After reading chapter three, Types and patterns of innovation, I was already familiar with several of the concepts presented, but still gained knowledge of unfamiliar terminology in the text.  One thing I never really thought about was that process innovation typically occurs in conjunction with product innovation.  I now see how an improvement in one can then lead to innovation in the latter.  Incremental innovation was something else I had not understood before.  I was always under the mindset that “innovation” meant a product always stemmed from “out of the box”, which is completely new and different from anything else offered.  However, simple improvements such as smaller batteries on cell phones can be considered incremental innovation.  Another important dimension is competence enhancing versus destroying innovation.  I was aware that many firms build upon their prior technology and create newer and better products compared to their prior models, but I never really considered how many firms go under due to competence destroying innovation such as what happened to Keuffel & Esser with the handheld calculator.

The most important concept in this chapter I believe is the technology s-curve.  In this modern age we are all aware of how fast technology changes or improves.  It seems that every year, if not more, computers seem to be improved with the latest in technology.  At their beginning, computers were absolutely huge with limited functionality and many firms were reluctant to enter an industry that was widely unknown.  It was not until the PC came out that a “standard” model for production was understood and more firms entered the PC market.  Being a leading innovator comes with high risk / high reward.  Plenty of capital is spent on research and development of a new product innovation, but if successful the market share held by the company leads to tons of profit.  Most companies air on the side of caution and will wait for someone else to work all the kinks out before they decide upon themselves it would be beneficial to enter the market.

Another concept I found intriguing was the S-curve serving as a prescriptive tool, where managers can roughly approximate when a technology will reach its limits and plan for moving to the next technological innovation.  In theory, this would do wonders for managers everywhere if they could predict this or identify new technologies, but there is always an unknown variable involved and hence no one can accurately predict when the next major breakthrough will come out or a product will be deemed obscure.

Robert Matyas

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