J PROD INNOV MANAG 2006;23:2633
r 2006 Product Development & Management Association
Successful Development and Commercialization of
Technological Innovation: Insights Based on Strategy Type
Stanley F. Slater and Jakki J. Mohr
H
ow can market leaders avoid the innovators
dilemma and continually develop disruptive
innovations to retain their leadership posi-
tion? We argue that the capability to successfully de-
velop and commercialize one type of disruptive
innovationtechnological innovationis based on
the interaction between a rms strategic orientation
(Prospector, Analyzer, Defender) and (1) its selection
of target market; and (2) the way it implements its
market orientation. The insights offered by this
framework assist in predicting whether a rms stra-
tegic orientation enhances or thwarts its ability to
successfully commercialize disruptive innovations and
also suggests the development of critical, yet contra-
dictory, skill sets in order to remain successful over
time.
How can industry leaders reinvent themselves by
developing and successfully commercializing disrup-
tive innovations that challenge their existing business
models? Known as the innovators dilemma, Christen-
sen (1997) argued that market leaders have difculty
diverting resources from the development of sustain-
ing innovations, which address known customer needs
in established markets, to the development of disrup-
tive innovations, which often underperform estab-
lished products in mainstream markets but offer
benets some emerging customers value.
Christensens (1997) initial research focused prima-
rily on technological innovations, broadly dened as
those that introduce a different set of features, per-
formance, and price attributes relative to existing
products and technologies. In other words, techno-
logical innovations create new products based on new
underlying technological underpinnings. Over time,
Address correspondence to: Stanley F. Slater, College of Business,
Colorado State University, Fort Collins, CO 80523-1275. Tel: (970)
491-2994. Fax: (970) 491-5956. E-mail: Stanley.Slater@Colostate.edu.
further developments improve the new technologys
performance on the attributes mainstream customers
do value, to a level where the new technology begins
to cannibalize the existing technology. This progres-
sion reects the classic S-shaped curve prevalent in the
study of technological discontinuities (e.g., Chandy
and Tellis, 2000; Shanklin and Ryans, 1987). The
focus of this article is on these technological inno-
vations, though distinctions exist between other types
of innovations and their dimensions. For example,
Govindarajan and Kopalle (2004) distinguish disrup-
tive innovations further based on their radicalness, or
new products based on a new technology relative to
what already exists in the industry. Their empirical
research shows that all disruptive innovations are not
necessarily radical (e.g., Schwabs discount brokerage
business model), nor are all radical innovations
necessarily disruptive (e.g., cordless phones relied on
substantially new technology relative to wired phones
but were not disruptive to the industry). Some can be
both radical and disruptive (e.g., cellular phones).
Through his studies of disruptive innovations,
Christensen (Christensen, 1997; Christensen and
Bower, 1996; Christensen and Raynor, 2003; Chris-
tensen, Scott, and Roth, 2004) has spawned a sub-
stantial stream of research investigating many aspects
of the innovators dilemma (e.g., Danneels, 2004).
One component of Christensens arguments is that
because incumbents listen too carefully to their cus-
tomers, they are disrupted by industry newcomers
that serve emerging customer segments. For example,
Christensen and Bower (1996, p. 198) state that mar-
ket-oriented rms cannot create disruptive innova-
tions since rms lose their position of industry
leadership . . . because they listen too carefully to their
customers. At its heart, this issue ties to both the se-
lection of a rms target market (emerging customer
segments versus existing customer segments) as well as
SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION OF TECHNOLOGICAL INNOVATION
the way a rm implements its market orientation (e.g.,
listening to current customers articulation of existing
needs or conducting proactive research on potential
customers unarticulated needs; see also Henderson,
this issue).
For those who study the successful commercializa-
tion of technological innovation, a logical question
arises as to the overlap between Christensens work
and the inuential work of Geoffrey Moore in Cross-
ing the Chasm (1991, 2002). Moores work highlights
the difculties rms face in commercializing new tech-
nologies, focusing on (among other things) the choice
of the initial market segment to target and how to
modify the initial marketing approach that was suc-
cessful with early adopters of the product so that
mainstream customers will also embrace the new tech-
nology. These issues were also identied in Danneelss
(2004) critique of Christensens (1997) work. For ex-
ample, Danneels discusses the complexities in fore-
casting when mainstream customers will actually
embrace the new technology and in selecting a target
market for the new innovation when the rm has not
previously served customers in that target market.
Given the commonalities between Christensens
(1997) and Moores (1991, 2002) works in understand-
ing the successful development and commercialization
of technological innovations, one purpose of this ar-
ticle is to build links between Christensens inuential
work on the innovators dilemma and Moores work
on crossing the chasm. A second purpose is to explore
whether or not a customermarket orientation is a
liability in developing disruptive innovations.
The common thread in this article binding these
two somewhat distinct purposes together is our belief
that a rms strategic orientation (in particular, based
on the Miles and Snow [1978] typology of prospectors,
analyzers, and defenders) offers useful insights for un-
derstanding why some rms are more successful at
commercializing technological innovations than
others. This typology is well validated and continues
to receive quite a bit of empirical attention (e.g.,
DeSarbo et al., 2005; Hambrick, 2003; Vorhies and
Morgan, 2003).
In particular, we examine how rm strategy (i.e.,
prospector, analyzer, defender) can explain success in
commercializing technological innovations with re-
spect to (1) the customer groups the rm targets;
and (2) its approach to being market oriented. For
clarity, it is important to realize that we are not
offering a new classication of Christensens disrup-
tive-sustaining innovation typology. Rather, we are
J PROD INNOV MANAG 27
2006;23:2633
suggesting that by overlaying the Miles and Snow
(1978) typology of rm strategy onto the disruptive-
sustaining innovation typology, additional insights
regarding which rms are more likely to develop
and benet from sustaining or disruptive innovations
may be gleaned.
Market Strategy and Success with
Disruptive Innovations
Market strategy is concerned with how businesses
achieve competitive advantage. Miles and Snow
(1978) developed a comprehensive framework that
addresses the alternative ways organizations dene
and approach their product-market domains and con-
struct structures and processes to achieve success in
those domains. They identied three archetypes of
how rms address these issues. Prospectors seek to
locate and exploit new product and market opportu-
nities, whereas defenders attempt to seal off a portion
of the total market to create a stable set of products
and customers. Analyzers occupy a position between
the two extremes by combining the strengths of both
the prospector and defender to cautiously follow pros-
pectors into new product-market domains while pro-
tecting a stable set of products and customers.
In conjunction with Moores (1991, 2002) and
Christensens (1997) work, we draw on the market
strategy implementation literature (e.g., Matsuno and
Mentzer, 2000; Olson et al., 2005; Slater and Olson,
2001) and market orientation literature (e.g., Kohli
and Jaworski, 1990; Narver and Slater, 1990; Slater
and Narver, 1998) to rene our understanding of suc-
cess in developing and commercializing technological
innovations, as illustrated in Figure 1. Our argument
is that, based on their specific strategy type, rms de-
velop skill sets associated with success for somebut
not alltypes of situations in commercializing tech-
nological innovations. For example, rms that are
adept at satisfying needs in the innovator and early
adopter segments are most likely to possess the re-
sources and capabilities to develop disruptive inno-
vations. Moreover, these rms specific approach to
being market oriented allows them to use innovative
research techniques to discover customer knowledge
that becomes the foundation for disruptive inno-
vation. Conversely, rms that are successful at satis-
fying needs in mainstream markets are more likely to
develop sustaining technologies or incremental inno-
vations. Their more traditional approach to market
28 J PROD INNOV MANAG S. F. SLATER AND J. J. MOHR
2006;23:2633

Market Strategy: We rst examine the relationship between selection

Prospector
Analyzer
of target market and strategy type and then explore
Defender the relationship between market orientation and
Market Segments: strategy type.
Innovators
Early Adopters
Early Majority
Late Majority Performance
Laggards Selection of Target Customer Group
Customer Orientation
Responsive
A widely adopted perspective on the success of new
Proactive innovations is the adoption and diffusion cycle, based
Figure 1. Successful Development and Commercialization of on the work of Rogers (1995). The basic premise of
Technological Innovations the adoption and diffusion process is that there are
different categories of adopters, each with unique
orientation is to listen to customers and to develop characteristics and buying needs (see Table 1). These
innovations based on customer feedback. categories of adopters fall along a normal, bell-shaped
However, to be successful across a range of inno- curve, such that the bulk of the marketplace falls
vations (both sustaining and disruptive), rms must within the early-majority and late-majority adopter
also develop skill sets of other strategy types. For ex- categories. Successful diffusion implies a smooth pro-
ample, a rm that tends to be more successful with gression from one category of adopters to the next,
late majority customers may need a more proactive which is necessary for a rm to create leadership in its
approach to developing customer knowledge; new industry.
techniques of market research may help it avoid fo- Moores (1991) work built on research by Rogers
cusing myopically only on existing customers and may (1995) and identied the existence of a chasm, or a
facilitate the development of disruptive technological gulf, between the visionaries (innovators and early
innovations. In essence, the capability to develop con- adopters) and the pragmatists (early-majority,
tradictory skill sets is vital. mainstream market). The idea of a chasm has been

Table 1. Segments of Innovation Adopters

Descriptive
Segment Label Characteristics

Early Market
Innovators Technology Appreciate innovation for its own sake
Enthusiasts Motivated by the idea of being a change agent in their reference group
Interest in new ideas leads them out of narrow circles of peers into broaders circles of innovators
Willing to tolerate initial glitches and problems that may accompany any innovation just coming
to market and are willing to develop makeshift solutions to such problems
Early Adopters Visionaries Look to adopt and use innovation to achieve a revolutionary improvement
Attracted by high-risk, high-reward projects
Because they envision great gains from adopting innovation, not very price sensitive
May demand personalized solutions and quick-response, highly-qualied sales and support
Mainstream
Market
Early Majority Pragmatists Rather than looking for revolutionary changes, motivated by evolutionary changes
to gain productivity enhancements
Averse to disruptive change; want proven applications, reliable service, and results
Want to reduce risk in the adoption of the innovation
The bulwark of the mainstream market
Late Majority Conservatives Risk averse and technology shy; price sensitive
Need completely preassembled, bulletproof solutions
Adopt innovation just to stay even; often rely on a single, trusted adviser to help them make
sense of technology
Laggards Skeptics Want only to maintain the status quo
Tend not to believe that innovation can enhance productivity and resist new technology purchases
Buy only if they believe all their other alternatives are worse and cost justication is absolutely solid
SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION OF TECHNOLOGICAL INNOVATION
empirically validated in work by Goldenberg, Libai,
and Muller (2002). In their study of the pattern of
diffusion of a large number of innovative products in
the consumer electronics industry, they found
that between one-third and one-half of the cases
exhibited a saddle (i.e., a lull in sales after initial
market take-off that stymied the steady adoption and
diffusion process). Their work also showed that word-
of-mouth effects among categories of adopters
(i.e., cross-market communication) were the critical
factor in determining the size and duration of the
sales slump.
Some rms are able to reach only a small niche
market of technology enthusiasts, whereas other rms
are able to successfully commercialize their inventions
by reaching a broader base of customers in the main-
stream market as well. Moore (1991) argued that the
chasm arises because (1) critical differences between
visionaries and pragmatists make cross-market com-
munication extremely difcult for technological inno-
vations (e.g., Goldenberg, Libai, and Muller, 2002);
and, more critically, (2) the marketing strategies rms
use to effectively reach the early market for technol-
ogy innovations do not speak to the very different
needs of the mainstream market.
The question is to what extent a rms strategy type
affects its ability to be successful at marketing to
various categories of adopters, which is where the
intersection of rm strategy and success in commer-
cializing technology innovations becomes relevant.
Insights from Market Strategy
Because market segmentation and targeting are
the foundation of market strategy, rm performance
is determined, at least in part, by the match between
target market selection and market strategy type. The
importance of this match is highlighted in a recent
study of technology-oriented businesses by Slater,
Hult, and Olson (2005), who examined the perform-
ance implications of targeting customer adoption
categories by strategy type. For prospectors, they
found a positive relationship between targeting the
innovator and early-adopter segments and perform-
ance and a negative relationship between targeting the
early-majority segment and performance. This sug-
gests that prospectors, who excel at exploiting new
product and market opportunities, have a difcult
time reaching out to more mainstream customers
to successfully commercialize their technological
J PROD INNOV MANAG 29
2006;23:2633
innovations. Conversely, for analyzers, they found a
positive relationship between targeting the early-
adopter and early-majority segments and perform-
ance and a negative relationship between targeting the
innovator segment and performance; this latter nd-
ing implies that analyzers may not have the capabil-
ities to develop the innovations that technology
enthusiasts value.
The ndings from Slater, Hult, and Olson (2005)
and related studies (Conant, Mokway, and Varadara-
jan, 1990; Slater and Olson, 2001), which suggest that
different strategy types have resources and capabilities
that enable them to successfully target different mar-
ket segments, are quite consistent with Christensens
(1997) work. Market-share leaders tend to be anal-
yzers and defenders because those strategy types
target the early- and late-majority segments of the
market comprising approximately two-thirds of mar-
ket demand. Of course, there is variation in the size of
the categories based on the nature of the innovation
and how its benets are communicated, but the idea
of a normal, bell-shaped distribution is widely accept-
ed and has been conrmed by research using the Bass
model (e.g., Mahajan, Muller, and Bass, 1990). Anal-
yzers and defenders also have the marketing and
operational competencies to succeed in those seg-
ments (Slater and Olson, 2001; Slater, Hult, and
Olson, 2005). As Christensen notes, these market
leaders are largely unsuccessful when attempting to
introduce innovations into niche markets. One key
reason for this is that defenders prefer predictability;
as a result, they tend to be neither innovation nor
technology oriented. In contrast, analyzers, though
not as risk averse as defenders, prefer incremental in-
novation to disruptive innovation.
A critical implication arising from this inter-
section of strategy type and selection of target
market is the idea that businesses must develop
what are often contradictory resources and capabili-
ties to be successful in appealing to a wide range of
customer types. For example, for prospectors to
appeal successfully to all categories of adopters, they
must develop some of the resources and capabilities of
analyzers. Similarly, for analyzers and defenders to
avoid the innovators dilemma by successfully devel-
oping and introducing disruptive innovations that
appeal to technology enthusiastscustomers in the
early marketthey must develop some prospector
resources and capabilities. More specific insights
related to these ideas are discussed in the conclusion
section.
30 J PROD INNOV MANAG
2006;23:2633
Market Orientation
Another key factor determining a rms ability to
successfully develop and commercialize technological
innovation is how it comes to understand customer
needs. As noted at the outset, experts have essentially
taken two views in this regard. On the one hand,
Christensen (1997, p. 18) stated that established rms
are held captive by their customers (i.e., they listen
too carefully to them). As a result, Danneels (2004)
points out that Christensens work has often been cit-
ed as an argument against a customer orientation. On
the other hand, Slater and Narver (1998) drew on an
extensive body of research concerning the nature and
benets of a market-oriented culture to argue that
market-oriented businesses can avoid the innovators
dilemma by being committed to understanding both
the expressed and latent needs of their customers
through the processes of acquiring and evaluating
market information in a systematic and proactive
manner and to continuously creating superior cus-
tomer value. To what extent are these views of the
value of being customer oriented at odds with each
other? And to what extent does understanding of rm
strategy inform this debate?
Recent research (Atuahene-Gima et al., 2005; Nar-
ver, Slater, and MacLachlan, 2004) has shown that a
proactive market-oriented culture is more strongly as-
sociated with innovativeness and new product success
than is a customer-led culture. A proactive market
orientation involves a set of behaviors through which
a business attempts to discover, to understand, and to
satisfy the latent needs of customers. Atahuene-Gima
(1995, p. 287) concluded that market orientation is
more strongly related to new product performance at
the early stage of the product life cycle than at the late
stage . . . Such an environment seems to warrant
greater market intelligence and information sharing
within the rm. Moreover, recent research by Go-
vindarajan and Kopalle (2004) shows that rms able
to develop truly disruptive innovations have a cus-
tomer orientation focused on emerging customer seg-
ments rather than on mainstream customer segments.
Indeed, a customer orientation focused on main-
stream customer segments is shown to inhibit the
development of disruptive innovations. Importantly,
these two dimensions of customer orientation are not
on opposite ends of a continuum but are independent
of each other, suggesting that rms can develop both
orientations simultaneously (see also Narver, Slater,
and MacLachlan, 2004).
S. F. SLATER AND J. J. MOHR
One implication from these ndings is the need to
distinguish between current and potential customers.
Being customer oriented does not imply an exclusive
focus on current customers. Instead, a customer-
oriented rm can serve current customers and remain
vigilant for unserved merging markets (see also Day,
1999; Chandy and Tellis, 1998). Further, as Danneels
(2004) notes, if rms had a deep understanding of
their customers needsboth expressed as well as la-
tent and unexpressed (Slater and Narver, 1998)then
the more reactive, narrow notion of customer orien-
tation would be rejected.
Insights from Market Strategy
We suggest that Christensens (1997; Christensen and
Bower, 1996) and Slater and Narvers (1998) positions
are not necessarily in conict with one another but
rather are on different sides of the same coin and are
resolved by understanding how a rms strategy type
informs its specific approach to being market orient-
ed. Defenders and, to a lesser degree, analyzers are
much more likely to be constrained by two factors.
First, the tyranny of the served market (Hamel and
Prahalad, 1994)or a tendency for rms to focus very
specifically on solving existing customers needs with
a current technologyobscures the possibility that
customer needs may change over time and may be
solved in radically different ways. Second, core rig-
idities (Leonard-Barton, 1992) result in preferences
for information sources and existing views of the mar-
ket, in turn strangling a rms ability to innovate.
Analyzers and defenders listen too closely to custom-
ers, which can inhibit innovation, constraining it to
ideas customers can envision and articulate and lead-
ing to safe, but bland, offerings. This may be due to a
variety of reasons, such as customers giving marketers
bad information. For example, during a marketing
research project, customers may say they love a new-
product idea but then not buy the product when it
comes out on the market. Marketers may also need to
ignore feedback about what customers say they do
not want. For example, some products that met with
initial customer resistance included fax machines and
overnight express delivery. On the other hand, pros-
pectors, by nature, possess corporate imagination
(Hamel and Prahalad, 1991), which enables them to
replenish their stock of ideas continuously; they
have an ability to create a vision of the future con-
sisting of markets that do not yet exist and based on a
SUCCESSFUL DEVELOPMENT AND COMMERCIALIZATION OF TECHNOLOGICAL INNOVATION J PROD INNOV MANAG 31
2006;23:2633

Table 2. Research Tools for High-Tech Markets

Customer Visit Systematic process of visiting customers with a cross-functional team to understand customer needs.
Program Benets include:
 face-to-face communication to facilitate the transfer of complex, ambiguous, and novel information
 eld research that enables personnel to see the product in use, to talk to actual users of the product, and
to gain a better understanding of the products role in the customers total operation
 rsthand knowledge of customers problems and needs
 interactive conversation that allows for clarication, follow-up, switching gears, and addressing surprising
and unexpected insights
 interaction with multiple decision makers to learn about all of the players various needs and desires
Empathic Design Based on the idea that users may not be able to articulate their needs clearly; focuses on understanding user
needs through empathy with the user world rather than from users direct articulation of their needs.
For example, users may have developed workaroundsmodications to usage situations that are
inconvenient yet so habitual that users are not even conscious of them. Or customers may not be able to
envision the ways new technology could be used.
Based in anthropology and ethnography, empathic design allows the marketer to develop a deep
understanding of the current user environment, to extrapolate the evolution of that environment into the
future, and to imagine the future need that technology can satisfy.
Lead-User Process Collects information about both needs and solutions from the leading edges of a companys target market
and from markets facing similar problems. Lead users may have needs months or years before the mass
market and, as such, are positioned to benet significantly by obtaining early solutions to those needs.
Customers that tend to innovate are lead userscustomers that are well ahead of market trends and have
needs that go far beyond those of the average user. In some cases, lead users may have developed a solution
to their needs that marketers can then commercialize for other users.
Research on Focuses on downstream markets to generate market intelligence; provides understanding of downstream
Customers Customers customers preferences, allowing for new insights and avoiding surprises in the market.
Target developing Provides a unique opportunity to inspire radical innovations with price-performance breakthroughs
markets (Prahalad, 2004).
For example, a car being developed for the Indian market will sell for $3,000. While it lacks sophistication
demanded by developed markets, the cost structure of parts and subsystems for this car pose a major
disruption to suppliers of the major auto rms.

horizon not conned by the boundaries of the current
business.
Once again, analyzers and defenders must augment
their skill sets with those more characteristic of
prospectors. One means for doing this is to rely on
novel types of market research to provide new types of
insights for innovation. For example, customers may
not always be able to articulate their needs; that is,
they have needs of which they are not aware; the needs
are real but are not yet in the customers awareness. If
these needs are not satised by a provider, there is no
customer demand or response. They are not dissatis-
ed, because the need is unknown to them. If a pro-
vider understands such a need and fullls it, the
customer is rapidly delighted. Based on this belief,
useful information can be gleaned through observa-
tion of what customers do under normal, natural con-
ditions.
The techniques overviewed in Table 2 offer insights
based on how customers behave rather than on what
they say (Leonard-Barton, 1995; Mohr, Sengupta,
and Slater, 2005). If implemented correctly, custom-
er-visit programs, empathic design, lead-user re-
search, end-user (customers of customers) research,
and targeting developing markets can reveal new piec-
es of information that may have a direct impact on
developing innovative products or services.
Conclusion
In order to successfully develop and commercialize
disruptive innovations, not only does the rm need to
conceptualize and develop the innovation in the rst
place; it must also be successful in reaching more than
just a niche market of innovatorsearly adopters. In
other words, it must overcome the innovators dilem-
ma as well as cross the chasm. These two problems
faced by all rmsbut especially those operating in
high-technology markets or driven by technological
innovationsare related in that they both derive from
the underlying skill set the rm brings to its marketing
strategy.
32 J PROD INNOV MANAG
2006;23:2633
Firms typically become industry leaders (analyzers,
defenders) by appealing to a broad base of customers
in the marketplace (i.e., the mainstream market) and
by continually meeting their needs for value over time.
These rms are able to develop sustaining innovations
based on customer input to continually hold their
position of market leadership. But, paradoxically,
these very skills put them at risk of being out-
innovated by industry newcomers.
The root causes of the innovators dilemma are
the tyranny of the served market and core rigidities
most common to analyzer and defender rms. To
solve the innovators dilemma, a rm must attack
the root causes of the dilemma by developing new
ways of looking at the world developing proactive
market learning competencies such as the ones we
described.
On the other hand, based on their ability to see
opportunity from a fresh perspective, industry new-
comersor prospectorsare able to develop disrup-
tive innovations that appeal to emerging market
segments and to eventually supersede prior industry
leaders. Whether or not these industry newcomers are
able to successfully establish themselves in any indus-
try depends critically on their ability to augment their
skill set with the capabilities to serve mainstream cus-
tomers as well. To penetrate the mainstream market,
prospectors must expand their focus from the inno-
vator and early-majority segments and must demon-
strate clear advantage over existing solutions (Rogers,
1995). They must develop distribution systems that
reach the mainstream market and offer their products
at a lower price to reduce the nancial risk associated
with adopting the innovation (Slater and Olson,
2001). Not every prospector can develop analyzer-
like marketing capabilities, nor should they. Often,
it makes more sense for the prospector to ally with
another organization already possessing these
capabilities.
Blending the insights from market strategy with
those from innovation management may illuminate
why some rms succeed with disruptive innovations
and others do not. Importantly, augmenting a rms
capabilities based on other strategy types can be crit-
ical to ongoing success.
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