Phases of Innovation

I've been struck by a notion, which probably needs much more refinement, that the nature or character of "innovation" is heavily influenced by environmental factors - it's not quite as simple as the level of economic development or the phases in the product lifecycle. Though it's similar in a number of ways, it's different enough that the character of innovation can't be neatly ascribed to those existing theories.

Discovery Phase

During the earliest phases of the product lifecycle, development and introduction, innovation is largely a matter of invention: an entirely new product is invented, which was never before in existence, and it's also discovered that the product serves some human need (which is important, as many of the "discoveries" of science have little application to human needs, at least initially).

The "discovery" phase also carries over to the second phase of the product lifecycle, introduction, in the sense that , while the supplier has discovered a new product by a process of invention, the buyer must also discover it - traditionally, by the supplier communicating information to the market to advertise the product, but more recently by word-of-mouth.

In this phase, innovation is characterized by invention and application: a product is created, and it is matched with a consumer need.

Manufacturing Phase

The manufacturing phase of innovation occurs during the introduction and growth periods of the product lifecycle, during which time innovation is geared toward developing methods of producing a product (or a service) in sufficient quantity to satisfy market demand.

The transition from discovery to manufacturing is a vulnerable period, during which a company that discovers a product seeks to bring it to the market before its competitors. My sense is that there are many instances in which one company has invented something is beaten to market by another, especially in the technology industry.

In this phase, innovation is characterized by entrepreneurship: the product must be produced and delivered to the consumer.

Efficiency Phase

The efficiency phase of innovation may occur during the last three phases of the product lifecycle: growth, maturity, and decline. It's generally characterized by multiple producers entering the market, competing largely on the basis of price.

Competition in this phase is for share of market: efficiency can take the form of the least costly manufacturing process (by cutting costs, price can be lowered to gain competitive advantage) or the most productive manufacturing process (being able to supply in quantity, such that customers who want the product immediately can buy from you rather than waiting for a competitor to catch up to back orders).

As such, innovation in this phase generally consists of cost reduction and supply-chain management, with the goal of gaining share of market.

Service Phase

The service phase may, in some products, be substituted for the efficiency phase, though for most products that come to mind, it generally occurs afterward, when firms are more or less equal in their ability to produce a good cheaply and in sufficient quantity and seek to differentiate themselves from competitors in ways that customers value.

Customer preference is of primary importance: given that the good is readily available from multiple sources, and there is little differentiation in product price, competitive advantage is won by the firm that best satisfies customer needs in terms that have less to do with the physical properties of the product or its price, but have to do with the success of the product in satisfying consumer needs other than those directly addressed by the product itself (core value is not sacrificed, but augmented).

As such, innovation in this phase consists of quality improvement and customer relationship management, with a goal of gaining customer loyalty and improving share of wallet.

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I'll concede that this is very early thinking, and as such may be a bit half-baked and ill-defined. I expect I'll return to it later for more detailed consideration - just wanted to jot it down in this notebook for now.