BROKEN BULBS: Innovation: Luxurious bargain seeking

Saturday, March 25

Luxurious bargain seeking

The problem firms face when pursuing incremental product innovation is that a bulk of customers may not be willing to pay extra for those innovations.

Adner and Levinthal (2001) cover this in their paper, Technological Evolution and Demand Heterogeniety: Implications for product and process innovation. This paper takes a demand-side view on innovation.

innovation management in Asia

Labels: innovation

1 Comments:

Anonymous said...: Hi Gordon,
The concepts discussed are certainly the nature of the game in my industry. New features get added to increase the capability of high-end products, but prices remain constant. We continue to innovate to keep that pricepoint--those that don't innovate are forced to reduce the price of their products to stay competitive. So, research efforts don't necessarily result in increased margin but are necessary to keep margins from eroding. Unless, of course, a company finds a new unmet need of the consumer, then they can demand a higher margin because customers will pay more. We are seeing that too in my industry. Thanks for the paper.; 12:22 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

My Slideshare Innovation Page

: 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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