What should large companies do when faced with radical innovations in their industry?

Large companies are currently in a position where radical innovation needs to be embraced, as it has the ability to impact an entire industry. The technology industry is a great example where there are various critical factors influencing a ventures success or failure when faced with radical innovation. Possessing organizational knowledge can greatly influence how a business goes forward; challenges in the business arise in not knowing the guidelines, regulations, along with limited market research and obtained data - leading to the failure of a business. A company in this disposition or within the mature growth stage should be taking leadership initiative and analyze what category their current clientele fall under by referring to the diffusion of innovation theory (see figure 1).

In using the leader strategy, investing a substantial amount of money into developing a R&D department can also assist in the innovation process where there is greater opportunity for developing a new product innovation and monopolize the market through various pricing strategies available. Developing a new breakthrough product within a company and the industry associated requires a great level of creativity that can include implementing complimentary technologies. This allows for product differentiation where the R&D is able to focus on more traditional activities such as new product development, especially for companies within the shakeout and early growth stage.

Companies that are smart will understand the importance of R&D both to their company and within their industry and have goals set in place of how they can best invest in R&D enabling them to challenge the current radical innovation that is taking over a whole particular industry and enable product expansion to go ahead.

Radical technological breakthrough might also be achieved by ensuring that when developing an R&D department that not all expenditure goes to the incremental refinements of existing products and process improvements, and instead allocate a specific percentage of resources to radical innovation projects enabling progress in developing new offerings that support the company’s long-term strategy. Otherwise, having R&D invest in a product that is already in the market would encourage incremental innovation, where companies make small innovative breakthroughs to maintain profit and stay relevant. This is not ideal for a company facing radical innovation within its industry as it would impact competitive advantage and the drive for long -term impact.

Figure 1.