Like many CEOs, Andy Grove missed the boat on the Internet. The longtime CEO of Intel Corp. explains that he was simply too busy with the microprocessor business, which was doing extremely well in the mid-1990s.1 Similarly, Microsoft Corp.’s preoccupation with its release of Windows 95 initially blinded it to the vast potential of the Internet as a business proposition. The truth is, emerging opportunities for innovation are often obscured by current business concerns. For managers who have many competing demands for their attention,2 short-term needs and goals are often more pressing and absorbing than long-term possibilities.3 In attempting to run their companies to the best of their abilities, executives can paradoxically make themselves vulnerable to a variety of “traps” that actually forestall innovation.
In our work (see “About the Research,” p. 60), we have identified three common innovation traps that can ensnare managers at large established companies, particularly when radical rather than incremental innovation is called for.4 These are the performance trap, the commitment trap and the business model trap. These categories dovetail nicely with much of the existing management literature on the subject. (See “The Innovation Traps,” p. 61.)5
The Performance Trap.
As in the cases of Intel and Microsoft, companies that currently perform well and enjoy sufficient growth in their core business tend to overlook opportunities that in the long term may be crucial to them. Either they lack financial incentives to explore these innovations,6 or the exploitation of such opportunities may be disruptive or require timely action by the management, which is already fully preoccupied with managing ongoing, fast growth. For example, Sun Microsystems Inc. may have lost market share to the Linux operating system due to its reluctance to embrace the open-source technology, even though it would have been in a great position to do so given Sun’s... To read the complete article, login or sign-up using the form below.
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