established black-and-white TV market. But what if a smaller change were made, such as changing the material of the television cabinet? Innovation can be classified as either radical innovation or incremental innovation.
RADICAL INNOVATION
Radical innovation is about making major changes in something established. Focus is significant in relation to this issue. A change can represent a radical innovation when viewed at a technological level, but the impact may be only incremental when viewed at an organizational level. When we examine innovation, it is the impact at this level that we are interested in. The term radical often refers to the level of contribution made to the efficiency or revenue of the organization (MacLaughlin, 1999). For example, by introducing the flat-screen television, manufacturers radically increased the demand for such products. We can visualize radical innovation as a step change in some measure of growth such as revenue or efficiency (Figure 1.3). Most organizations engage in some form of radical innovation over their lifetime.
Radical innovation can threaten to transform the industry itself by destroying the existing market and thus creating the next great wave (Christensen, 1997; Utterback, 1996). Undertaking radical innovation can bring dramatic benefits for an organization in terms of increased sales and extraordinary profits, but it is also highly resource intensive and risk laden. Companies in the pharmaceutical industry can invest more than $400 mil- lion in developing a new drug (Light & Lexchin, 2003) and have no guar- antee that it will ever pass clinical trials and make it to the marketplace. Because of the turbulence of the external environment, it is difficult for any company to say that a potential innovation will result in a radical impact; they can only pursue the innovation with the knowledge that the scope exists for radical impact.