Chapter 14. Sources of Innovation

Jenny Darroch[8] and Morgan P. Miles[9]

The need to reconfigure and innovate in the face of change is one of the dominant issues that underlies business strategy making today (Covin and Slevin, 2002). Firms are constantly attempting to leverage innovation in order to gain a competitive advantage or simply to survive. Hamel (2000, p. 11) suggests that:

"Somewhere out there is a bullet with your company's name on it. Somewhere out there is a competitor, unborn and unknown, that will render your strategy obsolete. You can't dodge the bullet—you're going to have to shoot first. You're going to have to out-innovate the innovators. Those who live by the sword will be shot by those who don't."

The tremendous changes in technology, strategy, culture, and business models have greatly increased competitive pressures on firms. Accordingly, resources, routines, behaviors, and practices are frequently examined as firms strive to become more innovative. The first step in the innovation process is to determine where to begin; that is, to identify a source of innovation (see von Hippel's 1988 comprehensive work in this area). However, therein lies the problem as "spotting" or recognizing attractive economic opportunities is seldom an easy task. Hamel (1998a, p. 12) offers the following story to illustrate how pig on the ho of became roast pork:

"One day, a wild pig wandered into a hut; lightning struck the hut; the hut burned down; a human poked through the charred ...

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