Creating Wealth from Knowledge

Creating Wealth from Knowledge

Meeting the Innovation Challenge

Edited by John Bessant and Tim Venables

This book illustrates that, although innovation has always mattered in economic development, simply increasing expenditure in creating knowledge may not be the answer: we need to look at the whole system through which such knowledge translates to value creation.

Chapter 8: Sustaining Breakthrough Innovation in Large Established Firms: Learning Traps and Counteracting Strategies

Simone Ferriani, David Probert and Elizabeth Garnsey

Subjects: business and management, knowledge management, organisational innovation, innovation and technology, innovation policy, knowledge management, organisational innovation


8. Sustaining breakthrough innovation in large established firms: learning traps and counteracting strategies Simone Ferriani, Elizabeth Garnsey and David Probert It must be considered that there is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle, than to initiate a new order of things. For the reformer has enemies in all those who profit from the old order of things, and only lukewarm defenders in all those who would profit by the new order, this lukewarmness arising partly from fear of their adversaries . . . and partly from the incredulity of mankind, who do not truly believe in anything new until they have had actual experience of it. (Niccolò Machiavelli) 1. INTRODUCTION Several studies show that breakthrough innovations are often likely to originate with entrants rather than with incumbents. Most established firms have too many obligations and too much to lose to justify the obvious risks of chasing radical possibilities that might or might not be market hits. Nevertheless, some room must be found for breakthroughs or the market leader risks being leap-frogged and deposed by upstart market newcomers. Given this imperative, why do large firms not come up with breakthroughs more regularly? Researchers in innovation management have proffered a variety of arguments to explain this tendency. It has been suggested that large established firms underinvest in radical innovation (Henderson 1993), fall into competency traps (Levitt and March 1988), are hampered by their core rigidities (Leonard-Barton 1992) or remain committed only...

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