Building the Mature Firm’s Capability for Breakthrough Innovation

The contemporary competitive environment has been and continues to be driven by technological revolution, globalization, hypercompetition, extreme emphasis on price, quality, and customer satisfaction—with a resultant increasing focus on innovation (Hitt et al., 1998). These factors cause increased competitive complexity and dynamism, requiring an increasing emphasis on innovation as a strategic competence. The competitive landscape began to change drastically during the 1980s, when technology-rich U.S. firms experienced increasing difficulty competing in various industries such as semiconductor memory chips, office and factory automation, and consumer electronics (Morone, 1993). Some have attributed these failures to an inferior capacity, relative to competitors, for achieving continuous and incremental improvements in products and processes targeted at increased quality and decreased costs. In response, in the past decade U.S. firms have focused on incremental innovation in existing products or processes, with an emphasis on cost competitiveness and quality improvements (Betz, 1993; Hamel and Prahalad, 1991; Morone, 1993).