- Innovation Types
- The Innovation Life Cycle
- The Innovation Life Cycle Inflection Points
- The Optimal Innovation Life Cycle
This chapter is from the book
This chapter is from the book
This chapter is from the book
The Innovation Life Cycle Inflection Points
As we have seen, there are three primary innovation inflection points. These inflection points are the areas within the innovation life cycle that create the most damage to a product's future. Surprisingly, these inflection points also provide the best opportunities for the company to respond effectively and maximize the value of the product.
The three innovation inflection points are reflections of stages in the innovation life cycle at which point the company sees a negative shift within the sales of the product or market for the product. Even if product sales are still increasing, the growth rate is perceived to be falling and is similarly interpreted negatively.
The three innovation inflection points from a product's sales perspective are as follows:
- Market dominance growth flattens: As depicted in Figure 3.5, the acceleration of market dominance will drop to a steady state when incremental inventions no longer act as disruptive innovation aftershocks.
- Customer acceptance falters: As depicted in Figure 3.7, when incremental inventions no longer drive an increase in the transformative value, customers begin to react negatively about paying for further incremental inventions.
- Customer acceptance ends: As depicted in Figure 3.8, when negative incremental inventions become destructive inventions, the transformative value drops precipitously, and customers no longer accept cost increases.
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Figure 3.9 reflects how the negative impacts of the innovation life cycle can have major impacts on transformative value and shift the company's focus from external innovation to internal innovation. Each of the inflection points will be discussed in detail separately in the following sections.
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Figure 3.9 Innovation inflection points
Innovation Inflection Point A
Innovation inflection point A (Figure 3.9) corresponds to the first time that the company will likely question the future revenue from the product. Multiple events are occurring at inflection point A:
- The market dominance growth has flattened.
- Disruptive innovation has ended.
- The positive growth of the transformative value is slowing.
In response to the perceived negative market activities relative to the product, the company will take these actions:
- Assume that the market is peaking
- Reduce spending on potential disruptive innovations
- Increase spending on incremental inventions to improve customer satisfaction and retention
- Increase spending on internal infrastructure inventions to lower costs
The following are reasons that the company reduces spending on the pursuit of new disruptive innovations:
- Perceived randomness of finding a new disruptive innovation
- Fear of decreasing revenues/need to focus efforts on current product
- Increased costs of incrementally improving the product
Ever-growing business pressures related to increasing revenues, maintaining large customers, and utilizing existing infrastructure, as shown in Figure 3.7, will further justify the company's reasoning regarding the balance between R&D spending for disruptive innovations and incremental invention.
The shifts toward increased internal and incremental inventions that occur at inflection point A will create a landslide effect that will ultimately drive the product through all remaining stages of the innovation life cycle.
Innovation Inflection Point B
Innovation inflection point B (Figure 3.9) is aligned with the first time that the customers are seriously reacting to continued price increases for ongoing incremental inventions. Multiple events are occurring at inflection point B:
- The company's market percentage has ceased to increase.
- Positive incremental innovation has ended.
- The transformative value ceases to increase and may begin to fall.
In response to the shift of customer viewpoints, the company will take these actions:
- Assume that a new disruptive innovation is needed
- Implement companywide invention/innovation business practices to try to identify a new disruptive innovation
- Shift spending toward incremental inventions that duplicate a competitor's incremental inventions
- Reduce staffing levels and management layers
- Increase spending on internal infrastructure inventions to lower costs
The actions of the company for inflection point B create little change unless the company wins the innovation lottery (as described in Chapter 1). The company shifts to a more competitive incremental invention model because of the following reasons:
- Perceived randomness of finding a new disruptive innovation.
- Poor understanding of the decreases in transformative value. It is assumed that the rising transformative value of a competitor's offerings is the cause.
- If the customers do not like the company's incremental inventions, then they must like the competitor's.
As was true at inflection point A, increasing business pressures at inflection point B will further limit the effectiveness of any targeted response to the drop in the product's transformative value.
The landslide effect started at inflection point A will accelerate following inflection point B.
Innovation Inflection Point C
At innovation inflection point C (Figure 3.9), the customers now openly refuse to pay for new features and are balking at the high yearly maintenance costs. The product has already reached an unacceptable level of complexity and cost. Multiple events are occurring at inflection point A:
- The company's market percentage is decreasing.
- The mirroring of a competitor's incremental inventions has failed.
- The transformative value of the product is plummeting.
- The transformative values of a competitor's offerings are still high.
In response to the collapse of customer acceptance, the company will take these actions:
- Assume that the product has run its course
- Shift the product into a maintenance mode
- Reduce staffing levels and management layers
- Reduce infrastructure costs through outsourcing and offshoring
- Attempt to sell off the product
Basically, the landslide that started at inflection point A and accelerated at inflection point B has finally buried the product at inflection point C. Because of the staggering complexity of the product, there is little hope that it can be dismantled and reassembled into a new disruptive innovation that delivers a competitive transformative value.