The document discusses various barriers to innovation, including transaction costs, learning costs, and obsolescence costs that hinder individuals and organizations from adopting new solutions. It highlights psychological factors like the endowment effect, status quo bias, and the sloth factor, which contribute to resistance against innovation. Additionally, it emphasizes the importance of identifying these barriers before developing products to align them with market needs.

1. Innovation Barriers
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Why Don’t People Innovate?
Even if there are strong triggers that are acting on people
to get them to innovate, there can be barriers that get in
the way.

3. Transaction costs
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There are several types of barriers getting in the way of
innovation.
The first of these are transaction costs. These are the costs
and time involved in searching for, evaluating and
purchasing a solution.

4. Learning costs
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Secondly there are learning
costs.
These arise form the time and
expense of implementing a
new solution and learning how
to use it.

5. Obsolescence costs
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The last type of costs are
obsolescence costs.
These are the costs of getting rid
of your old solution or transferring
what you produced using old
technology to the newer
platform..

6. Risk to innovating
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There are also risks to innovating as the new solution may
be worse than the last or may fail totally.

7. Psychological costs
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People must also recognize
they are currently doing
something wrong in order
to think that they should
change it and innovate.
People have a hard time
making that switch. that’s
why you hear them say
things like “It has worked for
us for 10 years so why
should we change what
isn’t broken.”

8. Endowment Effect
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Consumers view what they own as
part of their endowment.
They assess innovations in terms of
what they gain and lose relative to
their endowment.

9. Status Quo Bias
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Provide a consumer with a
new benefit and she will see
it as a gain.
Take away a benefit and she
will see it as a loss.
The loss increases with time of
ownership.

10. The Sloth Factor
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People are lazy and innovation requires
work, effort, and thought.
The status quo requires no work.

11. Psychological Costs
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People irrationally overvalue benefits
they currently possess relative to those
that they don’t.

12. Consumers overvalue existing
benefits
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They value the advantages of the
products they own more than the
benefits of the new one.

13. Executives overvalue innovation
benefits
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Suppliers value the benefits of
innovations they’ve developed over
the advantages of incumbent
products.

14. The 9X Effect
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15. If there are strong barriers
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People will resist a call to innovate,
even if there are strong triggers.
You will end up with a product in
search of a market.

16. Before you build a product, find
out what their barriers are and
how you can change your
product or marketing to avoid
or negate the barriers.
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17. In addition to barriers
There are triggers to
innovation and
competitive forces you
must overcome to
succeed.
But more of those issues
in another slide deck.
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18. material minds
We help technology entrepreneurs innovate,
communicate and execute.
We focus on helping improve business processes that
require an in-depth understanding of human behavior
for them to be effective.
We provide Business Advisory Services, Workshops and
speak at events.
Charles Plant
cplant (at) materialminds.com
@cplant
416.458.4850
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