Managing Competencies in Breakthrough Product Development: A Comparative Study of Two Material Processing Projects

Managers face many challenges as they bring breakthrough products to market. Increasing pressures for short-term returns often make these longer-term, breakthrough product development projects less attractive. At the same time, the array of external sourcing options available to managers has grown dramatically over the last decade, allowing firms to outsource more and more of their core processes. Taken together, managers often find it appealing to minimize their internal exposure to breakthrough projects, instead choosing to either focus on incremental projects (with quicker, more certain paybacks), or to outsource the high risk elements of these breakthrough projects. Although outsourcing decreases risk, it also allows other firms to develop critical expertise and competence. As such, there is an increasing need for strategies that help firms build new core competencies as they move these breakthrough projects forward. Significant gaps exist in understanding what kinds of competencies emerge and how to manage them in the context of breakthrough product development. As such, the primary objective of this study is to explore and document the development and management of these competencies within the context of materials processing firms undergoing breakthrough innovation. Utilizing a multi-case perspective allows for the delineation of common elements within these domains that provided their respective firms advantage. The findings of this study are put forth as propositions and support the notion that managers need to be cognizant of three domains of competencies (market, technology, and integrative) (Coates and McDermott, 2002; Danneels, 2002), that emerge from breakthrough innovations