Second Module of Innovation Process: Competition in Market Dynamics & Technological Changes
The competition in market dynamics and technology changes refers to the second module of the innovation process. I will attempt to prove the connection between market and technology evolutions and how they are interdependent. I will also talk about the impact design innovation can have on production adoption and examples of how design innovation has been successful.
Pivoting of the chicken or the egg analogy, which came first? Technology came first or the market gave birth to the technology? Using the mobile phone market as an example, did the mobile phone create the market or did the market conditions give rise to the mobile phone market? I think the answer is: both. The technology showed consumer the need and created a value proposition which consumers accepted. The basic call features deemed too expensive initially but added values helped broad expansion of mobile phone. Initially, “observers cited research that revealed apparently lackluster consumer interest in mobile music and little willingness to pay a premium for it.”[1] (Page 3) The consumers will not pay for the service unless the product/service is up to par. The value to the consumer has to have enough benefit (or enough perceived benefit) that they are willing to pay premium for the new technology. The “underlying technology platforms, and their pricing strategies” [2](Page 1) has to be addressed and middle ground must be forged.
The flexibility for the consumer has to be addressed. In the case of music format for DRM, it was strongly preferred by music labels but they restricted user freedom to enjoy the music. The findings suggested that “these complex usage rules had already grown frustrating and confusing.”[3](Page 4) This might seem like an intuitive point but there are many complex variables. In the case of music distribution via online/mobile avenue, the “licensing terms, potential platform complements, value chain leverage, and the standard’s ability to compete”[4] (Page 5) are major hurdles to overcome. The end goal is to deliver a product that satisfies or exceeds customer expectation, at a cheap price. The goal to provide complex and innovative features does not come at a cheap price tag for the companies. Companies have to find intelligent solutions that can enjoy economies of scale while retaining or gaining market share. The challenge is to strategically decide what drives the market: the technology or the economy?
There are many great technologies available: trip to space, super computers, satellite phones, or many other technologies which are too expensive for broad market adaptation. These ground breaking technologies offer impressive features which would excite and improve people’s lives but they do not deliver the product/service at a feasible pricing platform. In the case of mobile music, delivery service must factor in, “record labels, platform vendors and white-label music services, online music stores, handset makers, and mobile operators.”[5] (Page 8) Different parties will have advantages and disadvantages to adopted strategies, so the challenge is to adopt a macro strategy which aligns multiparty interest while delivering excellent service/product at a reasonable price.
The competitive landscape presents a formidable challenge in many industries for innovation to have a long lasting advantage for any company. For example, in the mobile music industry you have many key players jockeying for influence on how content is delivered and obviously who benefits from it. Currently Apple has a strong lead on competitors like Microsoft, Yahoo, Google, Wal-Mart, Amazon and traditional music delivery mediums fighting on who delivers music to consumers. The handset makers like Apple, Google, Samsung, Sony, Nokia, LG, Blackberry and others are racing to produce the best handset. While, AT&T, Sprint, Verizon and other carrier are contending to dominate the delivery channel as the music artists, executives and other parties are also evaluating and pushing for what makes them the most money. As you can see, the landscape is very crowded, complex and hyper-competitive.
The challenge is to cut through the competitive noise and produce the product via design-driven innovation. This radical method of innovation is based on the idea that “transitional objects”[6] (Page 3) bridge the emotional and functional aspect for consumers. Transitional objects are “things, such as toys, teddy bears, and safety blankets, that represent the happy world when children were still united with their mothers. These objects help children move from intimate dependence on their mothers to a more autonomous psychological status, and thus these objects become almost indispensable regardless of their actual function.”[7] (Page 3) Simply put, if consumer can connect design of a product with their emotional experiences, they will adopt the product at a deeper level. As the transitional objects bring back happy memories, the product design should “try to answer to a desire of happiness of people.”[8] (Page 4)
The success of Apple in the mobile music revolution has been its ability to produce, user friendly functionalities with radical designs. Although at a premium price-point, the end-to-end “experiential system…allow[ed] people to produce, select, buy and share music.”[9] (Page 6) The functionalities of iTune, iTune store, iPod/iPhone and accessories, gave an easy to use streamlined process that made Apple a success story in the music business. The product, infrastructure, functionalities, interface and content design has resonated deeply with consumers. It took out complications of buying digital music, maintenance, and backup via iTunes, mobility via sleek and stylish iPod/iPhone, all at a premium price and reliability. The designers at Apple “have completed their exercise-that the product is stylish, in line with the dominant language of the market…”[10] (Page 8-9) Apple did not invent the phone, mobile music device, or concept of delivering music online but it enhanced all these concepts with easy to use platform. Consumers have abundance of options but “we are surrounded by a world of anonymous products, of boring objects, most often lacking any emotion and poesy.”[11] (Page 9) Understand this divide and creating a product which stands out has made Apple a leader in its field.
Many other firms might understand that design is important but they don’t all understand to which extent the design should stress itself. I’m sure the cost factor limits if the design to incremental innovation or radial innovation. Before “the game changer” iPhone came to the market, most mobile phone design pursuit the incremental innovation to push new models to the consumers. The radical innovation concept at Apple gave birth to the iPhone. The phone was re-invented on how it is used and what it can do. Companies like Apple understand that “firms periodically [need to] search for dramatically new meanings, but their competitors do not. The radical innovators know that meanings in the market alternate between periods of incremental change and periods of rapid and disruptive transitions.”[12] (Page 10) The result is iPhone’s consistent climb with increase in market share, while its competitors suffer and struggle to find a suitable challenger. In order to pursue radical innovation, the company and leadership has to be truly confident in what they’re producing.
The radical product will challenge the norm which people use as a reference point, thus leading to confusion. A steadfast belief can be key to success, as Apple CEO Steve Job said, “A lot of times, people don’t know what they want until you show it to them.”[13] (Page 13) This line of thinking is a huge divergence from traditional user-centered innovation. As Clayton Christensen states, companies “…are so focused on chasing the needs of their clients that they lose sight of the big picture.”[14] (page 14) The radical innovators “…give meaning to things…on our values, beliefs, norms, and traditions. In other words, they reflect our cultural model. And that, in turn, reflects what occurs in our personal lives and our society.”[15] (Page 14-15)
One cannot assume that radical innovation happens on daily scale but understand that radical innovation does take place and its impacts are enormous. The catalyst for the changes can be, “…rapid changes in the economy, public policies, art, demographics, lifestyles, and, last but not least, science and technology.”[16] (Page 15) The overlap of Technology Push Strategy and Design-Driven (Design Push) Strategy is the ‘sweet-spot’ for high performance/radical improvement and meaning/generating of new meaning. As a leader, one must follow these steps:
· Understand and evaluate markets, customers and competitive landscape to see where the market is headed and what opportunities it might present
· Keeping the future needs of customers in mind, predict and design radical innovative ideas-leapfrogging pass competitors
· Utilize design-innovation to offer ‘game-changing’ product
· The above must be offered at a reasonable price that is aligned with current economic, cultural and social needs
· Repeat process
During my tenure as President of Mena Menswear, I had the opportunity to implement radical changes. As an inexperienced executive, I used the above without knowing what I was doing. I studied the customer demographics, local competitors, and current product line to see what opportunities are to be had. Over the course of a year, I worked with manufacturers to introduce a clothing line which changed how the company was viewed. Channeling the formal styles of the ‘days-gone-by’, we aimed to connection emotionally with our middle aged cliental. I did not conduct any focus groups or polls to see what customers were looking for, but offered an image of how a successful man should dress. The line resonated with clients, out selling Ralph Lauren, CK, Kenneth Cole, Boss and the likes. I understand the example is not as radical as Apple introducing the iPhone but it made a significant difference for Mena Menswear.
Judging from my experience, class discussions and readings, I believe that one must be ahead of the market and the competitors. The landscape research must merge with intuitiveness and foresight to create radical products which tilts the market in your favor.
[1] Travis D. Merrill. David B. Yoffie, iPod vs. Cell Phone: A
[2] Ibid
[3] Ibid
[4] Ibid
[5] Travis D. Merrill. David B. Yoffie, iPod vs. Cell Phone: A
[6] Roberto Verganti, Radical Pushes: Placing Design-Driven Innovation in the Strategy of a Firm
[7] Ibid
[8] Ibid
[9] Ibid
[10] Roberto Verganti, Radical Pushes: Placing Design-Driven Innovation in the Strategy of a Firm
[11] Ibid
[12] Ibid
[13] Ibid
[14] Ibid
[15] Ibid
[16] Ibid
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