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Extreme Contexts for Innovation

This is a guest post by Vijay Hariharan with fresh insights from academic research in the field of innovation and marketing. Vijay is an assistant professor of marketing at University of Central Florida. Prior to joining UCF, Vijay was at Erasmus University Rotterdam in the Netherlands. Vijay’s research focuses on answering managerially relevant questions in the field of marketing. His publications

have appeared in leading journals such as Journal of Marketing, Management Science, International Journal of Research in Marketing and Journal of Business Research.

This post is based on his recent research with Stefan Stremersch and Yvonne van Everdingen published in the Journal of Marketing*.

* Published by the American Marketing Association, the Journal of Marketing (JM) is the premier outlet for substantive research in marketing. Since its founding in 1936, JM has played a significant role in shaping the field of marketing. It ranks 5 out of 140 journals in Business according to Journal Citation Reports® (2018 release).

Extreme Contexts for Innovation by Vijay Hariharan

Firms seek extreme contexts to find inspiration for breakthrough ideas. Extreme contexts are those that require innovation teams to stretch their products for non-traditional users and/or in extraordinary conditions, typically under great time pressure. The ongoing pandemic has naturally created an extreme context in several industries.

Take healthcare as an example. While pharmaceutical research teams commonly race to develop medicines for new diseases, drug makers have set new speed records in the race to develop vaccines and antivirals for COVID-19. There is non-stop media coverage about companies that are finding innovative solutions to prevent the spread of COVID-19. The stock market has been quick to respond to hopes and disappointments in the drug development process.

Take another example: the video communications firm, Zoom. Even though Zoom benefited from employees shifting to working from home, the pandemic also exposed the tool’s vulnerabilities resulting in instances of Zoombombing, intrusions by internet trolls and hackers. To win back the public’s trust, Zoom had to rapidly develop new features to bolster the security and privacy of the platform.

Investors and firms alike seem to recognize that extreme contexts favor innovation. But how can companies use extreme contexts in their innovation efforts?

Recent research I coauthored with Stefan Stremersch and Yvonne van Everdingen (Erasmus University Rotterdam) shows that such extreme contexts, if used correctly, complement companies’ traditional innovation efforts. The research examined how automobile firms benefit from their involvement in F1 racing, which is an extreme context requiring firms to stretch their products (e.g. engines, brakes, tires) with an objective to win the race. Car firms’ R&D personnel collaborate closely with F1 drivers and technical engineers, which helps them generate hundreds of ideas a year to improve automobile performance (e.g., aerodynamics, suspension setup, weight distribution, fuel efficiency). Because races typically happen every two weeks during the F1 season, there is a rapid cycle of developing new ideas, testing them, and analyzing whether the modifications improve race performance. The research found that firms with higher R&D spending are more likely to benefit from their F1 investments and race performance. The research suggests two ways in which companies can benefit from extreme contexts.

One way is to treat the extreme context as a parallel path of innovation in addition to company’s regular innovation process. Parallel pathing mitigates the risk and vulnerability of relying on a single path. If companies have explored innovative solutions or new business models specific to the COVID crisis (see here), they can be integrated or complemented with their mainstream business. For example, hospitals and insurance companies may exploit the telehealth services they developed during the pandemic to provide remote treatment to their patients or to expand their reach.

Another option is to use extreme contexts to test ongoing innovations. The immediate performance feedback inherent in extreme contexts stimulates learning through trial-and-error experiences. When companies are experimenting with new technologies, the performance feedback provides insights into these technologies’ usefulness and quality. Such feedback facilitates the development of tacit knowledge and the discovery of otherwise unnoticed opportunities, which may increase the quality of the innovation. For instance, the pandemic gave Moderna (an American biotechnology company focused on drug discovery, drug development, and vaccine technologies) an opportunity to rapidly advance its new vaccine technology based on messenger RNA. Unlike conventional vaccines, which can take months to produce by growing weakened forms of the virus, RNA vaccines can be constructed quickly using only the virus’s genetic code. Although no RNA vaccines have thus far been approved, if proven to be successful, Moderna could use its platform to rapidly develop vaccines for other viruses. The pandemic also gave universities worldwide an opportunity to quickly scale and test their ongoing transition to remote learning since classes moved online with very little notice.

When the going gets tough, the tough gets going. Although the Cold War was a period of extreme global tension, many innovations that resulted from this period are still being used to date (see NASA spinoffs). Firms can try to take advantage of the extreme context presented by the pandemic today to develop innovations that may give them an edge over the competition when they emerge out the crisis.

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