Think Big

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.

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This article was originally published in the October 1998 print edition of Entrepreneur with the headline: Think Big.

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