A marketing study performed at University of Illinois at Urbana-Champaign shows that a technology focus is necessary to generate breakthroughs and that a customer focus only brings in incremental improvements.

Groundbreaking ideas spring most from companies that stress technology, rather than customer needs or staying ahead of competitors, according to research that will appear in the Journal of Product Innovation Management.

Firms that focus on their competitors or customers generate more new product suggestions than technology-based companies, the study found. But the ideas typically net only subtle advances, such as the slow evolution of wireless reading devices, rather than breakthroughs similar to the shift from compact discs to music downloads.

These results make sense intuitively.  The key point in my mind is that an organization needs both – breakthroughs and incremental improvements.  In fact, incremental improvements are critical for day-to-day operations of a business.  The need then is to achieve both through a balanced approach to R&D management.  A careful set of portfolio balancing tools are needed that allow organizations to fund breakthrough ideas and incremental improvements.