ABSTRACT
This chapter analyzes the foundation for creating, capturing and sustaining innovation, along with principal rules of engagement for successful innovation. Innovation-driven growth theory will never fully explain everything about innovation and the success of the firm. Because some of the technologies were a success and others less so, it shows that future retailers will need to continuously innovate in terms of their retail strategies to intuitively engage and adapt to the individual customer if they are to create and capture value. By managing the innovation formula, executives are able to nurture breakthrough innovation streams and gain a sustainable competitive advantage. Incremental innovation takes less time and involves less risk compared to discontinuous innovation, which helps explain why executives favour it and usually follow 'observe and apply' replication practices. In other industries, such as the automotive and aviation industries, innovation is labelled research and development.
