Winning in business today demands innovation. Companies that innovate reap all the advantages of a first mover. They acquire a deep knowledge of new markets and develop strong relationships within them. Innovators also build a reputation of being able to solve the most challenging problems. That’s why corporations spend billions of dollars each year trying to identify opportunities for innovation—unsolved problems or unmet needs, things that don’t fit or don’t work. They set up learning laboratories where they can stretch their thinking, extend their capabilities, experiment with new technologies, get feedback from early users about product potential, and gain experience working with underserved and emerging markets.
A version of this article appeared in the May–June 1999 issue of Harvard Business Review.