ABSTRACT
Developing new products and services on a regular basis is one of the key activities for many organizations. New products are a means to gain market share and ensure the viability of companies. They have been referred to as the crucial sources for competitive advantage (Tushman and O’Reilly 1997; Dougherty 1999). This is also the case for incremental product innovations. Incremental product innovations are not radically different from the current product portfolio, but are often refinements and extensions of existing products of a company and seem to involve primarily exploitation-oriented activities (cf. March 1991). Incremental product innovation is, therefore, a critically important competitive factor in established industries and focuses on leveraging a firm’s existing resources and capabilities and, as such, requires primarily routine procedures and capabilities (Nelson and Winter 1982; Leonard 1998). Although the relation between incremental product innovation and competitiveness has largely been reported in studies on the manufacturing industry (e.g. Clark and Fujimoto 1991; Wheelright and Clark 1992; Banbury and Mitchell 1995; Pisano 1997), we will demonstrate in this book that it is also the case for companies in the service sector such as banks, insurance companies, airlines or travel companies.
