Opportunity Recognition

and Breakthrough
Innovation in Large
Established Firms
Gina ColarelU O'Connor
Mark P. Rice
"Every day, I try to go out and grab lightning."
^Terry Fadem, Director, New Business Development, DuPont Corporation
G
^^^^ Tabbing lightning" is how Terry Fadem characterized opportunity
recognition associated with breakthrough innovations. In recent
annual surveys of the members of the Industrial Research Insti-
tute (a professional association of the technology leaders of
R&D-intensive firms), "making innovation happen" and "managing R&D for
business growth" were cited as the number one challenges facing fRI members
(in 1998 and 1999 respectively). Opportunity recognition is the bridge that con-
nects a breakthrough idea to the initial innovation evaluation processwhich in
turn leads to the formation of a formally established commercialization effort.
During the 1980s, U.S. and European firms were competitively
challenged by Asian finns in many industries, e.g., memory chips, office and
factory atitomation, constmier electronics, and auto making.' In response,
these firms dramatically increased their competencies in managing continuous
improvement and incremental innovation in existing produas or processes, with
an emphasis on cost competitiveness, quality improvements, and efficiency.^ In
the past decade, there has been growing awareness that managerial practices
had simply shifted from one incomplete approach to an alternative bui equally
incomplete approach. According to Gary Hamel; "Most companies long ago
reached the point of diminishing returns in their incremental improvement pro-
grams. Radical, non-linear innovation Is the only way to escape the ruthless
hyper-competition that has been hammering down margins in industry after
CAUFORNIA MANAGEMENT REVIEW VOL 43, NO. 2 WlKTtR2OOI 95
Opportunrty Recognrtion and Breakyirough Innovation in Large Established Rnms
industry."^ Although achieving excellence in ongoing operations and incremen-
tal innovation has been critical for regaining competitiveness, the demand for
corporate growth and improved financial performance from senior management
and from shareholders has catalyzed an intense and renewed interest in the
discovery, development, and commercialization of breakthrough innovations.
Since 1995, we have followed the evolution of twelve radical innovation
projects in ten large, established firms. In this article, we examine how these
firms undertook the recognition of opportunities associated with breakthrough
innovations, which from their perspeaive had the potential to 'change the
game." In this context, opportunity recognition is defined as the match between
an unfulfilled market need and a solution that satisfies the need.** In our twelve
projeas, breakthrough innovations arose out of invention, or insights based on
new combinations of technologies and processes. The technical discovery or
Insight typically originated with a scientist or engineer, who frequently was not
preparedeither through training or life experienceto make the cognitive leap
from a technical idea to an envisioned and articulated business opportunity-
Markets might not yet exist and would have to be imagined,' or current markets
might be transformed to such an extent by the innovation that it was difficult
for the scientist or engineer to discern the business model that might emerge.
The opportunity recognizer, typically a research manager or senior scientist, was
able to link the breakthrough technical idea with a need in the marketplace
one that already existed, but was unfulfilled, or one that could be created. What
is striking is that this act must happen not just once, but many times for a single
breakthrough innovation project to come to fruition in the market (as Figure 1
shows). Thus the problem of enhancing the capacity for opportunities to be rec-
ognized in a sustained manner is critically important to any firm interested in
breaking new ground.
Creative ability lies within individuals, and the degree of creativity varies
across individuals.* Opportunity recognition is a creative act. In and of itself, it is
not an organizational process.' Yet to simply rely on individuals is an inefficient
use of an organization. As Amabile and others have noted,* while individual
creativity is a critical factor, there are a number of management actions and atti-
tudes that can be put in place to enhance the likelihood that the creative side of
individuals will be developed, motivated, and direaed in useful ways.
Writers in the fields of innovation management and organizational learn-
ing have identified a number of problems that established organizations face in
enabling the recognition of breakthrough opportunities. Christensen provides
numerous examples of leading firms that have been unable to recognize the
import of novel technologies, develt)ped either within or external to their orga-
nizations, to the future of their own industries and markets.' Indeed, the classic
business strategy literature emphasizes the importance of organizational experi-
ence with familiar technologies and markets in maintaining continuous streams
of successful new products.'" Other writers show that the ability to create
and depend on efficient routines, considered a critical aspect of organizational
96 CAUFORNIA MANAGEMENT REVIEW VOL 43. NQ 2 WINTER 2001
opportunity Recognrtion and Breakthrough Innovation in Large Established Firms
F I GU R E I . Opportunity RecognitionInitial and Recurringwithin the Radical
Innovation Lifecycle
Reservoir
of
Technical
Knowledge
idea
Generation
Initial
Evaluation
Breakthrough
Innovation
Commercialization
Project
Opportunity
Recognition
Captures breakthrough ideas
and triggers the initial evaluation
as a precursor to the formation
of a commercialization efforL
Opportunity Recognition
Events 2 -> n in response to
discontinuities in the radical
innovation project lifecycte
The
Market
learning and successful performance may, in fact, prevent firms from sensing
opportunities that would drag them beyond those programmatic practices, i.e.,
the domain of breakthrough innovation." Van de Ven identifies the human
problem of managing attention.'^ In accordance with the observations of Chris-
tensen, he notes that the more successful an organization is, the more difficult it
is to trigger people's thresholds to attend to new ideas, needs, and opportunities.
Finally, TUshman and O'Reilly elucidate the need for, and challenges associated
CAUFORNIA MANAGEMENT REVIEW VOL 43. NO. 2 WINTER 2001 97
opportunrty Recognition and Breakthnaugh Innovation in Large EstaUished Rrms
with, building ambidexterity into organizations; that is, to manage current oper-
ations and simultaneously develop dramatically new and different ones to cope
with turbulent environments.'^ These writings focus on the dual importance of
the individual and the organizational coniexi, i.e., the role of the creative indi-
vidual in seeing an opportunity and championing it,'** and the role of organiza-
tional context and organizational learning mechanisms that can facilitate and
support the creativity required of opportunity recognizers.
Much of the literature on the topic of opportunity recognition focuses
on the nature and importance of the phenomenon rather than on how to en-
hance the firm's capacity to support it. A number of writers offer prescriptions
regarding the capabilities and sensitivities firms must possess to be effective at
opportunity recognition. For example, since the development of a breakthrough
innovation may take a decade or more, the ability to anticipate the direction and
timing of technological development and to identify technological alternatives
will be critical.'^ Shifts in technology, market, and competition need to be recog-
nized and interpreted within the context of the firm's environment."" Compa-
nies must be able to imagine markets that do not presently exist, and invest in
their development ahead of the competition.''' It is important fora firm to
extend its view beyond current operating practice to imagine how a discontinu-
ity may develop and look at the potential discontinuity in the context of all pos-
sible scenarios.'** It is interesting that these writers refer to the capacity of the
company for opportunity recognition without offering guidelines for enabling
them. In contrast, in our study opportunity recognition was itself a discontinu-
ous act based on individual initiative rather than a process or practice of the
firm.
The literature does recognize the importance of individuals through its
consideration of the roles of technical and market gatekeepers, but it does not
tie them specifically to the act of opportunity recognition. The firm that initiates
discontinuous innovation must be dependent on, and responsive lo, information
from outside the organization.'^ Gatekeepers provide a link between internal
and external sources of information, acquiring, translating, and disseminating
new information.^" Technical, or information, gatekeepers link technical infor-
mation they gain through external sources with product development and
process improvement, generating new technical possibilities.^' Market gatekeep-
ers possess competence in the application of technology to potential new mar-
kets." They insure the innovation is meeting a market needinformation that
will likely change as the projea evolves. While these writers provide rich
description of the roles involved in opportunity recognition, they do not explore
how firms can enhance the likelihood that it will happen as a result of the pres-
ence of gatekeepers. To whom should technical and market gatekeepers provide
such information? How might the organization structure iiseU to be most recep-
tive to the information? How can the organization enable opportunity recogni-
tion, an individual aa, and leverage it efficiently?
98 CAUFORNIA MANAGEMENT REVIEW VOL 43. NO. 2 WINTER 2001
Opportunity Recognition and Breakthrough Innovation in Large Established Firms
This article aims lo contribute to the understanding of the initiation of
breakthrough innovation projects and of the role of recurring opportunity recog-
nition events in sustaining these projects in the face of multiple discontinuities
in the radical innovation lifecycle (see Figure 1). We add to the growing body of
descriptive literature on innovation processes so richly developed by Van de Ven
and his colleagues, whose research program has worked across organizational
domains, organizational sizes, and both product and process innovations.'^'
While they have plowed new ground in describing the complexity of the inno-
vation process, there is room for a more focused look at key aspects of that
process, and for constraining the domain of innovation more tightly to look at
specific contexts. In this study, the context is the large established organization
that is concerned with creating value through the application of breakthrough
technology to changing markets.
Though the firms in our study exhibited a variety of organizational
mechanisms for supporting opportunity recognition, in general they were imple-
mented in ad hoc fashion with varying degrees of success. None have imple-
mented a sustained, comprehensive, and disciplined approach. In this article,
we examine several alternative approaches through which organizations may be
able to systematically stimulate and support opportunity recognition.
Research Design and Cases
Defining Radical Innovation
We define a radical or breakthrough innovation as the creation of a new
line of businessnew for both the firm and the marketplace. By "new" we
mean a product or process either witli unprecedented performance features or
with already familiar features that offer potential for a 5-1 Ox (or greater)
improvement in performance, or a 30-50% (or greater) reduction in cost. By
this definition, CT and MRI were discontinuous innovations in the field of diag-
nostic imaging, but none of the subsequent incremental and generational
improvements in the technologies were. The first PCs were discontinuous inno-
vations, but the many subsequent improvements were not.
Multiple Case Study Methodology
Case study research involves the examination of a phenomenon in its
natural setting. It is especially appropriate for research in new topic areas, where
the focus is on understanding "how" or "why" questions concerning a contem-
porary set of events, and the objective is on gaining insights to build a theory
rather than on testing hypotheses."^^ Multiple cases are generally regarded as
more robust than single case studies, in that comparisons across cases allow for
a greater robustness in the development of insights and a consideration of their
context dependency.^'
CAUFOfWIA MANAGEMENT REVIEW VOL 43. NO, 2 WINTER 2001 99
opportunity Recognition and Breakthnaugh Innovation in Large Established Finns
To guard against post hoc rationalization of the reasons and motives for
particular aaions, a prospective approach to data collection was taken. That is,
firms were eniistt'd for iheir participaiion while Ihe cases were ongoing. In order
lo qualify for participation, projects had to have been formally identified, with
an associated team and a budget. We colleaed data about the project's history on
our first round of interviews, but from there we collected data in real time as the
team was being confronted with successes and challenges in the course of the
project's development. To date, 5 of the projects have been introduced into the
marketplace to varying degrees of success, 5 are still under development, and 2
have been abandoned.
Information gathering techniques have included in-depth interviews,
surveys, reviews of project documentation, and teleconferences. Where possible,
copies of materials prepared for early evaluation boards were also collected and
analyzed. All interviews were taped and transcribed. We gathered information
from a variety of company representatives associated with each project from a
variety of functional pcrspeaives.
During the first year of the study, the participant firms hosted a minimum
of two site visits and provided access to the appropriate individualssenior
managers, project managers and project team memberswho could provide
both historic and current information and insights with respect to the research
questions of interest. As some projects are beginning to move into operating
units, new transitional team members are being added to our interviews.
Following Miles and Huberman,^** the transcripts and documents were
reviewed and coded in a systematic manner. Any comment that bore on the
issue of opportunity recognition and early evaluation was highlighted and col-
lected on a summary sheet for each project. Where individuals within a project
team gave conflicting data, it was so noted. The summary sheets were then
compared to aggregate the data and draw comparisons and contrasts.
The Sampte of Cases
This study is sponsored by the Industrial Research Institute (TRT), an
association of R&D managers and Senior Technology Officers of Fortune WOO
firms in the United States. The IRI is our sampling frame, and it therefore must
be noted that our results cannot be generalized to all types of innovations, but
only to those whose earliest development was housed in a central R&D function.
While the initial opportunity recognition that led to several of the projects aau-
ally occurred outside R&D, tbe work was, in all cases, quickly centralized in R&D
due to the high levels of technical uncertainty associated with them.
The unit of analysis is the project, not the finn or a division of Ihe firm.
Members of the IRl volunteered projects within their firms for observation. R&D
managers were asked to consider projects that were currently formally identified
as projects, with an associated assignment of personnel and a budget, and that
had the potential to have the market impact described above in our definition
100 CAUFORNIA MAhJAGEMENT REVIEW VOL 43. NQ 2 WINTER 2001
Opportunrty Recognition and Breakthrou^ Innovation in Lar^ Established Rrms
of radical innovation. The firms were Air Products and Chemicals, Analog
Devices, DuPont, General Electric, General Motors, IBM, Nortel (now Nortel
Networks), Polaroid, Texas Instruments, and United Technology Corporation's
Otis Elevator division."*^ A brief description of the projects follows.
Air Produas and Chemicals Corporation developed an ionic transport mem-
brane (ITM) for separating oxygen from air and is working on systems to meet
tbe needs of tbree different application domains. The firm believes that ibe
oxygen produced through ibe new system will offer a 30% cost improvement
over current systems in use, and bas tbe potential to completely change tbe
current delivery system in medical and metal cutting applications areas, result-
ing in new to the world features.
Analog Devices bas developed a micro-electro-mechanical (MEMS) acceler-
ometer, a small microcbip ihat can measure changes in speed. While the appli-
cation possibilities are nearly endless {e.g., virtual reality games, medical
applications to detect changes in the rate of heart pulse), ADI initially used this
tecbnology to belp move itself into tbe automotive market space. Even there,
potential applications are numerous, but tbe initial market disruption was to
replace electro-mecbanical airbag sensors with accelerometers. The cost to tbe
automotive market for the airbag system fell from approximately $500 to $100
per unit.
Dupont's Biomax, is a polyester material tbat can be recycled or decomposed,
It bolds up under normal commercial conditions for a time period establisbed
through product specifications. The material decomposes at tbe rigbt time and
under tbe rigbt conditions. It is environmentally safe at every stage of its
decomposition. Cbemicaily, Biomax* represents a new family of bigbly versa-
tile polymers based on traditional polyetbylene terepbtbalate (PET) tecbnology.
Its biodegradable qualities are made possible by tbe water-soluble (hydrolyz-
able) linkages in its molecular chain. These linkages dissolve as they make
contact witb water, causing the entire molecular chain to break apart. Tbe
remnants are consumed by microbes, wbicb convert them into carbon dioxide
and water. The material itself can be made into fibers, fibns, or resins. Tbis
makes it suitable for countless agricultural, industrial, and consumer produa
applications: mulcb containers, mulcbing film, seed mats, plant pots, disposable
eating utensils, blister packs, yard waste bags, parts of disposable diapers,
blown bottles. In tbe United States alone, where tbe average household creates
over tbree tons of disposable waste eacb year, tbe number of potential applica-
tions for Biomax* is immense; its development represents a potentially buge
business for DuPont and an important solution to tbe mounting problem of
solid waste in developed countries.
Dupont's Electron Emitter is a fiber tbat emits light at a rate significantly faster
tban any known source. Tbe most promising application areas are in electronic
display tecbnologies. Prior to ibis discovery, Dupont was not involved in tbe
displays business at any level.
GE is well known for its advances in medical diagnostic technology, particu-
larly with respect to Imaging systems. One of the most controversial recent
innovations in tbat industry is the advance of Digital X-ray tecbnology. Digital
X-ray not only allows for dramatic improvement in the specificity of tbe image.
CAUFORNIA MANAGEMENT REVIEW VOL43,NO.2 W1NTER2001 101
opportunity Recognftiwi and Breakthrough Innovation in Large Established Rrms
but also can be sent as a stream of data to a diagnostic bank. That alone allows
for remote diagnosing, and has wide ranging implications for staffing of highly
paid radiologists at local hospitals and clinics. GE has found a way to combine
Digital X-ray technology with Fluoroscopy, a technology ibat allows the film-
ing and digitization of movement within the body. Tbe combined benefit pro-
vides a leap in benefits in the medical imaging field thai GE believes will be tbe
nexi "game-cbanger."
GM's focus on alternative power systems for automobiles is widely known.
One of ihe innovation paths down wbich tbey, and their counterparts, have
been travelling for some time is tbat of tbe hybrid electric vebiclc. The concept
is tbat power comes from botb electrical and conventional engines, each of
wbich is drawn upon at the speeds al whicb it performs most efficiently. Tbose
technologies, combined with several others such as regenerative braking, could
serve to offer a vehicle capable of exceptional gas mileage (50-80 miles/gallon)
and exceedingly low emissions of pollutants.
IBM has commercialized a new microcbip based on an alloy of Silicon and
Germanium (SiGe), wbich promises to become the basis for bigh-performance
new transistors witb switching speeds up to four limes faster than tbose of
traditional semiconductors. SiGe chips also offer several other imponant addi-
tional benefits. First, tbey can operate using only a fraaion of tbe normal
power requirements for competing technologies, such as Gallium Arsenide
(GaAs) based chips. Secondly, SiGe can be manufactured with tbe same costly
fabrication equipment used to make conventional silicon cbips, potentially
avoiding billions in new capital investments. The most promising application
arenas are in telecommunications, wbicb is based on analog tecbnology, an
arena in wbicb IBM had not previously participated.
IBM's second projea is the confluence of display, power, and memory tech-
nologies to enable tbe creation of an "electronic book" that could be used lo
store vast amounts of data such as technical manuals, doctor's files, or newspa-
per articles, could be portable, and could receive written information as well as
be bighly readable.
NetActive is a spin-off venture of Nortel Networks, tbough it began as an inter-
nal organizational innovation. Tbe innovation is a software capability that
allows NetActive to encode game publisbers' software in such a way that a user
could obtain tbe application for a fraction of tbe normal purchase price. Tbe
customer must tben initialize its use over the internet, and cboose from a vari-
ety of usage options that allow single use, usage for a specified period of time,
or purchase, all with differing fee struaures. The customer's credit card is tben
charged for tbe given usage selection. Game software and utility software sucb
as tax filing programs are tbe current most promising applications.
Polaroid applied highly innovative manufacturing tecbnology from its tradi-
tional product arenas to the creation of low-cost, high-capacity memory stor-
age devices.
Texas Instrument's Digital Light Processor Is based on the MEMS device
described above. The TI projector creates a screen image by bouncing light off
of 1.3 million microscopic mirrors squeezed onto a 1 square-inch chip, each
mirror has the ability to angle itself independently in order to best reflect light.
102 CALIFORNIA MANAGEMENT REVIEW VOL 43. NO. 2 V^1NTER2OO!
Opportuni ty Recognition and BreakthnDugh Innovation in Large Established Rons
Potential applications exist in the hard copy markets, home movie projection
systems, and large screen movie theaters, to name but a few. The first that TI
is commercializing are large screen movie projeaion systems. Movie theater
owners can now receive movies from Hollywood producers on Digital Video
Disks or even by satellite rather than on heavy reels. Theaters will no longer
be limited by a finite number of film prims, so they have increased flexibility
in show times and the number of screens showing a particular movie.
" United Technologies' Otis Elevator division has devoted considerable energy to
solving tlie problem of the "mile high building." In the commercial construc-
tion industry, limits on building heighi are not based on any technical con-
straints other than the problem of the elevator systems. Current systems are
limited by the weight of the cable that pulls the elevator. Once the cable gets
too long (more than 130 stories), it becomes too heavy to lift. Designing paral-
lel elevator shafts and moving people from one shafi to the other is the current
solution to very tall buildings, but at some point, that solution becomes uneco-
nomic because the amount of the building's real estate needed to house the
shafts is too high in proportion to the amount available for rent. Otis has devel-
oped a system of people movement that solves the problem. It allows for eleva-
tor cars to become separated from the shaft, and to move onto other shafts. A
combination of horizontal and vertical movement allows for a conservation of
shaft space, and opens up the opportunity for thinking about conveyance sys-
tems in a completely different light.
Observations
Opportunity recogtiition for radical innovation is highly dependent on
individual initiative and capacity, rather than routine practices and procedures of
the firm. Opportunity recognizers are in positions in the organization that allow
them to make their cognitive leap. Opportunity recognition can be characterized
as reactive or proactive. On the one hand, individuals may be alert and ready to
react to ideas and information that have the potential to become an opportunity.
On the otber hand, through their own initiative or via a challenge from a supe-
rior, they may take on the responsibility of searching through the organization
for ideas that can be developed into opportunities for significant new products or
businesses.
The report of the initial opportunity recognition that led to the establish-
ment of DuPont's Elearon Emitter project is illustrative. The research manager
for the scientist who discovered the light-emitting properties of a material under
consideration for use in composites recognized that it might be of interest to the
electronic materials business unit. The research manager contacted Teny Fadem,
the director of New Business Development, and encouraged him to attend the
technical review at which the scientist would present his discovery. The initial
act of opportunity recognition by the research manager triggered a second act
of opportunity recognition, which in turn led to a technology evaluation effort.
CALIFORNIA MANAGEMENT REVIEW VOL 43, NO. 2 WINTER 2001 103
Opportunity Recognition and Breakthrau^ Innovation in Large Established Firms
Corporate executives seldom play the role of opportunity recognizer. In
10 of our 12 cases, a low- to mid-level research manager completed the initial
act of opportunity recognition. However, opportunity recognizers are not neces-
sarily the champions who provide the energy and persistence required to ensure
that the project receives appropriate management attention.^* In the majority of
cases in the study, the scientists who have envisioned, worked toward, and dis-
covered the discontinuous innovations have some idea of the applications for
their innovations, but they have a limited understanding of the market. The
scientists' research managers, who have recognized the opportunities associated
with their discontinuous innovations, have sufficient understanding of the mar-
ket which, when combined with their technical expertise, allows them to recog-
nize business opportunities. The leap in thinking required is illustrated by one of
the research managers:
"Altbough I didn't do much witb the business unit that would ultimately market
this technology, I knew something about the field. It did seem important to me. If
you look at the history of innovation in this field, there really hasn't been much.
Tbis . .. really had tbe potential to change the game."
Early conceptualizations of the commercial opportunity are made and
excitement is generated not based on projections of financial cash flows, market
share gains or wins, or the typical rules of the game that large corporations
establish. Every one of our participant teams could articulate a number that the
market promise had to be in order for this to be considered "an opportunity*
by the conventional corporate standards. For example, "if it isn't a $250 million
market, we aren't interested" was typical of the comments they had heard.
Those sorts of estimates, however, bordered on the ridiculous for many of these
projects. Market uncertainty is simply too high and costs of production, at the
outset, are impossible to predict. Rather, the recognition of the opportunity lay
In a conceptualization of what the delivered benefits of the technology might be,
and how rich and robust those were. The idea was that, if those benefits could
be delivered, the market would definitely be "big enough." There was no consid-
eration of the timing over which the market would develop to become big
enough to recoup the enormous investment required.
As a breakthrough innovation project proceeds, there is an increased
commitment of financial and human resources. In this domain, investment is
typically staged, rather than committed for the entire development path. Hence,
higher-level technical and business managers along with external partners fre-
quently engage in opportunity recognition, as a triggering mechanism for the
opportunity evaluation process leading to decision making about commitment
of resources. The research manager, as the first to identify the opportunity, acts
as the initial catalyst to set off this chain reaction in which technical and busi-
ness managers at various levels of the organization engage in the opportunity
recognition process.
101 CAUFORNIA MANAGEMENT REVIEV\/ VOL 43. NO. 2 WINTER 2001
Opportuni ty Recognrtion and Breakthrough Innovation in Large Established Firms
One example of the multiple levels of opportunity recognition is the Gen-
eral Motors hybrid-electric vehicle project. Initial technical developmeni began
in 1969. Because of the inability to overcome technical hurdles at that time, the
project was shelved. In the late 1980s, two research managers and a research
engineer had adopted a practice of getting together every week or two for Infor-
mal technology reviews, primarily to consider ideas volunteered from random
individuals and customers outside the firm.^^ The review of one of those ideas
triggered the occurrence of opportunity recognitionthe "big bang" that became
the catalyst for the formation of the project {the first opportunity recognition).
In the process of explaining why a particular idea violated the laws of thermody-
namics, an insight by the research engineer caused the group to come up with a
new way to look at the technology, which could meet a well-understood market
need if a set of technical hurdles could be overcome.
The research manager, using funds under his control, set up a technology
evaluation team in early 1989. The results of ihe evaluation were sufficiently
positive to cause the research manager to approach the head of the research
division, who in turn recognized the opportunity (the second opportunity recog-
nition) and committed substantial funding. Two years later, one of the project
leaders moved to a development organization, beginning a period in which par-
allel and complementary efforts were being conducted in the research group and
in the development group. Within twelve months, both projects were in danger
of losing funding, due to the downturn in the firm's sales revenue and market
share. The two project managers decided to stage a technology demonstration
for all the corporate executives "to try to save our butt."
Although the demonstration appeared to be successful, the director of the
developmeni group informed his project director: "You did a good show, but we
got orders lo close you down. Our budgets can't handle you." That same evening
one of the senior executives, who had seen the demonstration earlier that day,
called the director of the development group and said, "That's good stuff. You've
got to keep that going somehow" (the third opportunity recognition). The pro-
ject was resurrected and would continue, albeit under tight budgetary restric-
tions. One month later, the director of the development group presented the
concept to a senior official in a federal agency. The senior official recognized the
opportunity (the fourth opportunity recognition) and agreed to champion the
project for federal funding, which was authorized about a year later.
In the case of GE Digital X-Ray, there were seven key occurrences of
opportunity recognition, involving: the research scientist (1984); someone from
the outside firm (1987); the research manager (1987); the first head of the busi-
ness unit (1988); the head of central research (1992); the CEO (1993); and the
second head of the business unit (1997). This pattern of multiple instances of
opportunity recognition, and the necessity for an ability lo articulate the oppor-
tunity lo many constituents, arose in every one of our cases. For radical innova-
tions, this occurrence is a matter of life and death of the project.
CAUFORNIA MANAGEMENT REVIEW VOL 43, NO. 2 WINTER 2001 105
Opportunity Recognition and Breakthrough Innovation in Lar^e Established Rrms
Given the high degree of technical and market uncertainty associated
with breakthrough innovation, the understanding of the opportunity often
changes over the course of the projea, requiring a repeat of the opportunity
recognition process that may result in a new or substantially redefined opportu-
nity. To appreciate this, it is important to understand the difference between
ongoing project evaluation and additional occurrences of opportunity recogni-
tion subsequent to tiie initial occurrence that may be required due to disconti-
nuities in the projea development path. When an opportunity related to a
radical innovation is recognized, invariably assumptions are made related to
the uncertainties associated with the discontinuous innovation. Ongoing project
evaluation occurs through project reviews, which typically focus on achieve-
ment of milestones along the projea development path envisioned on the basis
of these assumptions. They are, in a sense, incremental steps along the path, are
evaluative in nature, and do not involve the cognitive leap required for opportu-
nity recognition.
When a major milestone is missed or a key assumption turns out to be
wrong, a discontinuity along the project development path occurs. For those
managers who do not have the capacity or willingness to make the cognitive
leap required for opportunity recognition, this discontinuity will be a projea
killer, or at least a major setback for the project. For those who do have the
capacity or willingness, it will be the trigger for a new occurrence of opportunity
recognition.
For example, initial technical research for the project that ultimately
became Texas Instruments' Digital Light Processor was conduaed in the mid-
1970s. Opportunity recognition first occurred with respea to this technology in
1978, when an application domain was identified. Prototypes were developed by
1980, and tbe technical breakthrough was incorporated into a consumer produa
in 1983. Within a year, the product was abandoned. At this point the project
could have died, but two new potential applications were recognized, and mid-
dle and senior research managers and senior corporate management continued
to provide financial support to sustain the project, fn 1987, a critical technical
breakthrough occurred which transformed the nature of the technology. Even
so the project was in danger of being killed off. A major new potential applica-
tion of interest to federal agencies emerged in 1989. Senior research managers
succeeded in attracting federal funding and additional funding from an outside
corporate panner that kept the project alive. In cases where a technical or mar-
ket development reacbes a dead end, it requires idea generation and opportunity
recognition that result in a dramatic redireaion of the projea.
In another example, discontinuities in the development path of Dupont's
Biodegradable Material projea required reoccurrence of opportunity recogni-
tion. First, when the initial application was killed by the business unit, the man-
ager of the research team identified a new market opportunity through industry
contaas. He precipitated the development of a new product that embodied a
characteristic of the original product that was not deemed important in the
106 CAUFORNIA MANAGEMENT REVIEW VOL 43, NO 2 WINTER 2001
Opportuni ty Recognition and Breakthrough Innovation in Large Established Firms
original application but which was the technical breakthrough for the new prod-
uct. Next, when anticipated government regulations requiring biodegradable
diapers did not materialize, a key customer pushing for the development of the
technology suddenly became disinterested. A non-application specific (strategic)
opportunity was recognized as important for the firm by the director of the busi-
ness development group in central research, however, and the project was main-
tained on life support, with one person and almost no budget. Finally, a senior
technical researcher in another business unit recognized an opportunity associ-
ated with a new application for this technology in a market of interest to his
business unit, and reinvigorated the effort.
Again, this pattern is repeated in nearly every one of the twelve cases in
the sample. When the technical and/or market assumptions related to an oppor-
tunity turn out to be incorrect, a project associated with a discontinuous inno-
vation faces a high probability of being killed (as it should be if no attractive
alternative opportunity emerges). At these critical junctures, a new occurrence
of opportunity recognition is required to sustain the project. In some instances
it is the same individuals who engage in the new instance of opportunity recog-
nition, and in other instances, different individuals, even in other business units,
recognize new opportunities. In most of the instances, a senior researcher or
research manager engaged in the subsequent occurrences of opportunity
recognition.
Although opportunity recognition is usually an act of individual initiative,
informal networks play an important role in propagating waves of opportunity
recognition within and external to the firm. The twelve projeas in this study
have undergone long gestation periods. Eleven of the twelve originated more
than 10 years ago, and several can be traced back more than twenty years. The
youngest project in the set, one based on the lightning-paced information tech-
nology industry, is entering its seventh year of development. While personnel
turnover is inevitable under these conditions, for len of the twelve projects, one
or more of the early champions have been involved for the entire life of the
project, although sometimes in different positions.
The capacity of the firm for opportunity recognition is related to the
continuity of the informal network of individuals engaged in the conversion of
breakthrough innovations into new ventures. Upward networks (access to senior
managers) provide protection and access to pockets of money, while the broad-
based lateral and downward networks appear to provide information, confirmation
of the recognizer's perception of the opportunity, and other resources.
In the case of IBM's Silicon Germanium project, the opportunity was
based on a scientific breakthrough that was in conflict with commonly accepted
research results that turned out to be incorrect. In addition, the market for the
technology represented a market discontinuity for the firm. As a result, there
was substantial resistance on both market and technical dimensions to recogniz-
ing the opportunity. The well-established network of the research manager was
critical to success in getting the opportunity recognized at multiple levels in the
CAUFORNIA MANAGEMENT REVIEW VOL 43. NO, 2 WINTER 2001 107
opportunity Recognftion and Breakthrough Innovation in Large Established Firms
organization and in getting the opportunity re-recognized when market-related
discontinuities occurred along the projea development path.
First, in order to prove the initial research assumptions incorrect, he
needed access to a fabrication line. No such resources were available to him,
since this research was not funded at the time. He called a manufacturing spe-
cialist that he knew in another business unit and "called in [his] chits with him."
In other words, were it not for the informal relationship he had with someone
in a business unit, he would not have had access to the resources he needed.
Later in the project, the research manager used his network of connections to
potential customers to provide testimonials for his senior management about the
potential of the technology in a new application market. A manager previously
connected to an earlier incarnation of the project by that time held a manufac-
turing manager position. Because of his history with the technology and the
research manager, he recognized the new opportunity and played a key role in
enabling the pursuit of this new market. Four years later, this same individual
became a vice president in the business unit in which the Innovation is being
commercialized and is a strong advocate for the innovation, even against a
strong organizational resistance.
The evidence here is of senior management behaving as a protector
within a resistant organization, and lateral networks providing resources (the
fabrication line) and confirmation of the value of the opportunity (other scien-
tists he met at professional conferences who were employed by potential cus-
tomer firms), in seven of our twelve cases, senior managers behaved as
protectors of potentially game changing opportunities. Thus, in more than half
our sample, the project would have died had it not been for the projea cham-
pion gaining access to a senior manager sponsor {Vice-President or above) and
convincing him thai the project was important. Senior managers provided pro-
tection from conventional forms of evaluation or from organizational resistance
that arose in reaction lo some of these projeas. Ralher than basing their deci-
sions on promise of specific economic payback hurdles, sponsors commonly
cited both their gut feelings that the project could have significant impact on the
long-term success of the firm and their trust in the projea champion. Thus they
recognize the potential opportunity, rather than relying on ihe safety of a tradi-
tional evaluation process that uses criteria inappropriate for a breakthrough
innovation. Many of the projects would "fall between the cracks" of the existing
businesses of their corporations. The sponsor of each of these projects worked
to keep them alive (even unofficially), and encouraged business units to adopt
them. Thus, upward networks provide paths around conventional organizational
processes that become pathological when applied to radical innovation.
The implication of these stories is that networks are efficient and cost
effective. They are based on personal friendships, histories, and favors. Organiza-
tions today that are not promoting or leveraging long-term employment, job
rotation, and building of networks may be missing opportunities to help their
people think and act creatively.
106 CAUFORNIA MANAGEMENT REVIEW VOL 43. NO, 2 WINTER 2001
Opportuntty Recognition and Breakthrough Innovation in Large Established Firms
Summarizing the Observations
Taken together, these data suggest that the process for moving from a
firm's reservoir of technical knowledge to the initiation of a project with poten-
tially game-changing opportunity appears lo be almost capricious and, to a large
extent, dependent on chance events, supra-nomially motivated individuals, and
rich informal systems, many of which have been destroyed with early retire-
ments and downsizing aaivities. Further, the individuals in positions to see
opportunities aren't always as motivated as the champion literature would lead
one to believe.'" Criteria applied by opportunity recognizers in the initial evalua-
tion of breakthrough innovations are different from the conventional criteria
applied to decision making regarding incremental innovation. The initial assess-
ment is highly dependent on an individual's capacity lo clarify the ways a tech-
nology can be used to substantiate a large enough market. This requires
distinctive skills and access to many varying types of people to test early assump-
tions. It also requires multiple waves of opportunity recognition as the project
confronts discontinuities, critical sponsors come and go, corporate strategies
change, and the projea's development path takes it into unexpected domains.
All of this points to the need for sustained effort and mechanisms to help make
the transitions easier.
Improving the Organizational Capacity
for Opportunity Recognition
Based on the observations, following are methods that can help build an
opportunity recognition capability in established organizations along with mech-
anisms to improve the gaps and potential difficulties.
Articulating a Call to Action
There are aaions managers can take that establish a context to encourage
idea generation and opportunity recognition. When senior managers communi-
cate a need for breakthrough ideas, they get a response. These communications
can either happen explicitly, as singular events, or be part of the fabric of the
firm's culture. For example, Jerry Junkins, former CEO of Texas Instruments,
announced the need to "find businesses in the white spaces between our exist-
ing business units." The Digital Light Processor project was one of several results
of that call. At Nortel, a new ventures group was set up and began issuing
Requests for Proposals for new business ideas. Their first taker was the group
that is now the NetActive project. This was originally a group of individuals who
had been assigned in one of the business units to "play in the idea sandbox" to
try to develop applications for broadband technologies that were diffusing inlo
homes. A number of ideas were generated, but this one did not exactly fit the
bill of broadband communication. Had the Requests for Proposals not been
issued, it may never have gone beyond the limits of the sandbox. In both of
these instances, the message was simply a call for new directions for growth.
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Oqx)rtunrty Recognition and Breakthrough Innovation in Large Established Rrms
which was currently being limited by the operating units' focus on current cus-
tomers, current business models, and current combinations of technologies. It
was a clear message about a need for new growth in any domain, and about
organizational receptivity to new ideas.
A large percentage of our projerts ensued from management's articulation
of strategic intent to grow in a particular technology or market domain. A well-
known example is the case of Jack Welch's commonly known order to "be Num-
ber 1 or Number 2 in all of our lines of business." This, in itself, provided an
impetus for a mid-level researcher working in avionics at GE's Corporate R&D
center to recognize the potential for the fluoroscopy technology he was develop-
ing as having possible applications in medical systems. He ihen made his coun-
terpart in the medical systems group of the R&D lab aware of il. Similarly, il was
Analog Devices' president Jerry Fishman's explicit statement of strategic intent
during the early 1980s to "gel into automotive" thai motivated the effort that
ultimately led to the accelerometer device as an airbag actuator, and
subsequently into numerous other applications.
Investing in Organizational Enablersfor Opportunity Recognition
Beyond the direct attention that senior management can give to stimulat-
ing breakthroughs, there are a number of activities organizations can engage in
that help connect opportunity recognizers to internal and external sources of
information. These activities reinforce the opportunity recognizers and steep
them in diverse types of data that they use as fodder in making connections.
Rather than simply relying on individuals to pursue access to a wide variety of
sources of data on their own, R&D organizations can build enabling activities
into people's jobs to increase the probability that opportunity recognition will
occur.
Although we saw no evidence of firms providing special professional
development programs to enhance the skills of opportunity recognizers, some of
the firms did have mechanisms to stimulate divergent thinking among personnel
in a position to engage in idea generation and opportunity recognition. For
example, research scientists at GE described periodic conferences ihai brought
together people from GE Medical Systems and Corporate Research and Develop-
ment in which "people would talk about things that were a little bit more radi-
cal, wilder ideas and so forth. IThese meetings promoted] cross-fertilization of
ideas and exposure to what other people were doing." Interactions with other
scientists in the opportunity recognizer's technical discipline and associated pro-
fessions played an important role in our cases. Attendance at professional con-
ferences and interactions with research labs and universities stimulated the
recognition of a number of opportunities. Other enabling activities included
think tanks, brown bag lunches with world-renowned scholars and researchers
in particular fields of expertise that may become arenas of strategic focus tor the
firm, technology forecasting exercises, and idea generation sandboxes. These
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OpportunHy Recognitron and Breakthrough Innovation in Lar^e Established Firms
aaivities are frequently put in place for some short period of time when a new
manager comes in and are the first to be cut when budgets need tightening. Yet
these aaivities were a part of the genesis of each project we observed. Project
team participants bemoaned the fact that, while management was benefiting
from ihose activities through a current project, they would have no similarly
enabling activities in the future.
Sustaining Attention: The Need for a Project Oversight Board
Strategic priorities in organizations shift over time. Firms that purport lo
value investments in potential breakthroughs are not consistent supporters. A
senior technical manager in one of our participant companies described a recur-
ring 17-year cycle during which strategic attention to the development of dis-
continuous innovations, opportunity recognition, and pursuit of new business
opportunities waxed and waned."
Changing expectations create inefficiencies in organizations, especially in
the realm of highly uncertain, long development span, high investment oppor-
tunities. The stops and starts documented in these projects result, in part, from
changing strategic contexts. The long investment horizon required, turnover in
senior management, resistance posed by operating units that perceive it as a
threat to their existing product lines and revenue models, and resistance from
corporate funding boards as the projea continues to require investment over
long periods of time, all require some need for continuity, reminder of purpose,
and continued articulation of the strategy.
We have documented the positive impact on opportunity recognition
of senior management's articulation of strategic intent for growth. We have also
documented the requirement for renewed opportunity recognition over time
and across organizational sub-units as the players change. There is a need for an
oversight board for each innovation project that protects the project from
turnover in senior management champions and changes in key breakthrough
innovation players, sub-units, and strategic contexts. The purpose of such a
board would be to continue to articulate the opportunity in a manner meaning-
ful to the firm, rather than to subject it to re-recognition by players who may
not understand it or feel threatened by it. Hence, the board should include indi-
viduals with a long-term strategic view of the importance of breakthrough inno-
vation who can make the long-term commitment to board participation needed
to provide continuity and perseverance. Appropriate company outsiders (such as
key members of project alliance partners or technical experts) should be consid-
ered for inclusion on the board. The firms in our study ihat structured such
boards without including external members subjected the projea to the normal
bureaucratic haggling that comes with typical corporate resistance. Those that
huilt the board based on needed expertise and alliances were more likely to
succeed.
CAUFORNIA MANAGEMENT REVIEW VOL 43, NO. 2 WINTER 2001 lit
opportunrty Recc^ition and Breaktfirou^ Innovation in Large Established Firms
Promoting and Nurturing Informal Networks
Opportunities are frequently recognized by developing boundary-span-
ning capabilities in individuals. A broad-based awareness and sensitivity to busi-
ness issues has been mentioned as a key component of opportunity recognition.
For research managers who are most often the initial opportunity recognizers,
sensitization to the key lines of business, current and potential customers, and
future market directions enhances their effeaiveness in this role. While we are
not suggesting that they become market research specialists, our results point to
the importance of the muiti-dimensionality required of these individuals. The
active promotion of informal networks is an activity management could under-
take to allow researchers to gain this sensitivity. As one of the Senior Managers
described the process:
"The true genesis of the idea is technical. The vast number of ideas comes from
the technical side. But they come from [technical people] with an understanding
of market needs...They [get this through] interacting with their counterparts on
the operating side. It's important that the scientists have enough [market] knowl-
edge, and that knowledge either comes from their own experiences or working
with the development folks."
Developing Organizational Structure Mechanisms
that Support Breakthrough Innovation
Since opportunity recognizers are not always driven to champion the
idea, it is imperative that organizations develop mechanisms to make it easy for
opportunity recognizers to come forward. These mechanisms enhance the orga-
nization's capacity for radical innovations by focusing on and supporting three
types of opportunity recognizers: gatherers, hunters, and radical innovation hubs.
Gatherers are passive opportunity recognizers. A good R&D manager can
understand the potential business implications of a breakthrough idea brought
to him by a bench scientist. These individuals have the experience, skill, judg-
ment, and motivation to be aleri and receptive to the ideas ihat bubble up out of
the normal R&D environment. Not everyone is equipped to be an effective gath-
erer. They must have enough scientific or engineering knowledge to understand
a technical concept, and they must also be sufficiently "market wise" to envision
the technology's potential impact on the market. First-line or mid-level research
managers or senior scientists usually play the role of gatherer.
Hunters are aaive seekers of opportunities in organizations. Their man-
date is lo search for opportunities among the activities in research labs and
other arenas of the organization known to be sources of innovative ideas. Their
skills and experiences are similar lo the gatherers', but they are more oriented
towards marketing and business development, with a broad rather than a spe-
cialist technical background. They use their extensive networks in the organiza-
tioti to quickly and inexpensively make connections between technologies they
uncover and potential market applications. They often extend themselves out-
side of the organization as well. A key skill that a hunter must develop is the
112 CALIFORNIA MANAGEMENT REVIEW VOL43.NO.2 WINTER200I
opportunity Recognition and BreakthriDugh Innovation in Large Established Fimns
ability to articulate the opponunity in a compelling way for management. One
hunter descrihed his job as follows:
"I was brought in to tnanage long-term produa and market strategy.! started
looking through R&D lo find out where there was intellectual properly that 1
could leverage into ihe marketplace. I was actively scanning and I knew Ihe] had
been running around evangelizing the technology for iwo or ihree years. They
hadn't made any progress. They jusi weren't able to build a case thai got it recog-
nized and funded. What we had here was a [Corporate Research] Fellow, one of
the smartest guys in the world, but be couldn't get the attention lo til[ tbis thing
up."
A Radical Innovation Hub is a known home for ideas. Creating an organiza-
tional repository for ideas is an important approach to establishing idea receiving
and opportunity recognition capacities in organizations. The hub's staff should
have the ski]Is and ta]ents necessary to be opportunity recognizers themselves.
They can convene informal and formal evaluation teams (expens from outside
the organization if necessary), record evaluation outcomes, and provide feed-
back to idea generators. If the decision is made to form a team, the hub staff
can play the role of catalyst. If the initial evaluation turns out to be negative,
tbe hub staff can provide shelf space to store the idea (or possible future use.
Although we have seen several partial manifestations of a radical innovation
hub in a few of our case studies, most firms don't have one. Just as there needs
to be an organizational mechanism for capturing the results of opportunity
recognition, there also needs to be a capacity for taking the results of a positive
evaluation and establishing and supporting a breakthrough innovation project
team. Clearly managing the handoffs between individuals and organizational
structures is critically important for the stirvival and progress of breakthrough
innovation projects. Hence, the individuals responsible for these sets of activities
must be skillful at managing organizational interfaces.
We have observed several models of hunters, gatherers, and hubs that
have not functioned well. The first is the single Business Development Manager
located in Central R&D. whose job is to behave as a hunter and evaluator. This
person floats from project to project within R&D to evaluate and guide the com-
mercial development aspecl of each project. In this case, the floater became so
involved with one project that he ultimately joined the development team. The
advantage of building the hub capability was lost. A new person had lo be found
to begin the process again. It was known as a rotational job position.
The second model we have seen is an informal group of scientists within
R&D that convened monthly, under the direaion of the R&D manager, to
review ideas that came from anywhere. This was the fertile ground from which
the technical insight sprang for one of our projects. However, there were two
challenges associated with this board's structure. First, it served as a technical
review only. There were no business development personnel on the board, and
so early questions about markets and costs were not considered. Secondly, tbe
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opportunity Recognrtion and Breakthrough Inncn/ation in Large Established Firms
board was not a permanent fixture. The monthly meetings evaporated once the
R&D manager retired, and the firm no longer engages in this activity.
The successful hub, then, will require a staff that is broad based in their
experiences, known wiihin the organization as the group to contact with radical
ideas, and skilled at evaluating and helping articulate the benefits of novel tech-
nologies. Persistence and organizational slaying power are key.
Conclusions
Though developing a robust and persistent capacity for opportunity
recognition has proven to be a difficult challenge for these firms, approaches
within the sample have aided the opportunity recognition practice. The in-depth
descriptions and insights of these firms can contribute to grounded theory devel-
opment and offers the potential to improve practice for the technology-inten-
sive, established firm. Systematic methods to enable opportunity recognizers
to leverage their skills are imperative for those organizations that compete based
on technological innovation.
Notes
1. J.G. Morone, Winning in High Tech Markets (Boston: MA: Harvard Business School
Press, 1993).
2. Frederick Betz, Strategic Technology Management (New York, NY: McGraw-Hill,
1993); D. Gerwin, "Integrating Manufaauring into the Strategic Phases of New
Product Developmeni," California Management Review. 35/4 (Summer 1993): 121-
134; G. Hamel and C.K. Prahalad Competing for the Future (Boston, MA: Harvard
Business School Press, 1994).
3. G. Hamel, Leading the Revohition (Boston, MA: Harvard Business School Press,
2000).
4. M.P. Bhave, "A Process Model of Entrepreneurial Venture Creation," Journal of
Business Venturing. 9 (1994): 223-241. See also l.M. Kirzner. Competition and Entre-
preneurship (Chicago: The University of Chicago Press, 1983). wherein on p. 81
the author states: 'The important feature of entrepreneurship is...the ability to
perceive opportunities which others have not yet noticed...to see where new
products have hecome unsuspectedly valuable to consumers and where new
methods of production have, unknown to others, become feasible." Our thanks
to an anonymous reviewer for reminding us of this reference.
5. Hamel and Prahalad, op. cit.
6. Most researchers in the field of creativity acknowledge that the level of creativity
varies across people, and they note the power of organizational support mecha-
nisms to help encourage creative aaions. See for exatnple A. \an Gundy, "Organi-
zational Creativity and Innovation," in Scott G. Isaksen, ed.. Frontiers of Creativity
Research: Beyond the Basics (Buitalo. NY: Bearly Limited, 1987), pp. 358-381.
7. T.M. Amahile, *A Model of Creativity and Innovation in Organizations," in B.M.
Staw and L.L. Cummings, eds.. Research in Organizational Behavior, Vol. 10 (Green-
wich, CT: JAI Press, 1988). See also H.L, Angle, "Psychology and Organizational
Innovation," in A.H. Van de Ven, H.L. Angle, and M.S. Poole, eds.. Research on the
I M CALIFORNIA MANAGEMENT REVIEW VOL 43. NO, 2 WINTER 2001
opportunity Reaignition and Breakthrough Innovation in Large Established Firms
Management of Innovation: The Minnesota Studies (New York, NY: Ballinger, 1989),
pp. 135-170.
8. T.M. Amabile, "The Delicate Balance in Managing for CreatJvily,* R^D Innovator
(August 1994); T.M. Amabile, "How to Kill Crealivily," Harvard Business Review,
76/5 (SepiembtT/Ociober 1998): 76-87; T.M. Amabile, R. Conti. H. Coon. J.
Lazenby, and M. Herron, "Assessing the Work Environment for Creativity," Acad-
emy of Management Journal. 39/5 (Oaober 1996): 1154-1184.
9. CM. Christensen. The Innovator's Dilemma: When New Technologies Cause Great Finns
to Fail (Boston, MA: Harvard Business Schooi Press, 1997).
10. H.I. Ansoff, The New Corporate Strategy (New York, NY: John Wiley & Sons, 1988);
C.K. Prahalad and G. Hamel, "The Core Competence of the Corporation," Harvard
Business Review, 68/3 (May/June 1990): 79-91; R.R Rumelt, Strategy. Structure and
Economic Perfontmme (Cambridge, MA: Harvard University Press, 1974).
11. A.S. Miner, "Struaural Evo!ution Through Idiosyncratic Jobs: The Potential for
Unplanned Learning," Organization Science. I (May 1990): 195-210; M.L, TUshman
and P. Anderson, "Technological Discontintiities and Organization Environmenis."
Administrative Science Quarterly. 31 (September 1986): 439-465; R.A. Burgelman,
"A Process Model of Internal Corporate Venturing in the Diversified Major Firm,'
Administrative Science Quarterly. 28 (June 1983): 223-244; D. Dougherty and C.
Hardy, "Sustained Product Innovation in Large, Mature Organizations: Overcom-
ing Innovation-to-Organization Problems," Academy of Management Journal. 39/5
(1996): 1120-1153.
12. A.H. Van de Ven, "Central Problems in the Management of Innovation," Mattage-
memSdence. 32/5 (May 1986): 590-607.
13. M.L. Tushinan and C.A. O'Reilly III, "Ambidextrous Organizations: Managing
Evolutionary and Revolutionary Change," California Management Review. 38/4
(Summer 1996): 8-30.
14. J.M. Howell and C.A. Higgins, "Champions of Technological Innovation," Adminis-
trative Science Quarterly. 35 (1990): 317-341; D. Day, "Raising Radicals: Diflereni
Processes for Championing Innovative Coqwrate Ventures," Organization Science. 5
(1994): 148-172; S.K. Markham, "A Longitudinal Examination of How Champi-
ons Influence Others to Support Their Projects,' Journal of Product Innovation Man-
agement. 15 (1998): 490-504; S.K. Markham and A. Grilfin, "The Breakfast of
Champions: Associations between Champions and Product Development Environ-
ments, Praaices and Performance," Journal of Product Innovation Management. 15
(1998): 490-504.
15. See, for example. Richard N. Foster, "Timing Technological Transitions,' in M.L.
Tlishman and W.L. Moore, eds.. Readings in the Management of Innovation (Cam-
bridge, MA: Ballinger, 1988). See also Betz, op. cit.
16. Mark B. Myers and Richard S. Rosenbloom, "Research Management and Corpo-
rate Renewal,' Conference on the Future of Industrial Research, Harvard Business
School, February 1993.
17. Gary Hamel and C.K. Prahalad, "Corporate Imagination and Expeditionary Mar-
keting,' Harvard Business Review. 69/4 (July/August 1991): 81-92.
18. Paul Strebel, Breakpoints: How Managers Exploit Radical Business Change (Boston,
MA: Harvard Business School Press, 1992).
19. J. Gluck, "Radical Innovation through Creative Leadership," in R.L. Kuhn, ed..
Handbook for Creative and Innovative Managers (New York, NY: McGraw-Hill. 1988).
See also Betz, op. cit.
20. Michael L. Tushman and David Nadler, "Organizing for Innovation," California
Management Review, 28/3 (Spring 1986): 74-92.
21. Edward B. Roberts and Alan R. Fusfeld, "Staffing the Innovative Technology-
Based Organization," Shan Management Review. 22/3 (Spring 1981): 19-33. See
CAUFORNIA MANAGEMENT REVIEW VOL43.NO.2 WINTER200I 115
Opportunity Recognrtion and Breakthrough Innovation in Large Established Rrms
also Michael J. Martin, Managing Technological Innovation and Entrepreneurship
(Reston, VA: Reston Publishing Company, Inc., 1984)
22. Robert A. Burgelman, "A Prtxess Model of Internal Corporate Venturing in the
Diversified Major Firm," Administrative Science Quarterly. 28/2 (1983): 223-244. See
also Martin, op. cit.
23. A.H. Van de Ven, H.L. Angle and M.S. Poole, eds.. Research on the Management of
Innovation: The Minnesota Studies (New York, NY: Harper & Row. 1989). See also
A.H. Van de Ven, 'Central Problems in the Management of Innovation,' Manage-
ment Science, 32/5 (1986): 590-607; A.H. Van de Ven and D. PoUay, 'Learning
While Innovating," Organization Science. 3/1 (February 1992): 92-116; Y.T. Cheng
and A.H. Van de Ven, 'Learning the Innovation Journey: Order Out of Chaos?'
Organization Science. 7/6 (November/December 1996): 593-614.
24. K.M. Eisenhardi, 'Building Theories from Case Study Research,' Academy of Man-
agement Review. 14/4 (1989): 532-550.
25. R.K. Yin. Case Study Research (Thousand Oaks, CA: Sage Publications, 1994).
26. M.B. Miles and A.M. Huberman, Qualitative Data Analysis. 2nd edition (Thousand
Oaks, CA: Sage Publications, 1994).
27. For a more detailed description of the characteristics of these projects, see G.C.
O'Connor, "Market Learning and Radical Innovation: A Cross Case Comparison,"
Journal of Product Innovation Management. 15/2 (March 1998): 151-166.
28. This observation implies that relying on the literature about championing behav-
ior may not be leading us in the right direction in our thinking about opportunity
recognition. We find they are two independent sets of skills.
29. The informal technology review practice has been discontinued since the research
managers' retirement, which reinforces our point that these praaices are ad hoc
and dependent on individual initiative.
30. In this regard, the champion literature suffers from a fundamental methodological
flaw. Typically the researcher identifies champions after a project's been initiated,
and then studies his behaviors, attitudes, and skills. What this implies is that the
literature has not identified those who recognized opportunities but elected not to
champion them, which is something we identify in this work.
31. Parry Norling and Robert J. Statz, "How Discontinuous Innovation Really Hap-
pens/ Research-Technology Management, 41/3 (May 1998): 41-44.
116 CALIFORNIA MANAGEMENT REVIEW VOL 43, NO. 2 Vv1NTER200l