What innovation resources are essential to disrupt markets? How can innovation resources position a company for success?<\/p>\n\n\n\n
Innovation resources are the capabilities, values, and culture that come together to help encourage or address disruption. An organization needs innovation resources to develop disruption capacity and respond to market disruptors<\/a>.<\/p>\n\n\n\n Read more about innovation resources and how they work.<\/p>\n\n\n\n\n\n\n\n Established firms become successful by developing certain capabilities that help them to efficiently and profitably develop, market, and sell their goods or services. Each company\u2019s capabilities are specific to its product and the value networks<\/a>. <\/p>\n\n\n\n However, the same characteristics that define a company\u2019s strengths in one context constitute weaknesses in another. In this way, a company\u2019s capabilities and disabilities are two sides of the same coin. <\/p>\n\n\n\n Disruptive innovations require a different context\u2014<\/strong>a different value network, cost structure, and production process\u2014than existing products, which turns established companies\u2019 <\/strong>capabilities <\/em><\/strong>into <\/strong>disabilities <\/em><\/strong>when confronting disruptive innovations. <\/strong><\/p>\n\n\n\n Innovation resources fall into three categories: <\/p>\n\n\n\n These are the easiest to remedy<\/strong>: You can hire new people, implement new training, bring in new technology, and raise more cash. <\/p>\n\n\n\n Established companies tend to have ample innovation resources. By comparison, entrants typically have few innovation resources, but its people resources\u2014specifically founders, managers, and employees\u2014often constitute their biggest capabilities. A startup\u2019s people are so critical to its early success, that losing just one person can derail the company\u2019s progress. <\/p>\n\n\n\n Processes ensure that everything from manufacturing to payroll operates in the same way every time, whether the employee performing the task is a new hire or a veteran. Processes can be explicitly defined protocols, or they can be implicitly understood.<\/p>\n\n\n\n Reliable processes are essential to a successful business<\/a>, but they become major disabilities in the face of disruptions\u2014since they\u2019re meant to <\/strong>prevent<\/em><\/strong> change, processes themselves are very difficult to change. <\/strong><\/p>\n\n\n\n While the visible processes relating to customer service, production, and development are important, the processes that most significantly determine a company\u2019s capabilities or disabilities are the subtler processes that influence investment decision-making, such as market research methodology and how the company creates budgets and strategies. These background processes have a powerful effect on resource allocation<\/a>, and they are especially difficult to change. <\/p>\n\n\n\n Entrants have the flexibility to develop processes that meet the needs of the disruptive technology and its market<\/strong>, unlike established firms, which are already entrenched in their established processes. <\/p>\n\n\n\n Values inherently reflect a company\u2019s cost structure, because they influence a company\u2019s decision-making about what kind of projects to prioritize.<\/strong> If a company\u2019s cost structure requires high gross margins, then its values influence investments in projects that promise large profits\u2014which impede the company from investing in disruptive innovations. <\/p>\n\n\n\n Values influence which projects executives pursue, which tasks employees prioritize, and which products the sales team pushes. For example, if a company\u2019s cost structure requires 40 percent profit margins to cover overhead costs, achieving those profit margins is a company value; executives reject projects expected to bring less than a 40 percent profit margin, employees prioritize tasks that support high-earning projects, and salespeople emphasize products that typically earn that profit margin. <\/p>\n\n\n\n Values are difficult to change on a whim, but, as a company grows, its values naturally evolve. <\/p>\n\n\n\nInnovation Resources at Established Firms<\/h2>\n\n\n\n
Defining Innovation Capabilities<\/strong><\/h3>\n\n\n\n
Supplies<\/strong><\/h4>\n\n\n\n
Processes<\/strong><\/h4>\n\n\n\n
Values<\/strong><\/h4>\n\n\n\n