Life‐Cycle Flexibility: How to Measure and Improve the Innovative Capability in Turbulent Environments*

Managing innovation in rapidly moving environments, such as Interned‐based services, is a major challenge for the consolidated theories on product and service development. The innovation management literature identifies flexibility as the right way for coping with these challenges. By increasing the development process flexibility, it is possible to reduce the development time as well as the time and cost needed for last‐minute concept changes. But this is not enough. The product or service must also be flexible after it has been released: A life‐cycle flexibility (LCF) must be pursued. Focused on the Italian on‐line discount brokers industry, this article is a result of a two‐staged research process that started with a qualitative explorative phase (i.e., case‐study methodology) and ended with a quantitative explorative one (i.e., questionnaire methodology). It identifies three different LCF dimensions—frequency of adaptation, rapidity of adaptation, and quality of adaptation—and it defines a metric for each of them. Subsequently, it identifies five managerial and organizational practices that increase at least one of the three LCF dimensions: (1) to manage the back‐end technological competences; (2) to share the front‐end technological competences with external suppliers; (3) to utilize open and standard technologies; (4) to have a low formalization of the new service development (NSD) procedures; and (5) to have high formalization of the NSD organization.