BROKEN BULBS: Innovation: When second doesn't work

Sunday, October 2

When second doesn't work

Apple have the portable MP3 market stitched up. They have benefitted from being first in a new category with a unique brand name, allowing them to "own" that category. They have also benefitted from positive network effects, courtesy of their iTunes Web site. This combination has made it extremely difficult for Apple's competitors to make any headway at all.

[Note: Technically, Apple were not "first" to develop a portable MP3 player, but as far as consumers were concerned, they were.]

With the new Apple Nano about to hit the shelves here in Taiwan, some of the local Taiwanese firms and Korean firms have resorted to cutting their prices.

Taiwanese firms are well known for their "fast-follower" innovation strategies (an innovation strategy that lets others take initial risks when developing new products and then the firm enters when that product "appears" to be successful). This type of innovation strategy has served Taiwanese firms well in the past, but there are times when a fast-follower strategy will not work.

Labels: innovation

1 Comments:

Anonymous said...: I'm curious what your analyses are as to why Apple, which was not the first to market, dominates the portable MP3 market and why the fast-followers are failing, with Apple owning a whopping 75% of the marketshare. My guess is it's because of an incredibly well integrating business plan consisting of a compelling product, innovative marketing, cult name-brand, and key supportive businesses (iTunes). I read this week that many of the Taiwanese manufacturers are stopping their productions of low-cost MP3 players given the dominance of the iPod, a unique case of the high-end forcing out the low-end.; 1:23 AM

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WHAT IS INNOVATION?

Innovation is defined here as:

"The profitable implementation
of ideas." - Broken Bulbs (2005)

This definition includes three core elements of innovation: ideas; implementation; and profit. If you dislike the term "profit," you can replace it with "social or economic value." So: "The implementation of ideas that create social or economic value." Broken Bulb's definition draws from these authoritative sources:

"Implementing new ideas that create value." - Innovation Network, U.S.A.

"The intersection of invention and insight, leading to the creation of social and economic value."
- U.S. National Innovation Initiative (2004)

"The development of new ideas and their economic application as new products or processes."
- U.K Dept. Trade and Industry

INNOVATION: UNDER THE BONNET (HOOD)

When thinking about innovation, it's worth keeping the following points in mind:

- innovation is a multi-dimensional construct
- an innovation can be described by type (process, product, service, business model, value, market, brand, channel, price etc.)
- and degree (incremental, semi-radical, radical, transformational etc.)
- an innovation can be described as a user innovation (the developer benefits by using it) or
- a manufacturer innovation (the developer benefits by selling it)
- a definition will emphasize a particular unit of analysis (e.g. task, project, individual, group, SBU, firm, region, or nation)
- a definition can, therefore, take a broad or narrow perspective
- a definition can take a supply- or demand-side view
- viewing innovation as either product or process, while useful, is overly simplistic
- a sustaining innovation can be radical or incremental
- a disruptive innovation, by contrast, emphasizes a dimension of a product that incumbent firms' most profitable customers don't especially value.
- the same author may use a number of different definitions, depending on which dimension is being discussed.
- innovation can also be viewed as attitude: "There must be a better way."

My E-mail

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: Name: Gordon Graham; Location: Connecticut, United States

My passion and interest is in innovation and brands in international business. Recently completed post-graduate research into the innovation strategies of Taiwanese firms active in multiple country-markets as part of an MSc (distinction) in International Marketing. Originally from Scotland. I recently moved to the United States (CT) and would love to work in a corporate university or traditional university setting. Thanks!

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Innovation Quotes:

"Though the outcomes of successful innovations appear random, the processes that result in their success often are not."
- Clayton Christensen (2003)

"He who innovates will have for his enemies all those who are well off under the existing order of things, and only lukewarm supporters in those who might be better off under the new."
- Niccolo Machiaveli, The Prince

"The true pacemakers of socialism were not the intellectuals or agitators who preached it, but the Vanderbilts, Carnegies and Rockefellers."
- Joseph Schumpeter (1942, p. 134)

"Dear President Jackson,
The canal system in this country is being threatened by a new form of transportation known as "railroads" . . . If the canal boats are supplanted by railroads, boat builders would suffer, and towline, whip, and harness makers would be left destitute . . . God never intended that people should travel at such breakneck speed."
Sincerely,
Martin Van Buren
Governor, State of New York, 1829

"Some good experiences will always be scarce."
- Matt Mason, 2008

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