by Eric von Hippel, Stefan Thomke and Mary Sonnack
Eric von Hippel is a professor at the Massachusetts Institute of Technology’s Sloan School of Management in Cambridge. Stefan Thomke is an assistant professor at Harvard Business School in Boston. Mary Sonnack is a Division Scientist at 3M Corporation. Sonnack and von Hippel and Joan Churchill are coauthors of a handbook on the lead user process to be published in 2000 by Oxford University Press.
When senior managers think of product development, they all dream of the same thing: a steady stream of breakthrough products—the kind that will allow their companies to grow rapidly and maintain high margins. And they set ambitious goals to that end, demanding, for example, that a high percentage of sales come from products that did not exist a few years ago. Unfortunately, the development groups of many companies don’t deliver the goods. Instead of breakthroughs, they produce mainly line extensions and incremental improvements to existing products and services. And given the pace of change in today’s markets, that’s a recipe for decline, not growth.
Given the imperative to grow, why can’t product developers come up with breakthroughs more regularly? They fail primarily for two reasons. First, companies face strong incentives to focus on the short term. To put it simply: although very new products and services may be essential to future growth and profit, companies must first survive to get to the future. That necessity tends to focus companies strongly on making incremental improvements in order to keep sales up and current customers—and Wall Street analysts—happy. Second, developers simply don’t know how to achieve breakthroughs, because there is usually no effective system in place to guide and support their efforts.
The lack of a system to guide product developers who are seeking to create breakthroughs is a problem even for a company like 3M, long known for its success with innovation. Traditionally, the company’s management has fostered innovation by taking a get-out-of-the-way attitude toward product developers who, in turn, have worked according to the aphorism “It’s better to seek forgiveness that to ask for permission.” This relationship between managers and developers has seen the creation of a long line of profitable products, from waterproof sandpaper and Scotch tape in the 1920s to Post-it Notes and Thinsulate in the 1970s.