation methodology and IBM’s use of WebFountain technology. 

1 Bessant, Birkinshaw, and Delbridge, Managing the Challenge of Discontinuous Innovation. AIM Research. 2004

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