Product Development & Management PDF
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Successful Development and Commercialization of
Technological Innovation: Insights Based on Strategy Type
Stanley F. Slater and Jakki J. Mohr
H ow can market leaders avoid the innovator’s
dilemma and continually develop disruptive
innovations to retain their leadership posi-
tion? We argue that the capability to successfully de-
velop and commercialize one type of disruptive
innovation—technological innovation—is based on
the interaction between a firm’s strategic orientation
(Prospector, Analyzer, Defender) and (1) its selection
of target market; and (2) the way it implements its
market orientation. The insights offered by this
framework assist in predicting whether a firm’s stra-
tegic orientation enhances or thwarts its ability to
successfully commercialize disruptive innovations and
also suggests the development of critical, yet contra-
dictory, skill sets in order to remain successful over
time.
How can industry leaders reinvent themselves by
developing and successfully commercializing disrup-
tive innovations that challenge their existing business
models? Known as the innovator’s dilemma, Christen-
sen (1997) argued that market leaders have difficulty
diverting resources from the development of sustain-
ing innovations, which address known customer needs
in established markets, to the development of disrup-
tive innovations, which often underperform estab-
lished products in mainstream markets but offer
benefits some emerging customers value.
Christensen’s (1997) initial research focused prima-
rily on technological innovations, broadly defined as
those that introduce a different set of features, per-
formance, and price attributes relative to existing
products and technologies. In other words, techno-
logical innovations create new products based on new
underlying technological underpinnings. Over time,
further developments improve the new technology’s
performance on the attributes mainstream customers
do value, to a level where the new technology begins
to cannibalize the existing technology. This progres-
sion reflects the classic S-shaped curve prevalent in the
study of technological discontinuities (e.g., Chandy
and Tellis, 2000; Shanklin and Ryans, 1987). The
focus of this article is on these technological inno-
vations, though distinctions exist between other types
of innovations and their dimensions. For example,
Govindarajan and Kopalle (2004) distinguish disrup-
tive innovations further based on their radicalness, or
new products based on a new technology relative to
what already exists in the industry. Their empirical
research shows that all disruptive innovations are not
necessarily radical (e.g., Schwab’s discount brokerage
business model), nor are all radical innovations
necessarily disruptive (e.g., cordless phones relied on
substantially new technology relative to wired phones
but were not disruptive to the industry). Some can be
both radical and disruptive (e.g., cellular phones).
Through his studies of disruptive innovations,
Christensen (Christensen, 1997; Christensen and
Bower, 1996; Christensen and Raynor, 2003; Chris-
tensen, Scott, and Roth, 2004) has spawned a sub-
stantial stream of research investigating many aspects
of the innovator’s dilemma (e.g., Danneels, 2004).
One component of Christensen’s arguments is that
because incumbents listen too carefully to their cus-
tomers, they are disrupted by industry newcomers
that serve emerging customer segments. For example,
Christensen and Bower (1996, p. 198) state that mar-
ket-oriented firms cannot create disruptive innova-
tions since ‘‘firms lose their position of industry
leadership . . . because they listen too carefully to their
customers.’’ At its heart, this issue ties to both the se-
lection of a firm’s target market (emerging customer
segments versus existing customer segments) as well as
Address correspondence to: Stanley F. Slater, College of Business,
Colorado State University, Fort Collins, CO 80523-1275. Tel: (970)
491-2994. Fax: (970) 491-5956. E-mail: Stanley.Slater@Colostate.edu.
J PROD INNOV MANAG 2006;23:26–33
r 2006 Product Development & Management Association
Technological Innovation: Insights Based on Strategy Type
Stanley F. Slater and Jakki J. Mohr
H ow can market leaders avoid the innovator’s
dilemma and continually develop disruptive
innovations to retain their leadership posi-
tion? We argue that the capability to successfully de-
velop and commercialize one type of disruptive
innovation—technological innovation—is based on
the interaction between a firm’s strategic orientation
(Prospector, Analyzer, Defender) and (1) its selection
of target market; and (2) the way it implements its
market orientation. The insights offered by this
framework assist in predicting whether a firm’s stra-
tegic orientation enhances or thwarts its ability to
successfully commercialize disruptive innovations and
also suggests the development of critical, yet contra-
dictory, skill sets in order to remain successful over
time.
How can industry leaders reinvent themselves by
developing and successfully commercializing disrup-
tive innovations that challenge their existing business
models? Known as the innovator’s dilemma, Christen-
sen (1997) argued that market leaders have difficulty
diverting resources from the development of sustain-
ing innovations, which address known customer needs
in established markets, to the development of disrup-
tive innovations, which often underperform estab-
lished products in mainstream markets but offer
benefits some emerging customers value.
Christensen’s (1997) initial research focused prima-
rily on technological innovations, broadly defined as
those that introduce a different set of features, per-
formance, and price attributes relative to existing
products and technologies. In other words, techno-
logical innovations create new products based on new
underlying technological underpinnings. Over time,
further developments improve the new technology’s
performance on the attributes mainstream customers
do value, to a level where the new technology begins
to cannibalize the existing technology. This progres-
sion reflects the classic S-shaped curve prevalent in the
study of technological discontinuities (e.g., Chandy
and Tellis, 2000; Shanklin and Ryans, 1987). The
focus of this article is on these technological inno-
vations, though distinctions exist between other types
of innovations and their dimensions. For example,
Govindarajan and Kopalle (2004) distinguish disrup-
tive innovations further based on their radicalness, or
new products based on a new technology relative to
what already exists in the industry. Their empirical
research shows that all disruptive innovations are not
necessarily radical (e.g., Schwab’s discount brokerage
business model), nor are all radical innovations
necessarily disruptive (e.g., cordless phones relied on
substantially new technology relative to wired phones
but were not disruptive to the industry). Some can be
both radical and disruptive (e.g., cellular phones).
Through his studies of disruptive innovations,
Christensen (Christensen, 1997; Christensen and
Bower, 1996; Christensen and Raynor, 2003; Chris-
tensen, Scott, and Roth, 2004) has spawned a sub-
stantial stream of research investigating many aspects
of the innovator’s dilemma (e.g., Danneels, 2004).
One component of Christensen’s arguments is that
because incumbents listen too carefully to their cus-
tomers, they are disrupted by industry newcomers
that serve emerging customer segments. For example,
Christensen and Bower (1996, p. 198) state that mar-
ket-oriented firms cannot create disruptive innova-
tions since ‘‘firms lose their position of industry
leadership . . . because they listen too carefully to their
customers.’’ At its heart, this issue ties to both the se-
lection of a firm’s target market (emerging customer
segments versus existing customer segments) as well as
Address correspondence to: Stanley F. Slater, College of Business,
Colorado State University, Fort Collins, CO 80523-1275. Tel: (970)
491-2994. Fax: (970) 491-5956. E-mail: Stanley.Slater@Colostate.edu.
J PROD INNOV MANAG 2006;23:26–33
r 2006 Product Development & Management Association
the way a firm implements its market orientation (e.g.,
listening to current customers’ articulation of existing
needs or conducting proactive research on potential
customers’ unarticulated needs; see also Henderson,
this issue).
For those who study the successful commercializa-
tion of technological innovation, a logical question
arises as to the overlap between Christensen’s work
and the influential work of Geoffrey Moore in Cross-
ing the Chasm (1991, 2002). Moore’s work highlights
the difficulties firms face in commercializing new tech-
nologies, focusing on (among other things) the choice
of the initial market segment to target and how to
modify the initial marketing approach that was suc-
cessful with early adopters of the product so that
mainstream customers will also embrace the new tech-
nology. These issues were also identified in Danneels’s
(2004) critique of Christensen’s (1997) work. For ex-
ample, Danneels discusses the complexities in fore-
casting when mainstream customers will actually
embrace the new technology and in selecting a target
market for the new innovation when the firm has not
previously served customers in that target market.
Given the commonalities between Christensen’s
(1997) and Moore’s (1991, 2002) works in understand-
ing the successful development and commercialization
of technological innovations, one purpose of this ar-
ticle is to build links between Christensen’s influential
work on the innovator’s dilemma and Moore’s work
on crossing the chasm. A second purpose is to explore
whether or not a customer–market orientation is a
liability in developing disruptive innovations.
The common thread in this article binding these
two somewhat distinct purposes together is our belief
that a firm’s strategic orientation (in particular, based
on the Miles and Snow [1978] typology of prospectors,
analyzers, and defenders) offers useful insights for un-
derstanding why some firms are more successful at
commercializing technological innovations than
others. This typology is well validated and continues
to receive quite a bit of empirical attention (e.g.,
DeSarbo et al., 2005; Hambrick, 2003; Vorhies and
Morgan, 2003).
In particular, we examine how firm strategy (i.e.,
prospector, analyzer, defender) can explain success in
commercializing technological innovations with re-
spect to (1) the customer groups the firm targets;
and (2) its approach to being market oriented. For
clarity, it is important to realize that we are not
offering a new classification of Christensen’s disrup-
tive-sustaining innovation typology. Rather, we are
suggesting that by overlaying the Miles and Snow
(1978) typology of firm strategy onto the disruptive-
sustaining innovation typology, additional insights
regarding which firms are more likely to develop
and benefit from sustaining or disruptive innovations
may be gleaned.
Market Strategy and Success with
Disruptive Innovations
Market strategy is concerned with how businesses
achieve competitive advantage. Miles and Snow
(1978) developed a comprehensive framework that
addresses the alternative ways organizations define
and approach their product-market domains and con-
struct structures and processes to achieve success in
those domains. They identified three archetypes of
how firms address these issues. Prospectors seek to
locate and exploit new product and market opportu-
nities, whereas defenders attempt to seal off a portion
of the total market to create a stable set of products
and customers. Analyzers occupy a position between
the two extremes by combining the strengths of both
the prospector and defender to cautiously follow pros-
pectors into new product-market domains while pro-
tecting a stable set of products and customers.
In conjunction with Moore’s (1991, 2002) and
Christensen’s (1997) work, we draw on the market
strategy implementation literature (e.g., Matsuno and
Mentzer, 2000; Olson et al., 2005; Slater and Olson,
2001) and market orientation literature (e.g., Kohli
and Jaworski, 1990; Narver and Slater, 1990; Slater
and Narver, 1998) to refine our understanding of suc-
cess in developing and commercializing technological
innovations, as illustrated in Figure 1. Our argument
is that, based on their specific strategy type, firms de-
velop skill sets associated with success for some—but
not all—types of situations in commercializing tech-
nological innovations. For example, firms that are
adept at satisfying needs in the innovator and early
adopter segments are most likely to possess the re-
sources and capabilities to develop disruptive inno-
vations. Moreover, these firms’ specific approach to
being market oriented allows them to use innovative
research techniques to discover customer knowledge
that becomes the foundation for disruptive inno-
vation. Conversely, firms that are successful at satis-
fying needs in mainstream markets are more likely to
develop sustaining technologies or incremental inno-
vations. Their more traditional approach to market
SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION OF TECHNOLOGICAL INNOVATION J PROD INNOV MANAG
2006;23:26–33
27
listening to current customers’ articulation of existing
needs or conducting proactive research on potential
customers’ unarticulated needs; see also Henderson,
this issue).
For those who study the successful commercializa-
tion of technological innovation, a logical question
arises as to the overlap between Christensen’s work
and the influential work of Geoffrey Moore in Cross-
ing the Chasm (1991, 2002). Moore’s work highlights
the difficulties firms face in commercializing new tech-
nologies, focusing on (among other things) the choice
of the initial market segment to target and how to
modify the initial marketing approach that was suc-
cessful with early adopters of the product so that
mainstream customers will also embrace the new tech-
nology. These issues were also identified in Danneels’s
(2004) critique of Christensen’s (1997) work. For ex-
ample, Danneels discusses the complexities in fore-
casting when mainstream customers will actually
embrace the new technology and in selecting a target
market for the new innovation when the firm has not
previously served customers in that target market.
Given the commonalities between Christensen’s
(1997) and Moore’s (1991, 2002) works in understand-
ing the successful development and commercialization
of technological innovations, one purpose of this ar-
ticle is to build links between Christensen’s influential
work on the innovator’s dilemma and Moore’s work
on crossing the chasm. A second purpose is to explore
whether or not a customer–market orientation is a
liability in developing disruptive innovations.
The common thread in this article binding these
two somewhat distinct purposes together is our belief
that a firm’s strategic orientation (in particular, based
on the Miles and Snow [1978] typology of prospectors,
analyzers, and defenders) offers useful insights for un-
derstanding why some firms are more successful at
commercializing technological innovations than
others. This typology is well validated and continues
to receive quite a bit of empirical attention (e.g.,
DeSarbo et al., 2005; Hambrick, 2003; Vorhies and
Morgan, 2003).
In particular, we examine how firm strategy (i.e.,
prospector, analyzer, defender) can explain success in
commercializing technological innovations with re-
spect to (1) the customer groups the firm targets;
and (2) its approach to being market oriented. For
clarity, it is important to realize that we are not
offering a new classification of Christensen’s disrup-
tive-sustaining innovation typology. Rather, we are
suggesting that by overlaying the Miles and Snow
(1978) typology of firm strategy onto the disruptive-
sustaining innovation typology, additional insights
regarding which firms are more likely to develop
and benefit from sustaining or disruptive innovations
may be gleaned.
Market Strategy and Success with
Disruptive Innovations
Market strategy is concerned with how businesses
achieve competitive advantage. Miles and Snow
(1978) developed a comprehensive framework that
addresses the alternative ways organizations define
and approach their product-market domains and con-
struct structures and processes to achieve success in
those domains. They identified three archetypes of
how firms address these issues. Prospectors seek to
locate and exploit new product and market opportu-
nities, whereas defenders attempt to seal off a portion
of the total market to create a stable set of products
and customers. Analyzers occupy a position between
the two extremes by combining the strengths of both
the prospector and defender to cautiously follow pros-
pectors into new product-market domains while pro-
tecting a stable set of products and customers.
In conjunction with Moore’s (1991, 2002) and
Christensen’s (1997) work, we draw on the market
strategy implementation literature (e.g., Matsuno and
Mentzer, 2000; Olson et al., 2005; Slater and Olson,
2001) and market orientation literature (e.g., Kohli
and Jaworski, 1990; Narver and Slater, 1990; Slater
and Narver, 1998) to refine our understanding of suc-
cess in developing and commercializing technological
innovations, as illustrated in Figure 1. Our argument
is that, based on their specific strategy type, firms de-
velop skill sets associated with success for some—but
not all—types of situations in commercializing tech-
nological innovations. For example, firms that are
adept at satisfying needs in the innovator and early
adopter segments are most likely to possess the re-
sources and capabilities to develop disruptive inno-
vations. Moreover, these firms’ specific approach to
being market oriented allows them to use innovative
research techniques to discover customer knowledge
that becomes the foundation for disruptive inno-
vation. Conversely, firms that are successful at satis-
fying needs in mainstream markets are more likely to
develop sustaining technologies or incremental inno-
vations. Their more traditional approach to market
SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION OF TECHNOLOGICAL INNOVATION J PROD INNOV MANAG
2006;23:26–33
27
orientation is to listen to customers and to develop
innovations based on customer feedback.
However, to be successful across a range of inno-
vations (both sustaining and disruptive), firms must
also develop skill sets of other strategy types. For ex-
ample, a firm that tends to be more successful with
late majority customers may need a more proactive
approach to developing customer knowledge; new
techniques of market research may help it avoid fo-
cusing myopically only on existing customers and may
facilitate the development of disruptive technological
innovations. In essence, the capability to develop con-
tradictory skill sets is vital.
We first examine the relationship between selection
of target market and strategy type and then explore
the relationship between market orientation and
strategy type.
Selection of Target Customer Group
A widely adopted perspective on the success of new
innovations is the adoption and diffusion cycle, based
on the work of Rogers (1995). The basic premise of
the adoption and diffusion process is that there are
different categories of adopters, each with unique
characteristics and buying needs (see Table 1). These
categories of adopters fall along a normal, bell-shaped
curve, such that the bulk of the marketplace falls
within the early-majority and late-majority adopter
categories. Successful diffusion implies a smooth pro-
gression from one category of adopters to the next,
which is necessary for a firm to create leadership in its
industry.
Moore’s (1991) work built on research by Rogers
(1995) and identified the existence of a chasm, or a
gulf, between the visionaries (innovators and early
adopters) and the pragmatists (early-majority,
mainstream market). The idea of a chasm has been
Market Segments:
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
Customer Orientation
Responsive
Proactive
Performance
Market Strategy:
Prospector
Analyzer
Defender
Figure 1. Successful Development and Commercialization of
Technological Innovations
Table 1. Segments of Innovation Adopters
Segment
Descriptive
Label Characteristics
Early Market
Innovators Technology
Enthusiasts
Appreciate innovation for its own sake
Motivated by the idea of being a change agent in their reference group
Interest in new ideas leads them out of narrow circles of peers into broaders circles of innovators
Willing to tolerate initial glitches and problems that may accompany any innovation just coming
to market and are willing to develop makeshift solutions to such problems
Early Adopters Visionaries Look to adopt and use innovation to achieve a revolutionary improvement
Attracted by high-risk, high-reward projects
Because they envision great gains from adopting innovation, not very price sensitive
May demand personalized solutions and quick-response, highly-qualified sales and support
Mainstream
Market
Early Majority Pragmatists Rather than looking for revolutionary changes, motivated by evolutionary changes
to gain productivity enhancements
Averse to disruptive change; want proven applications, reliable service, and results
Want to reduce risk in the adoption of the innovation
The bulwark of the mainstream market
Late Majority Conservatives Risk averse and technology shy; price sensitive
Need completely preassembled, bulletproof solutions
Adopt innovation just to stay even; often rely on a single, trusted adviser to help them make
sense of technology
Laggards Skeptics Want only to maintain the status quo
Tend not to believe that innovation can enhance productivity and resist new technology purchases
Buy only if they believe all their other alternatives are worse and cost justification is absolutely solid
28 J PROD INNOV MANAG
2006;23:26–33
S. F. SLATER AND J. J. MOHR
innovations based on customer feedback.
However, to be successful across a range of inno-
vations (both sustaining and disruptive), firms must
also develop skill sets of other strategy types. For ex-
ample, a firm that tends to be more successful with
late majority customers may need a more proactive
approach to developing customer knowledge; new
techniques of market research may help it avoid fo-
cusing myopically only on existing customers and may
facilitate the development of disruptive technological
innovations. In essence, the capability to develop con-
tradictory skill sets is vital.
We first examine the relationship between selection
of target market and strategy type and then explore
the relationship between market orientation and
strategy type.
Selection of Target Customer Group
A widely adopted perspective on the success of new
innovations is the adoption and diffusion cycle, based
on the work of Rogers (1995). The basic premise of
the adoption and diffusion process is that there are
different categories of adopters, each with unique
characteristics and buying needs (see Table 1). These
categories of adopters fall along a normal, bell-shaped
curve, such that the bulk of the marketplace falls
within the early-majority and late-majority adopter
categories. Successful diffusion implies a smooth pro-
gression from one category of adopters to the next,
which is necessary for a firm to create leadership in its
industry.
Moore’s (1991) work built on research by Rogers
(1995) and identified the existence of a chasm, or a
gulf, between the visionaries (innovators and early
adopters) and the pragmatists (early-majority,
mainstream market). The idea of a chasm has been
Market Segments:
Innovators
Early Adopters
Early Majority
Late Majority
Laggards
Customer Orientation
Responsive
Proactive
Performance
Market Strategy:
Prospector
Analyzer
Defender
Figure 1. Successful Development and Commercialization of
Technological Innovations
Table 1. Segments of Innovation Adopters
Segment
Descriptive
Label Characteristics
Early Market
Innovators Technology
Enthusiasts
Appreciate innovation for its own sake
Motivated by the idea of being a change agent in their reference group
Interest in new ideas leads them out of narrow circles of peers into broaders circles of innovators
Willing to tolerate initial glitches and problems that may accompany any innovation just coming
to market and are willing to develop makeshift solutions to such problems
Early Adopters Visionaries Look to adopt and use innovation to achieve a revolutionary improvement
Attracted by high-risk, high-reward projects
Because they envision great gains from adopting innovation, not very price sensitive
May demand personalized solutions and quick-response, highly-qualified sales and support
Mainstream
Market
Early Majority Pragmatists Rather than looking for revolutionary changes, motivated by evolutionary changes
to gain productivity enhancements
Averse to disruptive change; want proven applications, reliable service, and results
Want to reduce risk in the adoption of the innovation
The bulwark of the mainstream market
Late Majority Conservatives Risk averse and technology shy; price sensitive
Need completely preassembled, bulletproof solutions
Adopt innovation just to stay even; often rely on a single, trusted adviser to help them make
sense of technology
Laggards Skeptics Want only to maintain the status quo
Tend not to believe that innovation can enhance productivity and resist new technology purchases
Buy only if they believe all their other alternatives are worse and cost justification is absolutely solid
28 J PROD INNOV MANAG
2006;23:26–33
S. F. SLATER AND J. J. MOHR
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