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Iconic design: Douglas Aircraft’s DC-3, introduced in 1936, was a breakthrough.

The companies that the editors of Technology Review selected for the TR50 all have strong records of innovation. But how does the innovation process at a startup like Twitter compare with that at IBM? In a series of articles in the 1970s, including a 1978 contribution to TR, Harvard business professor William J. Abernathy and MIT professor of management and engineering James M. Utterback posed this basic question:

How does a company’s innovation–and its response to innovative ideas–change as the company grows and matures?

Abernathy and Utterback created a model, still in use, that described the life cycle of industrial innovation. They began with two extreme cases to define the limits of their “spectrum of innovators”:

Past studies of innovation imply that any innovating unit sees most of its innovations as new products. But that observation masks an essential difference: what is a product innovation by a small, technology-based unit is often the process equipment adopted by a large unit to improve its high-volume production of a standard product.

The authors found that small companies or groups are most often the source of radical product innovations.

New products which require reorientation of corporate goals or production facilities tend to originate outside organizations devoted to a “specific” production system; or, if originated within, to be rejected by them.

A more fluid pattern of product change is associated with the identification of an emerging need or a new way to meet an existing need; it is an entrepreneurial act. … It is reasonable that the diversity and uncertainty of performance requirements for new products give an advantage in their innovation to small, adaptable organizations with flexible technical approaches and good external communications, and historical evidence supports that hypothesis.

To be sure, radical innovations generate excitement and attract attention, but these are merely the beginning of the story for products that succeed in the marketplace.

One distinctive pattern of technological innovation is evident in the case of established, high-volume products such as incandescent light bulbs, paper, steel, standard chemicals, and internal-combustion engines. … In all these examples, major systems innovations have been followed by countless minor product and systems improvements, and the latter account for more than half of the total ultimate economic gain due to their much greater number.

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