Finding, Forming, and Performing: Creating Networks for Discontinuous Innovation

Abstract

Many industries today face a fast pace of technological and market change where the shifts are not just more-of-the-same. Instead, they are characterized by periods of discontinuous change in which the companies that emerge as the new winners often have competencies, backgrounds, and networks of relationships that are very different from the previous incumbents. Lego used to compete head-tohead with Mattel and Hasbro in brick sets and action figures; now it has to come to grips with the latest digital device or online offering from Sony, Nintendo, and Electronic Arts. GSK used to see Merck, Novartis, and Pfizer as its principal competitors; now it is equally worried about the proliferation of new drug compounds from biotechnology companies. While discontinuous changes of this type have occurred throughout history, there is evidence that they are becoming more frequent and more severe. 1 The implication for many firms—and particularly those in fast-moving, high-technology industries—is that they need to increase their capacity for discontinuous innovation, i.e., the implementation of new technologies, products, or business models that represent a dramatic departure from the current state of the art in the industry. 2 This article examines how firms create new networks (with customers, suppliers or other partners) as one part of this capacity for discontinuous innovation.