This chapter focuses on the complexity of innovation strategies and the distinction between incremental and radical innovation in particular. It argues that the type of innovation asks for other types of knowledge to be created and shared and also focuses on the concepts of related and unrelated knowledge. The chapter suggests that certain knowledge management practices improve incremental product innovation performance, while others are more appropriate for radical product innovation. It also argues that the type of knowledge that is transferred and created plays a determining role in stimulating incremental versus radical innovation. Crucial to innovation and the subsequent development of sustainable competitive advantage is the organization’s ability to create and transfer knowledge. Tacit knowledge is considered to be the crucial ingredient of innovation and a source of sustained competitive advantage because it is unique, valuable, scarce and inimitable, and can only be acquired and exchanged through experience and interaction with others.