Organizing for radical innovation: an exploratory study of the structural aspects of RI management systems in large established firms

Abstract

To escape the intense competition of today's global economy, large established organizations seek growth options beyond conventional new product development that leads to incremental changes in current product lines. Radical innovation (RI) is one such pathway, which results in organically driven growth through the creation of whole new lines of business that bring new to the world performance features to the market and may result in the creation of entirely new markets. Yet success is elusive, as many have experinced and scholars have documented. this article reports results of a three-year, longitudinal study of 12 large established firms that have declared a strategic intent to evolve their RI capabilities. In contrast to other academic research that has analyzed specific projects to understand management practices appropriate for RI, the present research reported explores the evolution of management systems for enabling radical innovation to occur repeatedly in large firms and reports on one aspect of this management system: organizational structures for capabilities literatures. Conventional wisdom holds that RIs should be incubated outside the company and assimilated once they have gained traction in the marketplace. Numerous experiments with organizational structures were observed that instead work to manage the interfaces between the RI management system and the mother organization. These stuctures are described here, and insights are drawn out regarding radical innovation competency requirements, transitional challenges, seniour leadership mandates, and business-unit ambidexterity. The centerpiece of this research is the explication of the Discovery-Incubation-Acceleration framework, which details three set of necessary, though not sufficient competencies for building an RI capability.