How to Manage Radical Innovation

Three of the people attending the meeting in a Chicago suburb were going broke. They had spent most of their money and all of their time for the past two years trying to commercialize a radical innovation called “Liquid Life,” an all-natural beverage made 100% from pureed fruit. They had developed an attractive plastic package, six good tasting flavors, and eye catching point-of-sale promotional materials. Grocery stores had told them they loved the idea and would gladly carry the product. However, consumers knew nothing about “Liquid Life” and it would take millions of dollars to commercialize the innovation the way the three entrepreneurs wanted to do it. Now, they had run out of money and time. Four other people were at the meeting. Two were investment bankers, one a venture capitalist, and one a vice-president from Big Food, Inc., a Fortune 100 food and beverage company. Three of these four tried, once again, to convince the “Liquid Life” entrepreneurs to sell their ideas and technology to the food company. Once again, this advice was met with an emotional refusal. The argument was always the same: the food company loved the breakthrough technology and was desperate for a radical new idea that might pump life into one of its existing product categories, but they could not pay much for an unproved innovation. The “Liquid Lifers” loved the idea of having a big company's resources behind them, but they knew the food company would strangle their commercialization dreams and control the way they developed future products. None of them wanted to join a large—though very successful—public company. The investment bankers had brought the food company to the meeting and advised the “Liquid Lifers” to sell. The venture capitalist wasn't so sure.