While conducting research on General Motors, Daeyong Lee saw automotive engineers using plastic rulers to measure stretching in metal fenders and asked how well the primitive-looking technique worked. "They said the accuracy was poor but that there was no alternative," Lee recalls. "I said there must be a better way to do it."
Lee began to search for a completely new tool to perform the measurements and eventually devised a way to use a video camera to automatically gauge the stretch in the fenders. That innovation formed the basis for the Troy, New York, company called CamSys that Lee founded in 1989. He now employs 10 people who sell the measuring system to car makers and steel companies around the world.
The practice of pursuing such radical innovations has fallen out of favor in recent years as more incremental approaches have come to the fore. But a new study by Rensselaer Polytechnic Institute (RPI) suggests it may be time to try for bigger gains.
Radical innovation is losing out to the incremental approach because it's much more difficult and the risks are huge, says Gina O'Connor, assistant professor of marketing at RPI in Troy. "But the payoff is greater as well," she adds.
Companies that create radically new innovations can gain long lead times over their competitors, which leads to higher profit margins and a competitive advantage, the RPI researchers say. And, they found, while many radical new ideas appear to be the result of chance combinations, there are systematic techniques you can apply to increase the chance your organization will generate the next big idea.
In reality, of course, few firms come up with more than one truly significant new idea--if that many. Radical innovation researchers don't think it has to be that way, however. "If we can understand these processes," reasons O'Connor, "then it can become a repeatable phenomenon."
Mark Henricks is an Austin, Texas, writer specializing in business topics.
The RPI researchers defined a radical innovation as one that incorporates brand-new features, produces at least a five-fold performance improvement over current solutions, or produces at least a five-times cost reduction over current solutions. "It's not just about fiddling with what you have and trying to put in some improvement," Lee says. "It's about starting from scratch."
Examples of radical improvement projects include General Electric's 15-year effort to develop digital X-rays, now bearing fruit with a new device being used by doctors, and Otis Elevator Co.'s even longer attempt to develop an elevator suitable for a mile-high building. There are similar radical innovation programs at General Motors, Polaroid, Analog Devices and Nortel.
Although they studied big-company examples of radical innovation, researchers found that being big has nothing to do with being innovative. Instead, they learned radical innovation works best, in companies of any size, when three conditions are met. First, the process must be sheltered from short-term financial pressures. "You can't watch your radical innovation quarter by quarter," agrees Mark Weiser, chief technologist at the Xerox Palo Alto Research Center, the copier giant's California innovation laboratory that is credited with inventing windows-based software interfaces and the technology for the computer mouse.
A radical innovation project must also be conducted in an environment that encourages the free flow of ideas. Innovation-seeking companies can boost intellectual cross-fertilization by doing such things as having their employees read a variety of unrelated publications and holding meetings in odd places like museums or parks, says Grace McGartland, a principal of innovation-creativity business consulting firm GM Consultants in Toronto. "If you don't bring fresh ideas in, how are you going to get fresh ideas out?" asks McGartland.
Finally, the effort must persist in spite of wrong turns and dead ends. In fact, radical innovators would do well to anticipate winding up in a place they never expected.
Ultimately, dedicated pursuit of radical innovation may involve much more than reaching out to new markets if the invention is profound enough. "You may have to be ready to change your whole business," Weiser says.
Above all, the company pursuing radical innovation must be persistent. This type of innovation can take a long time, and early failure isn't necessarily an indication of long-term results. "People tend to stop too soon," says McGartland. "Many groups are right on the edge [of success] but don't go on."
Worth The Risk?
The immense potential rewards of radical innovation come with commensurate risk. In fact, says Weiser, "If you're getting nothing but a stream of successes from your radical innovation effort, you're probably not doing it right." He suggests that at least 20 percent to 50 percent of your ideas should fail to pan out.
In addition, even if your idea works technically, it may be a business failure. Uncontrollable changes in regulation, market trends and other factors can hamstring even a perfectly executed radical innovation effort. "[Because of this uncertainty,] there is a real question about whether [your innovative idea] is the best strategy to hang your whole company on," says James Higgins, professor of management at Rollins College in Winter Park, Florida.
Because of this risk, radical innovation can't be a company's sole competitive technique. Instead, firms should concentrate on making minor improvements, while devoting a smaller portion of resources to radical innovation. "Think of it as portfolio management," suggests Weiser. "You don't want to put all your money into one stock. Similarly, you don't want to put all your money on radical innovation."
Another way to hedge a bet on radical innovation is to find a partner to share the costs. Strategic alliances with other companies can alleviate the burden for small companies, says O'Connor. Government grants for developing economically important new technology are another important helper for firms large and small. "Every one of the companies we studied has gotten government grants," says O'Connor, "and a lot of them are cost-sharing with strategic partners.
Innovating For The Future
For Lee, radical innovation will continue to be a key part of the way CamSys operates. It's not an entirely stable one, he admits, citing one long-term project to develop a mapping device that, despite years of development and marketing work, has so far failed to sell.
But good ideas can be found everywhere. For instance, when customer requirements pointed toward the need for a portable measurement system like the laboratory-based one he'd been selling, Lee had the idea of trying an inexpensive digital still camera that's normally sold to the consumer market. The new portable target model came out in 1996. So far, it's providing just the kind of improvement in cost and performance that characterizes many radical innovations.
"People are saying this [product] is great," says Lee. "They tell me they never thought someone could come up with an idea like this."
CamSys, (518) 276-4082, email@example.com
GM Consultants, (416) 920-3841, http://www.thunderboltthinking.com
Xerox Palo Alto Research Center, http://www.parc.xerox.com