Radical innovations
Gautam Ahuja and PuayKhoon Toh
A radical innovation is one that represents a major breakthrough from the existing paradigm or way of doing things (Abernathy and Utter back, 1978). Such breakthroughs can be defined from two perspectives: the technological per spective or the user perspective. From the tech nological perspective, a radical innovation is one that departs from the existing technological tra jectory to produce technological performance that is of an order of magnitude difference. If one views the development of each type of tech nology as progression along a path or trajectory, then a radical innovation represents a discon tinuous ‘‘jump’’ in the trajectory, defining a new progression along which the technological development is to continue. Innovations with radical effects, when first introduced, tend to leave the technological arena in initial periods of flux. This is followed by a period of stabiliza tion, when the new technology is understood and developed (Anderson and Tushman, 1990). A dominant design or industry standard then emerges from such radical change. The discon tinuity created by a radical innovation tends to render the old trajectory obsolete. This implies a reduction in the value of competencies along the old technological trajectory, especially when such competencies are specific to the obsolete technology. For example, the introduction of compact disc technology drastically reduced the value of audiotapes and rendered the pro duction competencies for audio tapes relatively irrelevant. Hence, radical innovations, by creat ing discontinuities in technological progression and changing industry standards, are often also competence destroying (Anderson and Tush man, 1990).
From the user’s perspective, an innovation can be radical if it introduces a significant im provement in one or more user attributes of the product or introduces a new user attribute, hith erto not significantly associated with that prod uct. For instance, the Airbus 380 increases significantly the load that an airline can transport through one aircraft. Thus, even if the under lying technologies do not represent significant novelty from a user perspective, the plane can still be considered a radical innovation. A radical innovation can sometimes generate new demand (as opposed to satisfying current consumer demand) by creating a new standard, and hence opening up a new market altogether. In Schum peterian (1975) terms, radical innovations are the significant engines and drivers of the process of creative destruction, necessary for firm growth and societal progress.
An incremental innovation is the opposite of a radical innovation. An incremental innova tion makes minor improvements over existing know how, and enhances current technologies. It encourages progress along the existing tech nological trajectory without creating discontinu ities and reinforces current paradigms. From a user perspective, incremental innovations make minor improvements in the existing set of user characteristics for a product (Saviotti, 1996).
Radical innovations are often associated with small firms, entrepreneurs, or new entrants to the industry. Although large firms tend to spend more on R&D, and thus on average tend to generate more innovations, radical innovations often build on novel and recent technologies that do not rely much on existing sets of other tech nologies. Entrepreneurs, who tend to operate in smaller firms, have the ‘‘advantage’’ of not having existing routines and standards that might constrain them. The lack of dogma or dominant paradigms makes it easier for them to employ new and novel knowledge in their cre ative activities. Large firms, on the other hand, have a tendency to fall into learning traps where they overlook distant times, distant places, and failures, due to their practiced process of simpli fication and specialization in solving problems (Levinthal and March, 1993).
While the key idea behind the definition of a radical innovation lies in the (great) extent of ‘‘newness’’ or novelty in the inherent invention, in empirical work the degree of ‘‘radicalness’’ of an innovation is often associated with the sub sequent usage of the innovation or the pool of knowledge from which the innovation is gener ated. The greater the novelty of the innovation, the greater will be the difference between such technology and the existing ones, and therefore the greater will be the magnitude of the dis continuity that is created. When such radical innovation generates new and different demand and creates a new market, the subsequent usage of the innovation by others will be high. In the realm of technology, a radical innovation defines a new trajectory along which subsequent tech nological developments will be determined, and hence subsequent technologies will tend to draw heavily on the ‘‘newness’’ of this focal innovation that has defined the new trajectory. When new technological developments are measured by patent information, such usage of the focal in novation is reflected in the citations of the focal innovation by subsequent patents that are de veloped based on the novelty that this focal innovation encompasses. Because a more radical patented innovation (as opposed to an incremen tal one) is more likely to have created a new path of technological progress, it is more likely to be cited by subsequent patents. Therefore, the number of subsequent citations by other patents is often used as a measure of the degree of radicalness of an innovation (Trajtenberg, 1990; Ahuja and Lampert, 2001).
Another measure of radical innovation is related to the knowledge pool from which the innovation is generated. The more the focal in novation relies on prior or existing knowledge, the less likely is it that the innovation is going to be novel. This is because heavy use of existing knowledge suggests extensive reliance on existing paradigms. Innovations based purely on recombinations of existing knowledge com ponents tend to be incremental. Novel inventions tend to be path breaking and therefore typically do not follow existing paradigms, nor draw much on existing technologies. Hence, the extent of reliance on previous knowledge can also indicate the level of radicalness of the innovation. Again, patents are often used to measure radical innovations and in this context the radicalness of a patent is based upon the number of citations it makes to previous patents. While such measures of radical innovations are not perfect – as they are not direct measures of the radical nature of the innovation – the availability and reliability of the patent data and the lack of a better alternative make these measures the common ones used in the literature.
Bibliography
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Levinthal, D. A. and March, J. G. (1993). The myopia of learning. Strategic Management Journal 14 (winter special issue): 95 112.
Saviotti, P. (1996). Technological Evolution, Variety, and the Economy. Brookfield, VT: Edward Elgar.
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Trajtenberg, M. (1990). A penny for your quotes: Patent citations and the value of information. RAND Journal of Economics, 21: 325 42.
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