Now or Never: Back to the Future with Breakthrough Market-Driving Innovation

Now or Never: Back to the Future with Breakthrough Market-Driving Innovation

The Future of Work is… research.

At the Centre for Workplace Leadership we passionately believe in the value of research. We conduct a number of research projects, undoubtedly the most critical of which will be the Study of Australian Leadership. We also want to contribute to a research focused conversation about the future of work. Good research will help us produce productivity, build resilient workplaces and allow for best practice leadership and management.

To develop this research conversation, and to contribute to the excellent work of emergent leadership scholars we put out a nation wide call for emerging scholar speaker slots at the Future of Work event. Excuse the cliche but the response was overwhelming, Australia is producing excellent management research. We chose the three which excited us the most and asked them to speak at the event -a section not to miss- and we also asked others to contribute to this Future of Work blog. It is heartening how responsive people were, eager to contribute to this nationally important conversation. In the weeks leading to the event we are publishing that writing here.

-Editor.

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As Steve Jobs (1984) put it in one of his well-known quotes:

“We’re gambling on our vision, and we would rather do that than make ‘me, too’ products. Let some other companies do that. For us, it’s always the next dream”

Apple product event for the first Macintosh computer, Steve Jobs, 1984

The developments of Apple’s iPhone, Nintendo’s Wii Fit, Chanel’s Little Black Dress, Mini Cooper, and Cochlear implant are just a few samples of breakthrough “market-driving” product innovations. Although these market-driving products have made history by revolutionising the industry and fundamentally refine the market structure, preferences and even behaviour of all players in the market (customers, competitors and other stakeholders) (Jaworski, Kohli, & Sahay, 2000), it is only recently that researchers and leaders have begun to focus on the essential behaviour of firms to strategically become market-driving (Elg, Deligonul, Ghauri, Danis, & Tarnovskaya, 2012). This is particularly true with the current boost of the public policy and the government’s innovation statement to increase Australia’s capacity to innovate.

Given today’s dynamic and highly competitive business environment, all firms from small-medium to large sized should face the challenges and be engaged in market-driving innovative activities rather than just being market-driven in order to survive:

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  1. Engage in “market-driving” culture building and innovative activities and resist the temptation to fall back on the current “cash cow” or “me-too” business.

Senior management has an essential role in setting up the organisational culture that foster the exploration of entirely new product ideas and/or technologies (Slater, Mohr, & Sengupta, 2014). Although the experiments may lead to unexpected results or failures, individuals and NPD teams are encouraged to “learn by doing” and to treat failures as valuable discoveries for their future development in order to achieve bigger and better outcomes. A survey by PricewaterhouseCoopers (2013) suggested that an environment where failure and risk are reasonably tolerated is very important for the development of breakthrough innovations (71%) as well as having senior executives taking part in innovative projects (74%).

In fact, senior managers have the role of “visionary leaders” in terms of supporting radically new or really new product ideas through to the development process and into a potential market (Tellis, 2006). Without senior management support and commitment during strategic, structural and resource planning at the front end of innovation, the process of developing market-driving innovations may come to a dead end (Reid & de Brentani, 2004).

Managers should resist the temptation to fall back on developing too many or only incremental innovations or “me-too” products even though undertaking market-driving innovation tends to increase the levels of uncertainty and complexity in the development process. This is a competitive necessity for firms to achieve sustainable competitive advantage (Ahmad, Mallick, & Schroeder, 2013). To be involved in a project associated with high risk and uncertainty does not necessarily result in poor performance. A competitive advantage can often be gained by undertaking more difficult and complex tasks than the competitors do.

 

At the individual and team levels, market-driving innovations require an institutionalised group of highly multifunctional individuals who are broadly skilled, knowledgeable, flexible and have entrepreneurial characteristics to enable to work well in circumstances of high risk and market/technical uncertainty Entrepreneurial individuals have a mindset and vision that drive the development of market-driving innovations while non-entrepreneurial individuals might not be able foresee future potential opportunities and find it stressful to adapt to changing circumstances (Slater et al., 2014).

  1. Have a “market visioning competence” to visualise market-driving innovations and breakthrough possibilities.

Leaders and managers should not be too concerned about technical solutions to develop market-driving innovations but should devote more attention to key nontechnical resources and competencies early in the process.

Following the traditional market research approach by incorporating direct customer input into the front end of the NPD effort, however, often leads to only small, incremental improvements of existing products or short-sighted product innovation. Customers often have difficulty visualising and articulating their future needs because their mindsets are based on what they have experienced or their current use context (Menguc, Auh, & Yannopoulos, 2013). This is a “functional fixedness” (Baron, 1998), a cognitive limitation that may hinder truly creative thinking and can influence the tacit knowledge that underlies intuition or real insight regarding latent needs of customers (Maqsood, Finegan, & Walker, 2004).

Market visioning competence reflects the ability of individual employees or NPD teams in organisations to link new ideas or advanced technologies to future market opportunities (Kyriakopoulos, Hughes, & Hughes, 2015; Reid & de Brentani, 2010). In doing so, they must engage in ‘proactive market learning’ particularly during the idea generation stage of the NPD process, by means of discovering additional, latent or unarticulated needs to determine future market needs and to incorporate these into solutions in the form of new products (Markham & Lee, 2013). Prior to development, the exploration of new needs can help firms to envision for future market opportunities that did not exist previously in the market (Kim, Im, & Slater, 2013).

Employees are also encouraged to use combinations of forecasting and market estimation techniques, such as backcasting, scenario planning and user analysis through probe-and-learn processes, before making a final market selection (Deszca, Munro, & Noori, 1999; Reid & de Brentani, 2010). These tools emphasise exploring customers’ current usage and possible future usage as well as the level of customer-product interaction (O’Connor, 1998).

Having a market visioning competence can therefore lead to knowledge, insight and foresight [market vision] regarding  radically or really new products that enables individual employees or NPD teams to grasp what it is they are developing and for whom. This can help them to recognise and understand the real meaning of the future product-market they are developing, and to have the courage to follow their intuition when making the front end decisions related to market-driving innovations. The right questions must also be asked among the NPD team members when they first start thinking about the development of a market-driving innovation, particularly the question of who of the target market will value and benefit the most from the breakthrough innovation.

  1. Follow your “market vision” to promote breakthrough integrity of product concepts from the front end through to launch – allow market-driving ideas to flourish and resist dumbing them down.

The real challenge for firms is to maintain the highly innovative concept of a potential new product, or it’s breakthrough integrity, from the front end stages through to the final product launch. Highly innovative, market-driving ideas are revolutionary, risky and disruptive. Accordingly, the more innovative ideas (that might create new markets) are often squelched by managers or led astray by customers’ expressed preferences at the outset, or otherwise face a number of stops and starts, deaths and revivals before moving through to launch.

Correspondingly, the quality of execution of early NPD activities (market visioning) is instrumental in achieving breakthrough integrity and early success with customers, particularly at the front end of market-driving innovation. These early NPD activities and performance also have significant impacts on the levels of speed in bringing market-driving innovations to market and in opening up new opportunities for firms and ultimately achieving sales and profitability (Thongpravati, 2014). Thus, leaders/managers and employees must have the market vision to generate and allow market-driving ideas to have a fair chance of success.

  1. Formulate and sustain individual’s market visioning ability through organisational routines and processes that promote exploratory learning.

The market visioning competence (of individual employees or an NPD team) must be formulated and sustained through organisational routines and processes that promote exploratory learning. Exploratory market learning is related to the concept of “absorptive capacity” (Cohen & Levinthal, 1990) in that “outside sources of knowledge are often critical to the innovation process, whatever the organization level at which the innovating unit is defined” (p.128). Market-driving firms have a greater capacity to innovate than those that are solely market-driven, based on ‘absorptive capacity’ (ACAP) — a set of organisational routines and process by which firms and their employees “acquire, assimilate, transform and exploit knowledge to produce a dynamic organizational capability” (Zahra & George, 2002, p.186).

Knowledge management and information processing are at the core of market visioning at the front end of market-driving innovation. Management must recognise that a firm’s capability to acquire and assimilate knowledge is a proxy for market vision (Thongpravati, 2014). New information from the external environment regarding markets, technology, competitors and resources is the source of radically new or really new product ideas. The breadth or diversity of knowledge and divergent thinking may give rise to creativity, allowing linkages between what is already known and novel associations (Kim et al., 2013; O’Connor & Rice, 2013). More importantly, a firm’s capability to reconfigure and devise ways to combine non-redundant or new information with in-house knowledge to transform it can foster the process of market visioning or employees’ vision of a future market opportunity and its exploitation into a successful market-driving innovation.

A better understanding of dynamic capabilities associated with market-driving innovation will enable firms and any individual involved in NPD to avoid the current-customer trap and seize control of tomorrow’s market, today! For public policy makers, the challenges also involve advancing the traditional array of policy interventions by stimulating a firm’s absorptive capacity to increase the development of market-driving innovations at the national level. Greatly designed market-driving innovation enhances customer value and firm value, allowing more and/or faster growth to the economy in a broader term.

Ahmad, S., Mallick, D. N., & Schroeder, R. G. (2013). New Product Development: Impact of Project Characteristics and Development Practices on Performance. Journal of Product Innovation Management, 30(2), 331-348.

Baron, R. A. (1998). Cognitive mechanisms in entrepreneurship: Why and when enterpreneurs think differently than other people. Journal of Business Venturing, 13(4), 275-294.

Cohen, W. M., & Levinthal, D. A. (1990). Absorptive Capacity: A new perspective on learning and innvoation. Administrative Science Quarterly, 35(1), 128-152.

Deszca, G., Munro, H., & Noori, H. (1999). Developing Breakthrough Products: Challenges and Options for Market Assessment. Journal of Operations Management, 17, 613-630.

Elg, U., Deligonul, S. Z., Ghauri, P. N., Danis, W., & Tarnovskaya, V. (2012). Market-driving strategy implementation through global supplier relationships. Industrial Marketing Management, 41(6), 919-928.

Jaworski, B. J., Kohli, A. K., & Sahay, A. (2000). Market-driven Versus Driving Markets. Journal of the Academy Marketing Science, 28(1), 45-54.

Kim, N., Im, S., & Slater, S. F. (2013). Impact of Knowledge Type and Strategic Orientation on New Product Creativity and Advantage in High-Technology Firms. Journal of Product Innovation Management, 30(1), 136-153.

Kyriakopoulos, K., Hughes, M., & Hughes, P. (2015). The Role of Marketing Resources in Radical Innovation Activity: Antecedents and Payoffs. Journal of Product Innovation Management.

Maqsood, T., Finegan, A., & Walker, D. (2004). Biases and Heuristics in judgement and decision making: the dark side of tacit knowledge. Science and Information Technology, 1, 295-301.

Markham, S. K., & Lee, H. (2013). Product Development and Management Association’s 2012 Comparative Performance Assessment Study. Journal of Product Innovation Management, 30(3), 408-429.

Menguc, B., Auh, S., & Yannopoulos, P. (2013). Customer and Supplier Involvement in Design: The Moderating Role of Incremental and Radical Innovation Capability. Journal of Product Innovation Management, 31(2), 1-16.

O’Connor, G. C. (1998). Market Learning and Radical Innovation: A Cross Case Comparison of Eight Radical Innovation Projects. Journal of Product Innovation Management, 15, 151-166.

O’Connor, G. C., & Rice, M. P. (2013). New Market Creation for Breakthrough Innovations: Enabling and Constraining Mechanisms. Journal of Product Innovation Management, 30(2), 209-227.

Reid, S. E., & de Brentani, U. (2004). The Fuzzy Front End of New Product Development for Discontinuous Innovations: A Theoretical Model. Journal of Product Innovation Management, 21, 170-184.

Reid, S. E., & de Brentani, U. (2010). Market Vision and Market Visioning Competence: Impact on Early Performance for Radically New, High-Tech Products. Journal of Product Innovation Management, 27, 500-518.

Slater, S. F., Mohr, J. J., & Sengupta, S. (2014). Radical Product Innovation Capability: Literature Review, Synthesis, and Illustrative Research Propositions. Journal of Product Innovation Management, 31(3), 552-566.

Tellis, G. J. (2006). Disruptive Technology or Visionary Leadership. Journal of Product Innovation Management, 23, 34-38.

Thongpravati, O. (2014). Market-driving innovation: understanding the critical success factors at the front end of the development process. RMIT University.

Wind, J., & Mahajan, V. (1997). Issues and Opportunities in New Product Development: An Introduction to the Special Issue. Journal of Marketing Research, 34(1), 1-12.

Zahra, S. A., & George, G. (2002). Absorptive Capacity: A Review, Reconceptualization, and Extension. The Academy of Management Review, 27(2), 185-203.

About the author: 

Dr Onnida Thongpravati is a Postdoctoral Researcher in Entrepreneurship and Innovation at the ARC Training Centre in Biodevices and an affiliate researcher at the Centre of Transformative Innovation at Swinburne University of Technology.

The curiosity inspiring Onnida’s research on innovation builds on her passion in exploring factors influencing the success of new product development, particularly “true to type” breakthrough market-driving products. Her PhD research is the first empirical study to model the role of Absorptive Capacity, an emerging organisational dynamic learning capability, as a precursor to building Market Visioning Competence and developing a Market Vision. These concepts facilitate the translation of market-driving ideas into radical or really-new products.

Her research also branched out into STEM education and biomedical entrepreneurship with her involvement in an industry-oriented PhD program (technology innovation) and integration with medical device and diagnostics companies to provide business and innovation consultancy.

Onnida has filled academic and professional teaching roles at universities both in Australia and Thailand (e.g. RMIT, Chulalongkorn), including private/public companies and non-profit organisation. She also worked as a project manager and a consultant at a number of Thai companies across industries, and as a procurement and logistics planner managing a range of IT product portfolios such as Hewlett Packard consumables at Synnex Australia Pty Ltd.

Throughout her life and career, Onnida believes that one must make a contribution to the world and have the social responsibility to give back to the wider communities at large; this reflects on her research vision to transform the lives of people through entrepreneurship and innovation.

http://www.swinburne.edu.au/business-law/staff/profile/index.php?id=othongpravati


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