Harvard Business Review 
 
 
 

     Over a decade ago, we researched the roots of profitable growth and found that innovation was the key driver.  This finding is consistent with the New Growth Theory of economics, spearheaded by Paul Romer, which established that innovation is the central determinant of the wealth creation and economic growth potential of nations.  Since then, our research has focused on how companies actually make innovations happen.  We have built up a database on over a hundred companies that have innovated successfully and repeatedly.  We've also collected data on the companies whose products and services our innovators have displaced.  We've drawn on all this information to understand what underpins the commercial success of a new idea, whatever the market space it occupies or creates.  The result is three analytic tools, based on the underlying economics of utility, price, and cost, that help managers know a winner - a commercially successful new business with a strong future - when they see it.   The first tool, "The Buyer Utility Map," indicates how likely it is that customers will be attracted to a new business idea.  The second tool, the 'The Price Corridor of the Mass", helps identify what price will unlock the mass of customers. The third tool, "The Business Model Guide" offers a framework to help figure out whether and how a company can profitably deliver on the new idea at the targeted price.  The article concludes with a discussion of adoption hurdles such as employee, partner, or societal resistance to innovation.  While often overlooked in the planning process, adoption hurdles can make or break the commercial viability of even the most powerful innovative ideas.   The paper explores how managers can head off those reactions.