Innovation and corporate renewal

Abstract

Leading firms fail. Dinosaurs ruled the earth for 180 million years - almost forty times longer than human beings have existed. However, the only remains are fossils and a few hardy species. Both are the result of failures to innovate fast enough in the face of changing environments. While "sticking to your knitting" may be good advice in corporate strategy to avoid fragmentation of attention, sitting on the 'corporate laurels' of a leading firm is purely a recipe for disaster. These assertions may appear to be intuitive, yet most leading firms appear to be unable to innovate in spite of significant advantages over new entrants. This thesis explores the nature of innovation, building on earlier framework<. to describe the nature of product or service innovation (based on the components, systems and customer perception of utility), different types of innovation from incremental to radical. These ideas are then used as a base to look at the evolution of innovation in an industry or technology and understand the issues large organizations face as they enter new businesses or attempt to sustain existing business. Finally, the affect of organizational control systems on product innovation and the evolution of innovation within an organization is discussed, to better understand the potential inhibitors to and tools to support innovation. The frameworks are used to analyze three examples of innovation at IBM, to confirm the usefulness of the frameworks and identify additional issues that must be considered by corporate managers that don't want to be dinosaurs.