The Future Of Innovaiton ... Managing The Fuzzy Back-end Of The Innovation Process

Dr Federico Frattini

The technological innovation process can be roughly conceived as composed of two major phases: a first one which is aimed at identifying and developing a new or improved product or service, and a second stage where managers struggle to successfully commercialise and establish it on the market. It is fair to say that innovation management scholars have directed their attention much more to the first stage of this critical process so far. They have in fact largely studied how to develop a firm’s capability to identify the most promising ideas for new products and services, how to effectively seize and incorporate the needs of extant and prospective customers into its innovation efforts, how to better organise and manage engineering and development projects. Far less attention has been devoted instead to look into the diffusion processes of new products and services, to understand the reasons underlying different levels of customer acceptance, and consequently to devise appropriate methods to manage the critical interface between the innovation process and the market. These issues have been the exclusive domain of bordering albeit distinct scientific disciplines such as marketing, sociology and economics.

In my opinion a number of evolutionary trends are currently in place that, in the near future, will make it easier for a firm to generate and successfully develop new products and services:

The opportunity to more easily tap into the diffused creativity of dispersed and skilled individuals, enabled by low-cost, web-based platforms and intermediaries (e.g., innocentive.com or designboom.com);

The overarching diffusion of new digital communication paradigms (e.g., web 2,0 and online-communities) that will allow to more easily involve the final users into a firm’s innovation process;

The growth and diffusion of innovation intermediaries (e.g., new product development service companies, contract research organisations, technology brokers), that allow a firm to more easily access missing pieces of technical competencies and knowledge;

If it is true that these dynamics will demand some changes in the management of the generation and development of new products and services (how to cope with crowdsourcing?), they will unavoidably improve the chance of a firm’s to succeed in the earlier phases of the innovation process.

At the same time, the market acceptance of new products and services will become an even more critical process to administer:

The pervasiveness of communication networks will magnify word-of-mouth, imitation, bandwagon and social contagion dynamics, with significant (both positive or negative) effects on the acceptance of innovations;

The growing interconnectedness of high-technology markets will make it harder and harder to successfully establish a systemic product on the market, especially when it substantially undermines the status-quo;

Ethic and social concerns, and other forms of intangible benefits, will become more and more decisive in determining the market success of new products.

I believe these trends will shrink the success rate for fully commercialised new products, notwithstanding the higher number of high-quality ideas and innovation opportunities available to a firm. I expect therefore that, even in high-technology industries, competitive advantage will be more and more influenced by marketing and commercialisation skills rather than mere technological prowess, as some authors have already noted.

The main challenge for innovation management scholars will be therefore to integrate established concepts and interpretative models belonging to traditionally distinct disciplines, i.e. innovation management, marketing, economics and sociology, to gain a better understanding of the dynamics underlying what could be called the “fuzzy back-end” of the innovation process. This is a pre-requisite for addressing some questions that will be of paramount importance for the success of a firm’s innovation efforts: how to manage the innovation process in order to elicit a positive attitude toward the new product among its early adopters? how should marketing instruments be employed to streamline the acceptance of highly radical innovations? how to coordinate the market launch of a new product with concept generation, engineering and development activities, so as to stimulate and harmonize the behaviour of the different players of the value network?

Article © 2009 Dr Federico Frattini. All rights reserved.

about the author...

Dr Federico Frattini

Dr Federico Frattini

affiliation:   Politecnico Di Milano; Department Of Management Economics And Industrial Engineering

position:  Assistant Professor

country:  Italy

area of interest:  Innovation management

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