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Radical Innovation In Large Companies Essay

1440 words - 6 pages

In order to grasp a glimpse of the concept of "radical innovation", I tried to make an extensive internet search and gather and combine the most useful and relevant parts together. Like Narayanan, the sources I exploited for this assignment begin with the definitions of the keywords as well. So, I think it'll reasonable to start with the short description of the key concept- radical innovation-, crystallize it and then discuss the factors that contribute to radical innovation in large, mature companies.What is radical innovationWith respect to its knowledge and configuration dimensions, Narayanan has classified the concept of innovation into four major types, incremental, modular, architectural and radical. Like him, virtually all authorities on the issue have long distinguished between what we call radical and incremental innovations, although not always in these words. One can make a distinction between exploitation of existing technology and exploration of new technology (1). Exploitation has to do with refining or expanding existing products or processes, whereas exploration involves something fundamentally new, including new products, processes, or combinations of the two. In my view, incremental innovation usually emphasizes cost or feature improvements in existing products or services and is dependent on exploitation competencies. In contrast, radical innovation concerns the development of new businesses or product lines - based on new ideas or technologies or substantial cost reductions - that transform the economics of a business and therefore require exploration competencies. For the sake of holding a more specific perspective of view, radical innovation can be defined as;-an entirely new set of performance features;-improvements in known performance features of five times or greater; or-a significant (30% or greater) reduction in cost.Thus, a radical innovation is a product, process, or service with either unprecedented performance features or familiar features that offer potential for significant improvements in performance or cost (3, p.5). In my view, radical innovations create such a dramatic change in products, processes, or services that they transform existing markets or industries, or create new ones. By this definition, examples of radical innovation include computerized tomography (CT) and magnetic resonance imaging (MRI) in the field of diagnostic imaging; the personal computer in computing; and pagers and cellular phones in mobile communications. The definition is driven by new value added to the marketplace rather than by technical novelty or newness to the firm.Small entrepreneurial Firms vs. Large Mature FirmsThere are conflicting opinions about the radical innovativeness of firms with regard to their scales. According to the "law of microcosm", by economist G. Gilder, small entrepreneurial firms are much better suited to new high technology fields than are the larger counterparts (2, p.85). This widely held belief is...

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