Innovation Games: A new approach to the competitive challenge

Résumé 0

Firms need to be innovative to stay ahead of the competition. But what form does innovation take in today's fast-moving world? The conventional view is that innovation is confined to the R&D departments of large firms, where boffins labour to perfect new products that meet presently unmet customer needs, and patents and copyrights protect market supremacy. In this ‘closed system’ scenario, all managers are striving to follow universal best practices, and as a consequence can find themselves trapped in competition that ultimately gets no one very far. The authors argue that in reality, 21st century innovation is a much more fluid affair. For example, rather than being released as a finished product, the first generation of a new product may be a prototype with corners still to be rubbed off when it enters the market: adventurous early customers themselves help to hone performance over time. Similarly, rather than R&D being an internal business, an entire ecosystem of smaller firms may collaborate and interact, under the direction of the lead company, in the innovation process. Analysing data collected from a large number of firms across different industry sectors, the authors set out to create a more holistic, multi-dimensional approach to understanding innovation. To this end, they draw up a typology of seven ‘games of innovation’ with different characteristics; games cut across industries and sectors, and different firms may play one or more. Their empirical findings highlight the fact that ‘design rules’ are not always drawn up in R&D laboratories but in many cases emerge as a result of negotiations and competition between many players. Rather than imitating competitors, managers should focus on identifying the games their own firm is playing and the strategic issues that shape those games.