Managing Innovation, 6th Edition

CHAPTER 4 Developing an Innovation Strategy

“A great deal of business success depends on generating new knowledge and on having the capabilities to react quickly and intelligently to this new knowledge …I believe that strategic thinking is a necessary but overrated element of business success. If you know how to design great motorcycle engines, I can teach you all you need to know about strategy in a few days. If you have a Ph.D. in strategy, years of labor are unlikely to give you the ability to design great new motorcycle engines.”

– Richard Rumelt (1996) California Management Review, 38, 110, on the continuing debate about the causes of Honda’s success in the US motorcycle market

The earlier quotation from a distinguished professor of strategy appears on the surface not to be a strong endorsement of his particular trade. In fact, it offers indirect support for the central propositions of this chapter [1]:

1. Firm-specific knowledge – including the capacity to exploit it – is an essential feature of competitive success.
2. An essential feature of corporate strategy should therefore be an innovation strategy, the purpose of which is deliberately to accumulate such firm-specific knowledge.
3. An innovation strategy must cope with an external environment that is complex and ever changing, with considerable uncertainties about present and future developments in technology, ...