Dealing With Discontinuity Continuous innovation is the lifeblood of organisations. They survive or fail, grow or decline, depending on how good they are at product or service innovation as well as process innovation. When companies are mature and operating in mature markets, they develop sophisticated suites of routines that they constantly modify through an adaptive learning process to retain competitive edge, pushing the boundaries of existing products and processes. In this phase of a firm‘s life, there is a high degree of imitation and an incremental pattern to innovation in products and processes. Dramatic changes can occur, however, every now and then. A new technology or a political or regulatory change for example rewrites the rules of the game. It is a revolution. Companies that have developed the ability to deal effectively with continuous incremental innovation are not necessarily prepared to deal with discontinuous innovation. Ironically, it is often the firms that excel at managing innovation in a »steady-state« environment that suffer most when discontinuous shifts occur. Another set of tools is needed. The routines that give the firm a strong position in managing innovation under steady-state conditions oftentimes act as a barrier to detecting and responding to innovation threats and opportunities associated with discontinuous shifts. So how can organisations become good at dealing with both continuous and discontinuous organisations? If companies need to build alternative routines to enable them to cope with discontinuous conditions, what strategies can they adopt? The challenge for firms lies not so much in the scale of novelty or dislocation. It is more about conditions beyond the experience – the normal operating envelope – of the company. In order to develop capability to deal with discontinuous shifts, organisations need to experiment, imitate, adapt and in other ways learn new routines, which can become structured and embedded.