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In our webinar with Forrester VP and analyst Chip Gliedman, we discuss best practices for implementing an effective innovation process, from ideas through execution.
Technology is evolving at an accelerated pace and the opportunities to create new products and services present challenges for both established organizations and emerging entrepreneurs alike. The role of UX research and design goes beyond developing simple, beautiful and user-friendly interfaces and has become and essential component of how organizations understand and design for their future success.
www.thememedesign.com
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4. Two organizational forms
as a Fn of product complexity
Market exchange
is more efficient
Coase’s 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
Demsetz’s 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
Coase’s firm theory + Demsetz’s
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 isn’t widely tolerable.
10. Efficient production forms
as a Fn of product life-cycle
Value > property Costs >
Costs property value
exchange
Goods
in-house
Build
Spasokukotskiy’s 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 editor’s 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 editor’s life cycle as a
product component
Text editor’s life cycle as a
stand-alone product
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 doesn’t fit all
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
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
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
subset’s 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 isn’t 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
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
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
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 doesn’t conform
•“I’m 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
57. Author
Konstantyn Spasokukotskiy
your gateway to technology and innovation
www.spasokukotskiy.info
References
Yochai Benkler - The Wealth of Networks, 2006
Clayton Christensen – The Innovator’s Dilemma, 2003
Geoffrey Moore – Crossing the Chasm, 1991
Chris Argyris – Organizational Learning, 1978
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