MIT Sloan Management Review on Mastering Innovation's Toughest Trade-Offs

Innovation is frustratingly hit-or-miss. More than 90% of high-potential ventures fail to meet projected targets, while roughly 75% of the products released each year bomb.1 Few established organizations remain dominant over time, as revitalization efforts fail or backfire, costing companies time and money and creating openings for competitors; even fewer generate above-average shareholder returns for more than a couple of years.

These failures are often attributed to a lack of money, talent, or luck. But we think the underlying cause is that innovation in dynamic environments — those characterized by novelty, resource constraints, and uncertainty — is rife with critical tensions. When left unaddressed or mishandled, these tensions sink teams and organizations. Until now, there has been little focus on these tensions in practice or theory, leaving leaders blind to their existence and without the rigorous approaches needed to successfully manage them.

About the Author

Christopher B. Bingham is the Philip Hettleman Distinguished Professor of Strategy and Entrepreneurship at Kenan-Flagler Business School at the University of North Carolina at Chapel Hill. Rory M. McDonald is the Thai-Hi T. Lee Associate Professor of Business Administration at Harvard Business School. They are the authors of Productive Tensions: How Every Leader Can Tackle Innovation’s Toughest Trade-Offs (MIT Press, 2022), from which this article is adapted.

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