The three faces of corporate renewal: Institution, revolution, and evolution

Abstract We examine corporate renewal by taking a structural approach and focusing on the routines and rules that are part of large, established, bureaucratic organizations. We characterize approaches to the management of innovation in terms of three different themes–institutional, revolutional, and evolutional strategies. The first two approaches involve intentional efforts to encourage innovation, either within the current organizational paradigm (institutionalizing innovation) or moving away from it (revolutionary innovation), while the evolutional approach involves less conscious efforts to manage what is viewed as a random, probabilistic process. This paper uses simulation methodology to explore the effectiveness of these strategies on organizational innovation, performance, and resources. The behavior of the simulated organizational units is guided by assumptions of a learning model. Results indicate that innovation strategies sometimes have unintended effects that are both positive and negative in nature. Several lessons on managing innovation are offered.