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Innovation Cycle

Konstantyn Spasokukotskiy
Konstantyn Spasokukotskiy

Heavy content. Phasing theory of product evolution. A unifying view on innovation phenomena, techniques and instruments.

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the Innovation Cycle a continuous growth theory Draft August 2011 IDEA
content Innovation cycle theoretical background organizational chaining constrains characterizations Product Phasing Skill Innovative taxonomy conditions sets background innovation instruments Geoffrey Clayton Chris Malcolm Gary Moore Christensen Argyris Gladwell Hamel Bill Leif Angela ? Steve Gates Edvinsson Merkel Blank
Organizational constrains theory
Two organizational forms as a Fn of product complexity Market exchange is more efficient Coases firm theory In-house production is better than procuring the product
Two ownership forms as a Fn of asset building costs Property is more Implementation costs valuable than are higher than the implementation costs value of property that controls an opportunity Demsetzs property theory
Organizational forms as a function of relative costs Value > property Costs > costs property value Cheaper goods exchange Markets Commons to build in-house Property Cheaper Firms regimes Coases firm theory + Demsetzs property theory
Efficient production forms as a Fn of product attributes Value > Costs > property Costs property value Abundance Commodity of market product that exchange Goods players, serves universal significant product need Hygienic Complex, product in an in-house unique Build inapt product in providers monopoly market
Constrains summary Optimal production form Depends on: market ubiquity production costs May require an operation within a social and economic paradigm which isnt widely tolerable.
Chaining theory
Efficient production forms as a Fn of product life-cycle Value > property Costs > Costs property value exchange Goods in-house Build Spasokukotskiys phasing theory
Any product drifts Cheaper and adjustable replicas of the editor the cycle over time The idea is picked up. Mass product 2 3 A text editor is created as custom built code 1 4 The editors functionality is integrated in other products as a component
maturing all the way increasing market penetration pervasion inception
upon market saturation the product can make a quality leap pervasion actual maturity limit >> integration cycle quality leap inception components cycle
becoming a standard component due to an integration pervasion inception Text editors life cycle as a product component Text editors life cycle as a stand-alone product
over and over again quality leaps
Chaining summary Optimal production form Depends on: market maturity product ubiquity Is chained: the forms change each over in a strict sequence the transformative process is one-way street repeats in a loop over and over again
Chaining corollaries Following theories are necessarily to consider: skills phasing business objectives phasing economic regime phasing phase timing organizational forms phasing One solution doesnt fit all
Innovation cycle characterization
Product parameters define dots in the cycle product phasing skill taxonomy + conditions + sets = cycle
Two scales are common for all products in the cycle buying entities costs/profit
Break-through products pop share non-consumption entities coverage price New product projects costs/profit
Mass market products pop share entities coverage price costs/profit
Saturation products common base standards pop share entities coverage price This phase delivers flavors to any taste. The number of buyers for every variant reduces. The core functionality though becomes a common good and knowledge costs/profit
Next-level products pop share non-consumption entities coverage price next level infrastructure phase the tipping point final touch phase costs/profit
product-market-costs-time optimization cycle overview Product A buying entities Product B costs/profit
Product parameters define dots in the cycle product phasing skill taxonomy + conditions + sets = cycle
Phasing of product type is due to changes in costs and profits price potential price profit costs
Labor division is the main theme in progress Vendor 3 All new products satisfy the same existing need/want. Typically new products are improving a subset of the whole technological stack that serves to the Value stack Vendor 2 need. Many industry players simultaneously control the value stack. Vendor 1
If there is a market niche, where potential price is much larger than costs Vendor 3 technology Value profit costs Vendor 1
enterprises and build-toorder ventures take the chance profit costs project
If a known and available product has a potential price up to profit standards Vendor 3 technology Value profit costs Vendor 1
There is no risk to scale the production as along as it goes mass profit production costs
If the value stack is gainful but a subsets costs are higher than price Vendor 3 technology Value costs Vendor 1
The losses are covered by stakeholders from profits through a cooperation cooperation costs
partners or commons cover excess costs Vendor 3 producing consumers technology Value the value stack partners costs (value stack is clearly defined, high entry barriers) commons (3rd party) Vendor 1 (value stack is blurry, covers too many bases, low entry barriers)
there is no profit in the entire value stack but the product is a must-have costs technology Value costs costs
Hygienic products are protected by society through regulations costs Government enterprise
This phase isnt always evident it could be short, or disguised costs technology Value Governmental preferences, easy tax regime, grant support, etc. all cover costs in a costs distressed value stack. costs
An innovation reduces costs of the entire value stack, then the cycle begins anew Value > Costs > property Costs property value exchange mass Goods production cooperation in-house government Build project enterprise innovation
True innovation redesigns industries and value chains across multiple stakeholders beneficiary Value stack inventor beneficiary Other product transformations along the cycle are various forms of continuous improvement process
But if you stretch the term, there are various types of innovation process innovation | effectiveness application innovation experiential innovation product innovation business model innovations process innovation | efficiency sustaining innovation structural innovation marketing innovation disruptive innovation
Innovation comparison innovation internal customer side structure capability practice structure capability practice disruptive new, cheaper and better new market low-end sustaining Improves improves product value application existing technology to new markets, serve new purpose product improves established offers process optimizes for established markets experiential cosmetics modifications marketing tweak touching Business change change reframes value proposition model company role focus structural restructure major gains industry
Product parameters define dots in the cycle product phasing skill taxonomy + conditions + sets = cycle
Every phase answers different question and uses different governance principles 1. Hierarchy search for product fit and production method buying entities 2. Process chain search for common market 2 denominator and scalable production output 3. Network - search for 1 3 true market fit and inexpensive supply 4. Dictatorship search for supply security and working ideas 4 costs/profit
Innovation cycle instruments
Why is a product maturity cycle called a cycle of innovation? huge problem minor problem There are systemic hurdles on the road. Lateral ideas are required to pass through. significant problem
innovation theories challenges overview Christensens dilemma learning Moores chasm leap discipline leap Argyris single-loop learning & double-loop learning
Double-loop learning learning leap discipline leap Argyris single-loop learning & double-loop learning
Single-loop mindsets of successful executives Product A Defensiveness Hiding and denying uncomfortable information Avoiding negativity A need to win at all costs Worshipping rational behavior, decrying anything that doesnt conform ≒Im right attitude by Chris Argyris
Double-loop mindset of successful executives Dialogue Sharing tasks and information Free choice based on vivid information Questioning the assumptions by Chris Argyris Product B
The business development chasm Moores chasm
Startups face a market gap (the chasm) expanding from cheering crowd to mainstream sales time
Innovators dilemma Christensens dilemma
Companies overshoot market demand not willing to give up profitable position Product performance time
innovation theories solutions Christensens modularization, Hamels agents provocateurs non-consumption Gates success principles paradigm shift product adoption Gladwells tipping points Merkels subsidy targets idea buy-in Edvinssons corporate longitude new idea Blanks pivot steps Moores components-to-platforms Siegels IDEA
Are there other innovation theories? provide your input ?
Author Konstantyn Spasokukotskiy your gateway to technology and innovation www.spasokukotskiy.info References Yochai Benkler - The Wealth of Networks, 2006 Clayton Christensen The Innovators Dilemma, 2003 Geoffrey Moore Crossing the Chasm, 1991 Chris Argyris Organizational Learning, 1978 free to copy and reuse with proper attribution

More Related Content

Innovation Cycle

  • 1. the Innovation Cycle a continuous growth theory Draft August 2011 IDEA
  • 2. content Innovation cycle theoretical background organizational chaining constrains characterizations Product Phasing Skill Innovative taxonomy conditions sets background innovation instruments Geoffrey Clayton Chris Malcolm Gary Moore Christensen Argyris Gladwell Hamel Bill Leif Angela ? Steve Gates Edvinsson Merkel Blank
  • 4. Two organizational forms as a Fn of product complexity Market exchange is more efficient Coases firm theory In-house production is better than procuring the product
  • 5. Two ownership forms as a Fn of asset building costs Property is more Implementation costs valuable than are higher than the implementation costs value of property that controls an opportunity Demsetzs property theory
  • 6. Organizational forms as a function of relative costs Value > property Costs > costs property value Cheaper goods exchange Markets Commons to build in-house Property Cheaper Firms regimes Coases firm theory + Demsetzs property theory
  • 7. Efficient production forms as a Fn of product attributes Value > Costs > property Costs property value Abundance Commodity of market product that exchange Goods players, serves universal significant product need Hygienic Complex, product in an in-house unique Build inapt product in providers monopoly market
  • 8. Constrains summary Optimal production form Depends on: market ubiquity production costs May require an operation within a social and economic paradigm which isnt widely tolerable.
  • 10. Efficient production forms as a Fn of product life-cycle Value > property Costs > Costs property value exchange Goods in-house Build Spasokukotskiys phasing theory
  • 11. Any product drifts Cheaper and adjustable replicas of the editor the cycle over time The idea is picked up. Mass product 2 3 A text editor is created as custom built code 1 4 The editors functionality is integrated in other products as a component
  • 12. maturing all the way increasing market penetration pervasion inception
  • 13. upon market saturation the product can make a quality leap pervasion actual maturity limit >> integration cycle quality leap inception components cycle
  • 14. becoming a standard component due to an integration pervasion inception Text editors life cycle as a product component Text editors life cycle as a stand-alone product
  • 15. over and over again quality leaps
  • 16. Chaining summary Optimal production form Depends on: market maturity product ubiquity Is chained: the forms change each over in a strict sequence the transformative process is one-way street repeats in a loop over and over again
  • 17. Chaining corollaries Following theories are necessarily to consider: skills phasing business objectives phasing economic regime phasing phase timing organizational forms phasing One solution doesnt fit all
  • 18. Innovation cycle characterization
  • 19. Product parameters define dots in the cycle product phasing skill taxonomy + conditions + sets = cycle
  • 20. Two scales are common for all products in the cycle buying entities costs/profit
  • 21. Break-through products pop share non-consumption entities coverage price New product projects costs/profit
  • 22. Mass market products pop share entities coverage price costs/profit
  • 23. Saturation products common base standards pop share entities coverage price This phase delivers flavors to any taste. The number of buyers for every variant reduces. The core functionality though becomes a common good and knowledge costs/profit
  • 24. Next-level products pop share non-consumption entities coverage price next level infrastructure phase the tipping point final touch phase costs/profit
  • 25. product-market-costs-time optimization cycle overview Product A buying entities Product B costs/profit
  • 26. Product parameters define dots in the cycle product phasing skill taxonomy + conditions + sets = cycle
  • 27. Phasing of product type is due to changes in costs and profits price potential price profit costs
  • 28. Labor division is the main theme in progress Vendor 3 All new products satisfy the same existing need/want. Typically new products are improving a subset of the whole technological stack that serves to the Value stack Vendor 2 need. Many industry players simultaneously control the value stack. Vendor 1
  • 29. If there is a market niche, where potential price is much larger than costs Vendor 3 technology Value profit costs Vendor 1
  • 30. enterprises and build-toorder ventures take the chance profit costs project
  • 31. If a known and available product has a potential price up to profit standards Vendor 3 technology Value profit costs Vendor 1
  • 32. There is no risk to scale the production as along as it goes mass profit production costs
  • 33. If the value stack is gainful but a subsets costs are higher than price Vendor 3 technology Value costs Vendor 1
  • 34. The losses are covered by stakeholders from profits through a cooperation cooperation costs
  • 35. partners or commons cover excess costs Vendor 3 producing consumers technology Value the value stack partners costs (value stack is clearly defined, high entry barriers) commons (3rd party) Vendor 1 (value stack is blurry, covers too many bases, low entry barriers)
  • 36. there is no profit in the entire value stack but the product is a must-have costs technology Value costs costs
  • 37. Hygienic products are protected by society through regulations costs Government enterprise
  • 38. This phase isnt always evident it could be short, or disguised costs technology Value Governmental preferences, easy tax regime, grant support, etc. all cover costs in a costs distressed value stack. costs
  • 39. An innovation reduces costs of the entire value stack, then the cycle begins anew Value > Costs > property Costs property value exchange mass Goods production cooperation in-house government Build project enterprise innovation
  • 40. True innovation redesigns industries and value chains across multiple stakeholders beneficiary Value stack inventor beneficiary Other product transformations along the cycle are various forms of continuous improvement process
  • 41. But if you stretch the term, there are various types of innovation process innovation | effectiveness application innovation experiential innovation product innovation business model innovations process innovation | efficiency sustaining innovation structural innovation marketing innovation disruptive innovation
  • 42. Innovation comparison innovation internal customer side structure capability practice structure capability practice disruptive new, cheaper and better new market low-end sustaining Improves improves product value application existing technology to new markets, serve new purpose product improves established offers process optimizes for established markets experiential cosmetics modifications marketing tweak touching Business change change reframes value proposition model company role focus structural restructure major gains industry
  • 43. Product parameters define dots in the cycle product phasing skill taxonomy + conditions + sets = cycle
  • 44. Every phase answers different question and uses different governance principles 1. Hierarchy search for product fit and production method buying entities 2. Process chain search for common market 2 denominator and scalable production output 3. Network - search for 1 3 true market fit and inexpensive supply 4. Dictatorship search for supply security and working ideas 4 costs/profit
  • 45. Innovation cycle instruments
  • 46. Why is a product maturity cycle called a cycle of innovation? huge problem minor problem There are systemic hurdles on the road. Lateral ideas are required to pass through. significant problem
  • 47. innovation theories challenges overview Christensens dilemma learning Moores chasm leap discipline leap Argyris single-loop learning & double-loop learning
  • 48. Double-loop learning learning leap discipline leap Argyris single-loop learning & double-loop learning
  • 49. Single-loop mindsets of successful executives Product A Defensiveness Hiding and denying uncomfortable information Avoiding negativity A need to win at all costs Worshipping rational behavior, decrying anything that doesnt conform ≒Im right attitude by Chris Argyris
  • 50. Double-loop mindset of successful executives Dialogue Sharing tasks and information Free choice based on vivid information Questioning the assumptions by Chris Argyris Product B
  • 51. The business development chasm Moores chasm
  • 52. Startups face a market gap (the chasm) expanding from cheering crowd to mainstream sales time
  • 53. Innovators dilemma Christensens dilemma
  • 54. Companies overshoot market demand not willing to give up profitable position Product performance time
  • 55. innovation theories solutions Christensens modularization, Hamels agents provocateurs non-consumption Gates success principles paradigm shift product adoption Gladwells tipping points Merkels subsidy targets idea buy-in Edvinssons corporate longitude new idea Blanks pivot steps Moores components-to-platforms Siegels IDEA
  • 56. Are there other innovation theories? provide your input ?
  • 57. Author Konstantyn Spasokukotskiy your gateway to technology and innovation www.spasokukotskiy.info References Yochai Benkler - The Wealth of Networks, 2006 Clayton Christensen The Innovators Dilemma, 2003 Geoffrey Moore Crossing the Chasm, 1991 Chris Argyris Organizational Learning, 1978 free to copy and reuse with proper attribution