Radical Product Innovation

Radical Product Innovation

It is a type of Innovation that focuses on creating a new-to-the-world product (e.g. radio, car, mobile phones, and personal computers). Radical Product Innovations are disruptive to consumers because disturbed prevailing consumer habits with new products and value propositions. Also, are disruptive to producers, because punched competences and assets where they built their success.  This type of Innovation is not driven by demand, but for a supply-push process boosted by the new technology developers (Markides and Geroski, 2005).

Characteristics

New-to-the-world founders are rarely the ones who scale the business from their little niches.  Usually, new followers take off their lead in the market.

Radical Product Innovation leaders, time their entry to markets and undertakes hard work such as making heavy investments for scale economies, building strong brands and controlling channels distribution (Markides, 2006).

The Radical Product Innovation has the same scaling-up process made by the Disruptive Innovation, shared by Christensen (1997). Indeed different examples (Honda motorcycles, canon copiers, and Seiko watches) referred (Christensen & Raynor, 2003) are Radical Product Innovations.

How to compete?

Although mentioned above, if incumbents companies want to achieve Radical Product Innovation's advantage, might not follow up the strategy that described Christensen et al. Unlike, they can do what they are good at - consolidating young markets into big, mass markets (Markides & Geroski, 2005).

Other option, business incumbents can change quality and price, while improving the quality of the product to make it acceptable to the average consumer; or can create a network of feeder young entrepreneurial firms: or can invest in equity stakes to later support them at the moment of consolidate a mass market (Markides, 2006).

The Radical Product Innovation has a different product performance as Business-Model Innovation, although both types have a scaling-up process, therefore, the strategy to compete must be different for managers.

What type of Product Innovations am I talking about?

Here I share an interview where I'm talking about different products made by different scientific to reduce the effects of frost and cold in high Andean areas. Are these products Radical Product Innovation type? Are they Disruptive Innovation?

Markides, C. (2006; 23:19-25). Disruptive Innovation: In need of Better theory? The Journal of Product Innovation Management.

Markides, C. and Geroski, P. (2005). Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets. San Francisco: Jossey-Bass.

Christensen, C. & Raynor, M. (2003). The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston: Harvard Business School Press.

Christensen, C. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston: Harvard Business School Press.

Business-Model Innovation

What is a Business-Model Innovation?

It is a type of innovation and happens when an organization discovers a different business model in an existing business.  To be recognized as such, it should (1) Enlarge an existing economic pie - by attracting new customers in a market or by encouraging customers to consume more (Markides, 2006). - {Rolando: can't be by taking off customers from other competitors? Could be, but must be providing something new in a different way} and (2) Require different value-chains.

Characteristics:

Business-Model Innovation redefines what a product is and how it is provided, it is not used to build new products or services. E.g. Amazon never discover the bookselling business, rather redefines it and how it is provided.

Business-Model Innovation attends new "success factors" overlooked, changing the product's attributes used by traditional business incumbents.

Business-Model Innovation requires a different structure of their "business model" to attend new customers, even incompatible with business incumbents. E.g. If KLM sells its tickets on the internet like Easy Jet (low-cost), risks its existing distributors, their traditional service and travel agents. 

Equally to the Disruptive Innovation or Radical Product Innovation, New Business-Model Innovations offers a specific product performance that established customers start to switch to the new product offered.

How to compete?

Business-Model Innovation doesn't dominate a market according to evidence (e.g. internet banking) and literature (Markides, 2006), therefore it is not necessary to create a new company as Christensen said (Christensen, 1997). In fact, it is found that usually this type allows emerging fast to a certain percent of the market but fails to overtake it. So, incumbent companies can compete by using "Disrupt the disruptors" strategy, invest in adjacent markets or taking its business-model internationally.

Discussion

The way how Business-Model Innovation emerges from a low-performance market to a mainstream market is similar to the process of how Disruptive Innovation happens. This may explain how the term could be managed as the same, but a clear thing should be noted, Disruptive Innovation assume a total market overtook and "New Business-Model Innovation" don't. So, market impact's patron may be the difference?!

Markides, C. (2006; 23:19-25). Disruptive Innovation: In need of Better theory? The Journal of Product Innovation Management.
Christensen, C. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston: Harvard Business School Press.