strengths. Without an explicit strategy indicating
otherwise, a number of organizational forces will
tend to drive innovation toward the home field.
Some years ago I worked with a contact lens
company whose leaders decided that it needed to
focus less on routine innovations, such as adding
color tints and modifying lens design, and be more
aggressive in pursuing new materials that could dramatically
improve visual acuity and comfort. After a
few years, however, little progress had been made.
A review of the R&D portfolio at a senior management
meeting revealed that most of the company’s
R&D expenditures were going to incremental refinements
of existing products (demanded by marketing
to stave off mounting short-term losses in
share) and to process improvements (demanded by
manufacturing to reduce costs, which was, in turn,
demanded by finance to preserve margins as prices
fell). Even worse, when R&D finally created a highperforming
lens based on a new material, manufacturing
could not produce it consistently at high
volume, because it had not invested in the requisite
capabilities. Despite a strategic intent to venture