Knowledge-based industries such as technology, life sciences and e-commerce are fundamentally driven by innovation: developing new approaches, products and services to solve customer problems. While most companies rightly place huge value on innovation, it creates five unique business challenges:

1. Launching new products or services - The first practical output, and thus business challenge, of innovation is a new product or service. Since product lifecycles are getting shorter and competition is fierce, businesses must constantly strive to create new offerings or risk getting left behind. This may include a brand new product or service, or an improved "twist" on an existing one. However, most new product launches fail due to their inability to clearly target and meet customer needs. This is particularly true of very new technologies, where it is difficult to anticipate how much and for what purpose the customer might use the innovation.
2. Entering new markets - A second business challenge of innovation is taking products into new markets. Within your core market, you may have developed brand recognition, trust, and customer loyalty. When targeting new groups of customers, even ones similar to your core market, do not underestimate the difficulty of rebuilding that type of awareness and credibility. In many ways, entering a new market even with an established product is like launching a brand new business.
3. Re-launching/repositioning business or products - Despite management's best efforts, many companies first efforts at product launch or market entry do not proceed as hoped. New products may be initially presented as meeting too broad a range of needs and markets, or the initial concept of why the market wants your product or service proves incorrect. As a result, the third business challenge of innovation is to reposition your offering. The relaunching process essentially involves re-educating your market and changing their earlier perception of your business. This may mean simply revitalizing an existing product, or completely rebranding your offering, targeting an entirely different set of needs.
4. Launching an online channel or business - For many businesses, one of the biggest current forms of innovation is not product or market, but channel. The hype surrounding the dot-com era drove business into an over-optimistic frenzy followed by a "doomsday" crash. Through these financial market machinations, the Internet and e-commerce have continued to grow every year in importance as a new channel. This poses a fourth substantial business challenge for many companies, as the online channel disrupts previously stable patterns of communication and distribution.
5. Growing beyond early adopters - The fifth business challenge of innovation, made famous by Geoffrey Moore in his book Crossing the Chasm, is how to reach the mainstream market. The first customers to subscribe to your new product or offering will be early adopters - visionaries, "tech geeks," and so forth. However, typically these early adopters make up just 5 - 15% of any market. To grow beyond them, companies must reach the majority of customers - who buy products using very different criteria from the early adopters. What worked for the visionaries will not work for the broader market. Many new products fail because they cannot move beyond this "chasm" between the early adopters and the large, mainstream market.

The Innovator's Solution: Creating and Sustaining Successful Growth
By Clayton Christensen and Michael Raynor

Marketing High Technology
By William H. Davidow