Non-Core Innovation Challenges Faced by Incumbent Firms A Case Study Investigating Challenges Faced by a Product Strategy Department at a Multinational Incumbent Technology Firm When Pursuing Non-Core Innovation
Publicerad
Författare
Typ
Examensarbete för masterexamen
Master's Thesis
Master's Thesis
Modellbyggare
Tidskriftstitel
ISSN
Volymtitel
Utgivare
Sammanfattning
Incumbent firms, with their established market positions and competitive advantages, excel in
stable environments due to strong customer relationships and product specialization. However,
they often struggle to adapt to market changes and focus on disruptive innovation, leading to
the "Incumbent's Curse." This occurs when incumbents resist radical ideas that new entrants
develop, reshaping the market and threatening the incumbents' dominance. Despite this, some
incumbents successfully pivot to new markets, as seen with GKN and The Tandy Corporation.
Research indicates that while incumbents can pursue radical innovation, many struggle due to
mechanistic organizational structures and a focus on sustaining innovations for existing
customers.
This thesis examines the primary challenges an incumbent firm faces when pursuing non-core
innovation, using a case study approach on a multinational technology firm active in the
automotive industry. Focusing on a product strategy department, the study identified eight
significant challenges, which were grouped into three main areas. The first area highlights the
difficulties in discussing innovation, due to varied interpretations of terms like "disruptive,"
"adjacent," "transformational," and "non-core innovation." This complexity underscores the
need for a common language and comprehensive discussions within the department. The
second area addresses the dilemma of responsibility for non-core initiatives. Opinions were
divided on whether the department should handle non-core innovation, with employees
advocating for a broader innovation scope to mitigate risks, while managers were more cautious
due to perceived higher risks. The third area pertains to practical challenges in driving non-core
innovation, including the impact of reorganization, resource allocation issues, mindset and
motivation problems, and structural barriers. These challenges suggest the need for a shift in
organizational mindset and resource allocation, potentially requiring a separate division for noncore
innovation.
The thesis primarily focused on identifying challenges rather than providing solutions, laying
the groundwork for future research. However, six practical recommendations could be
provided: achieving a unified view on non-core innovation, educating on various innovation
theories, balancing resource allocation, establish a workforce with diverse skills and knowledge
backgrounds, creating a separate unit for non-core innovation, and establishing new valuation
methods for non-core initiatives.
Limitations to the study include the single-case design and time constraints, which may affect
the generalizability of the findings. Future research could involve multiple case studies and
exploring industry-specific challenges and solutions for non-core innovation.
Beskrivning
Ämne/nyckelord
innovation, non-core innovation, incumbent firm, innovation challenges, disruption, Incumbent’s curse, radical innovation, transformational innovation, mechanistic structure