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In new-product development, most management approaches presume a high ratio of knowns to unknowns, and most planning defines prescribed pathways through developmental stages and decision gates. In fact, a by-product of the focus on quality and operational excellence is that companies tend to avoid uncertain situations and resist market experimentation. However, such approaches are counterproductive for any project that has the potential to produce real breakthrough innovations,1 which, by definition, are fraught with a high degree of uncertainty. Indeed, when asked about how they managed breakthrough innovation projects, respondents from a variety of industries expressed difficulty articulating and defining the uncertainties that confronted them and the approaches they could use to attack those uncertainties. (See “About the Research.”) In this article, we offer a framework, called the Learning Plan, that enables companies to manage breakthrough innovation by explicitly recognizing that project teams are proceeding on the basis of assumptions, rather than known facts.
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1. Breakthrough innovations offer the potential for new-to-the-world performance features, five-fold or greater improvement in known performance features, and/or 30% or greater reduction in cost.
2. See R.G. Cooper, “Stage-Gate Systems: A New Tool for Managing New Products,” Business Horizons 33, no. 3 (May-June 1990): 44-54.
3. See Z. Block and I. MacMillan, “Milestones for Successful Venture Planning,” Harvard Business Review 63 (September-October 1985): 184-196.
4. See R.G. McGrath and I. MacMillan, “Discovery-Driven Planning,” Harvard Business Review 73 (July-August 1995): 44-54.
5. Some elements of the Learning Plan methodology are evident in approaches offered by D. Leonard-Barton, “Wellsprings of Knowledge: Building and Sustaining the Sources of Innovation” (Boston, MA: Harvard Business School Press, 1995); and G. Lynn, J. Morone and A. Paulson, “Marketing and Discontinuous Innovation: The Probe and Learn Process,” California Management Review 38, no. 3 (spring 1996): 8-37.
6. The material in this section is drawn from G.C. O’Connor and M.P. Rice, “A Comprehensive Model of Uncertainty Associated with Radical Innovation,” 2007, a conceptual paper currently under development for submission to Organization Science. Please contact Gina O’Connor at firstname.lastname@example.org for a copy of the manuscript.
7. For further explanation, see: R. Burgelman and L.R. Sayles, “Inside Corporate Innovation: Strategy, Structure and Managerial Skills” (New York: Free Press, 1985); C.M. Christensen, “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail” (Boston: Harvard Business School Press, 1997); D. Dougherty and C. Hardy, “Sustained Product Innovation in Large, Mature Organizations: Overcoming Innovation-to-Organization Problems,” Academy of Management Journal 39, no. 5 (1996): 1120-1153; and R.M. Kanter, “When Giants Learn to Dance” (New York: Simon and Schuster, 1989).
8. Special thanks to Tim Morscheck, Vice President of Technology, Eaton Truck Group, and innovation hub manager Vishal Singh for providing insights into the use of the Learning Plan in the HEV project and its derivative impacts on other projects within Eaton’s innovation hub.
9. Eaton Truck Group’s adoption of the Learning Plan methodology was based on the uncertainty framework presented in R. Liefer, C.M. McDermott, G.C. O’Connor, L.S. Peters, M. Rice and R.W. Veryzer, Jr., “Radical Innovation: How Mature Companies Can Outsmart Upstarts” (Boston: Harvard Business School Press, 2000).
i.For a full explanation of the uses of a cross-case methodology for developing new insights, see: K.M. Eisenhardt, “Building Theories From Case Study Research,” Academy of Management Review 14, no. 4 (1989): 532–550; and K.M. Eisenhardt and M.E. Graebner, “Theory Building From Cases: Opportunities and Challenges,” Academy of Management Journal 50, no. 1 (2007): 25–32. For a detailed description of the methodology we used, see: G.C. O’Connor, M.P. Rice, L.S. Peters, and R.S. Veryzer, “Managing Interdisciplinary, Longitudinal Research Teams: Extending Grounded Theory-Building Methodologies,” Organization Science 14, no. 4 (2003): 353–373.