CNBC published an interesting article “Smartphone market turned into a veritable trash-fest of devices”. It got me thinking; the smartphones may illustrate a broader and bewildering phenomenon. At the high end of the market you have a few companies – Samsung, Apple, Huawei, Sony – are trashing it out with a flow of substantial product innovations. At the low end of the market, a few companies like Xiaomi high end of he offer products that offer the basic services at very low prices. At the top end of the market, there is some saturation, at the low end of the market China, India, Africa offer sizeable opportunities. However, the companies that have embarked on the market continue to amaze with new technologies but may be trapped in a technological contest that will start to erode margins and sales.
Akio Morita, one of the founders of Sony, said: “Our plan is to lead the public with new products rather than asking them what they want. The public does not know what is possible, we do”. Nobody asked of Bluetooth, for Wi-Fi, for smartphones. In many fields, it is the technology not the customer-wants that drive the market. This is probably true for an increasing number of markets. Technologies and mass-markets do not only make more sophisticated products, What I called the “Children of the Internet” – the likes of Amazon, Google, Facebook, Alibaba – are able to offer customers products that are easy to use, easy to get to, and easy to afford. The password is easy does it, but sometimes more features may complicate products. Well, I am just skimming the surface of the dilemmas facing the strategists of techno-sophisticated products like the smartphones.
I am building an original model that should facilitate rethinking innovation strategies. It has two dimensions. On the first dimension the 3 foci of innovation, namely: the product, the placement, and the platform. On the second dimension the 3 levels of innovation, namely: the continuous business improvements, the evolutionary innovation, and the radical innovation. In order to find the strategies that will provide the right and the sustainable balance, the management must look at the different time-horizons at the resources to be invested vs. the resources to be protected, and the results to be achieved vs. the results to be avoided. (1)
The product-focus in many fields is dominated by technologies, the features and the ensuing benefits. The placement-focus looks at the market-fragmentation, at the competitive positioning, and it fine-tunes the features/benefits balance. The platform-focus envisages a wide arrange of products that can be combined. For example the smartphones enable communications, purchasing, payments, banking et cetera. The importance of combining the 3 aforementioned levels of investment in innovation has been underscored by Govindarajan and in my last book. (2)
The subject is of great interest and I look forward to inspirational insights.
- Willy A. Sussland “The Platform of Agile Management” Routlege 2017
- V. Govindarajan C. Trimble “10 Rules for Strategic Innovators” HBSP 2005