Inversely, modern technology has become a framework and perhaps a threat equally existent as natural catastrophes have been from former times [56]. Innovations become more and more limited to the extent of the maintained technologies. For example, the increased traffic on wheels, by air or by waterways has reached a level where it is limited by progressive jams, accidents, and pollution and where there is no innovation redemption in sight. And technical commerce is increasingly affected by sustained financial crises, investment bubbles and superheated markets, which are also influenced by the expected technical achievements. Again, there seems to be no guarantee for success, even if there is a reasonable application for a justified business case by a practiced execution.
The Suez Canal generated in the first year after its inauguration in 1871 a surplus of FF 2 million, which increased until 1889 to an annual profit of some FF 30 million. According to the construction expenses of FF 426 million, this corresponds to a comfortable annual rate of about 7% for its investors of the French middle class. Therefore, a similar project was started for the Panama Canal in 1881, with a similar execution for a similar application and a similar business case, as well as the same engineering managers. However, the challenges turned out to be much more difficult than expected and ended in 1889 with the bankruptcy of the respective canal society and subsequently the worst financial scandal of the 19th century, as there was no legal substance to claim. The corresponding rights could be sold only in 1904to the United States, which realized the construction only until 1914 but inaugurated it just after the First World War. Obviously, success does not follow a blueprint scheme.
Many innovation projects try to manage the risks of failure by referring to a much higher number of success factors (see Figure 3.10). As has been explained before, an insignificant influence may turn out as a possible factor for success or for failure, too. And basically the two sorts of factors can be discerned: One to succeed the technical execution and another to succeed the economical diffusion.
Virtually all innovations need a combination of some factors. For instance, sales innovations require some technical factors to succeed, for example, for an impressive stand at a trade fair. And organizational innovations may need a new technical solution for transport and logistics.
The importance of each factor can be rated on an arbitrary scale and attributed to special classes of innovations. For instance, a radical innovation should dispose of extraordinary differentiating features and appropriate development efforts, as well as similar customer requirements and considerable profitability. In contrast, an incremental innovation should be characterized by high reliability and compatibility, as well as by an own marketability and related sales expectancies. A disruptive innovation requires usually a reasonable amount of patentability and synergies, as well as of entry barriers and assistant subsidies. And technological innovations rely basically on homologation and on own competences, as well as on a market development with a suitable scope of supply and services. differentiating features and patentability, which concern similar topics. And other topics may be relevant, like occasional opportunities, curiosity or personal technical interests. Once more, the different factors have to be understood in regard to the innovation project—and subsequently to be elucidated once again.
Figure 3.10: Arbitrary factors influencing the success of innovation projects.
For example, high innovation potentials include often differentiating features, thus enabling a very competitive market position, but generally with considerable development efforts and homologation requirements, as well as certified proof of reliability and sustainability. This appears feasible for an enterprise only if the innovation is somewhat compatible with its own marketability, competences, and capacities. Otherwise, there should be occasional or planned opportunities for cooperation and related synergies. Therefore, a suitable market volume seems appropriate with particular entry barriers and a related market development. The scope of supply and services has to match the customer requirements and an appropriate pricing. Thereby the sales expectancies and the related profitability can be derived, leading to a balancing of the development costs with respect to assistant subsidies.
A suitable comparative factor analysis for that is known under the mnemonic acronym SWOT—standing for strengths, weaknesses, opportunities, and threats. Thereby, each project case is subjected to a specific combination of strengths and opportunities to enhance as well as the concurrent avoidance of weaknesses and threats. It is therefore the duty of a success-oriented innovation manager to strengthen a project by the utilization of opportunities and an omission of the threats, as well as to consider related weaknesses. In particular, interdependencies can be studied in detail. Occasionally, this will help to improve the management of innovation projects.
Surely, at every given moment there will be various strategy circles underway to establish an appropriate logic for innovative enterprises and their entrepreneurial success. And supposedly, complex structures with parallel and serial interdependences are elaborated by these efforts. And this work can be certainly beneficial in several ways through a novel understanding of the respective technology to reveal the hidden potentials. Therefore, to care about innovation management may be some sort of a success factor itself, where a surplus value is generated without necessarily focusing on an innovation project case. This is important, but not for the aim of this book.
Lesson 15
The success of innovations is flanked by a triangle of execution, application and business; yet it is always challenged by coincidences!
3.1.4Promoters
Man is the measure of all things:
of things which are, that they are,
and of things which are not, that they are not.
attributed to Protagoras by Plato in Theaetetus about 400 BC
The number of ideas to establish an innovation cannot be counted—neither the factors required to succeed nor the plurality of categories to be taken into account. For sure, a genuine conviction seems mandatory, which has to be renewed all over again and again. And uncountable ideas for management and for work have to be elaborated on the way. Further on, particular ideas for execution, application and business have to be drafted. Yet, there will always be a remaining event of coincidence to be expected for the best or for the worst.
Hence, in the end it is the human factor, which makes any innovation. Or, as Carter has formulated as an Anthropic Principle [57]: “We must be prepared to take into account of the fact that our location in the universe is necessarily privileged to the extent of being compatible with our existence of observers.” Please note that physical facts are the privileged departure for sciences, whereas human reason is the privileged departure for innovations. Hence, both have to bow to some objectivation, as already explained before as a scientific principle.
The sketch of an innovator as an isolated genius is perhaps wishful for innovation projects. However, a set of several promoters for innovations is more realistic for that purpose. In addition to the different phases and to the various success factors, the management of innovation projects is ultimately also a question of various human competences and characters. According to the considerations of Witte [58] and Hauschildt [59], basically four different roles for promoters can be discerned (see Figure 3.11):
The Innovation Master is an authority to promote an innovation against all opposition, factual as well as reasonable. For each novelty implies some destruction of the old, considerable confusion or even anxiety come along with the expected changes, which therefore endanger or even prohibit the success of an innovation project. In consequence, the master promoter has the principal duty to convince the adversary parties and/ or to restrict the aversion against risks and changes to an acceptable level.
Figure 3.11: The various roles for the promoters of innovations.
The Innovation Crafter represents a functional competence according to the topic of the project case, especially in order to promote an innovation against all technical obstructions. For each novelty implies unknown mechanisms, a trained and appropriately skilled personality is needed in order to overcome the occurring problems in form and in content. Hence, the crafter promoter has the fundamental duty to contribute technical solutions and to introduce engineering knowledge in general and in particular.
The Innovation Planner disposes of special proficiencies according to the management of projects and of innovations, indispensable for any methodical proceeding. A professional planning can largely reduce or even prevent detrimental impacts on a project, since each novelty contains a considerable risk to fail. Consequently, the duties of the planner promoter are somewhat more indirectly placed, because he or she contributes certain services to the organization, the structuring and the proceeding of work and of functioning with a notable impact on the solution of problem or the marketing.
The Innovation Networker disposes on far-ranging contacts to all kind of other promoters, that is, other masters, crafters, planners or networkers, which becomes helpful to resolve the occurring organizational deficits in general. Such suitable networks are useful to cut short and/ or to save money, since each project is limited in costs and duration. Thus, the duties of the network promoters are in counseling, because a survey of dispersed experiences and of wisdom helps to understand the framework of a new field of interests. Widespread contacts may be helpful and may provide appeasing interventions in the case of conflicts.
A similar consideration of the social roles for undertakings is related to role acting in dramatics. This approach was also adopted in psychology to analyze the interaction of human behavior. Later on, the technique of Psychodrama was picked up for organizations and for the management of teams, as well. Obviously, a playful handling of human interactions in a role set facilitates the task to work out cooperation improvements. In any case, play actions are quite popular, be it for historical enactments or for electronic games.
For instance, the development of a project team can resort to medieval stands in order to combine the various capabilities with the required role functions. Therein, the nobility represents the master role and the craftsmen the crafter role, while the clergy may stand for the planner role and the traders and innkeepers for the networker role. Perhaps, similar constellations have been responsible for the rare innovations in medieval times.
According to project stakeholders and the related management duties similar role correlations can be established. And the manager of an innovation project should perhaps discern if and how different role aspects are covered by the project team.
For example, the master role seems to be reasonably related to the project sponsor, which implies the skilled work to decide about the requirements, about the priorities and about the milestones. The workforce of a master is rather general, for example, the elaboration of a strategy and the survey of programs and of portfolios. And the cooperation is basically due to the project manager by an authorization of leadership. Thus the sponsor takes an entrepreneurial responsibility for the choice of the topic, its budgeting and occasionally its abortion.
Consequently, the crafter role is more related to an individual project team member and the skilled work on various work packages as well as the execution of the activities in a project case. The cooperation there is mainly with the other crafters of a work package or those of other work packages. And a crafter is responsible for the skillful execution of his or her activities, for example, the job completion, the provision or an implementation.
Therefore, the planner role in a project case can be better attributed to the project manager, because in general the skilled work required for this is due to managerial aspects like conception, organization, project scheduling, and controlling. However, the manager can delegate all these duties to crafters but not the duty to take care of and ensure an execution of these duties. Therefore, the workforce and the cooperation of a planner consist mainly of distribution, balancing, and integration of the management duties. And the manager is thus responsible for the correct execution of a project—although he or she may delegate the whole execution to others.
Finally, the networker role seems appropriate for a member of the steering committee of a project. Thereby, the skilled work of networking contains counseling and surveillance—and the workforce of networkers consists in the proliferation of information and of contacts regarding the project case. Networkers cooperate with all imaginable stakeholders, that is, sponsors, team members, and managers, in the role of a mentor, a coach or even a mediator, if required. Thus, the responsibility of a networker lies in the procurement and in the maintenance of good personal relations and a general balancing between the works and the other related responsibilities.
Again, the role setting of human characters represents an approach to manage the plurality of possible categories for an innovation. In sciences, a similar setting has already been discerned in the ancient classics. Or, to cite Sextus Empiricus of the 2nd century:
When people are looking for something, the likely outcome is either that they will find it; or that they will give up the search and admit it cannot be found; or that they will carry on looking for it. [. . .] The ones who think they have found it are called “dogmatists” in the strict sense—examples being Aristotle, Epicurus, the stoics, and various others. The ones who assert that it cannot be found are the school of [Plato’s] Academy. Those who are still looking for it are the skeptics. [60]
What Sextus omitted in his comprehensive approach is obviously promoters, who were not looking for understanding but for mere existence, who were called cynics at that time.
Again it may be useful to relate these personality types to the management of projects—in order to seize and to control the influences on innovations by a clear breakdown of categories. And some relation to innovation promoters and to project stakeholders seems feasible, as all these settings contain an equal number of four archetypes.
The classical cynic presumes that every profound contemplation is purely human and without any practical relevance. Thus, a cynical fundamentalist restricts all his reflections to mere biological needs, just like a dog, which is literally the Greek origin of the word “cynic”. The classical protagonist of a cynic was Diogenes, sleeping in a barrel, eating whatever was available, defecating whenever and wherever the need occurred and refusing any tradition or citizenship. An anecdote recounts that Alexander the Great offered him once any favor of his power. While Diogenes was relaxing in the morning, he simply asked Alexander to stand out of the sunlight.
Such cynicism seems quite appropriate for the role of a master, imperturbable and focused to comply with the very duty to promote an innovation against all resistances. Any conviction, any deeper understanding or even bias may cause a distraction and may endanger the pursuit of the goals. And sometimes you may need someone to just clear the conditions and smoothen the way to success. Especially for innovations it is sometimes advisable to watch out for the utmost simplicity in performance, for example, to construct foolproof and robust machinery, like protective switches or automatic process control devices.
In contrast, the classical dogmatist appreciates sometimes a verbal comprehension even higher than reality. Thus, a dogmatic fundamentalist strives to seize the world by the right words, literally standing for a dogma. The classical protagonist of a dogmatist was Aristotle, codifying many terms, which are still applied almost unchanged across millennia and thereby founding abstract concepts for logics, geology, physics, metaphysics, biology, medicine, psychology, and philosophy by an enormous amount of dogmatic writings. However, some of his esoteric statements— literally being employed by him for doctrines—should by mentioned, like the spontaneous generation of mollusks from mud or of worms from long-standing snow. Obviously, his ambition to furnish a suitable answer for everything has been overwhelming at times.
Such dogmatism seems quite appropriate for the role of a crafter, who is ready to handle, record, include, gather, seize, measure, determine, and realize all appearing problems with an appropriate means and to derive a practical solution. And sometimes you have just to follow rules, theories or maybe doctrines in order to comply with the expectations. Especially for innovations it is sometimes advisable to come back to an utmost unsophisticated pragmatism, for example, to provide sustainable and holistic solutions by resorting to natural paradigms, like cat’s eye reflectors, Velcro fasteners or lotus effect surfaces.
In between the two promotion roles, the classical academic tries to establish a correlation of factual things and their understanding. Thus, an academic fundamentalist needs a community of like-minded people, the Academy, named after a grove near Athens as a meeting point of Plato’s scholars. And Plato can be estimated as the classical protagonist, describing the ideology of two corresponding worlds of facts and of reason, seized by man in between due to perception and to understanding. Although he himself derived detailed concepts with some practical impact, academics have generally been known in the classics to refuse any concrete application of their thinking, because—as explained before—they were conscious about the notion that epistemology stays always arbitrary and subjected to coincidences.
Such academicism seems quite appropriate for the role of a planner, who relates everything to everything by means of appearances, of impressions, of understanding and of comprehension—and back again from thoughts, to recognitions and to information to display—that is, the whole entelechy to and fro. The antique Academy lasted for more than a millennium and set standards for teaching, education and formation, because sometimes it is more important to care about coherence, comprehension, and linkage in order to ensure the correct process, than to just push or pull preconceived convictions and the related skills. The academic mind cares about the overall framework and ensures the process in general. Especially for innovation projects it is sometimes advisable to explore the technological environment without instantaneous remuneration. For instance, astronautics or informatics have been for a long time a predominantly political or military aim with high expenses and no obvious remuneration; yet, they finally enabled new markets, like thermal shields or computers.
Finally, the classical skeptic stands for a permanent survey, for caution and for diligence, of all factors and probable coincidences. Thus, a skeptical fundamentalist strives to withhold any opinion, statement or judgment in order to learn as much and as long as possible and obtain insight, literally being the origin for the meaning of the word “skepticism”. The classical protagonist of a skeptic was Epicurus, always concerned about even temper and equal opportunities. His garden parties were famous because even women and slaves were invited to join the discussions. Company and friendship were esteemed as the basic virtues to live an inconspicuous life with the lust of curiosity and of apprehension.
Such skepticism is obviously well related to the role of a networker, who is fond of the plurality of influences and the importance of the acting individuals. The skeptic mind is always open for some new ideas and further contributors, sometimes even to an extent that the terminal aim appears being neglected. Especially for innovations, it is always recommended to collect all kinds of information, which may become helpful to succeed, for example, to establish a comprehensive project brief, to keep track of a clear storyline and to record, review, audit, and report the proceedings. Nowadays, an Internet blog or a virtual forum are themselves innovative communication platforms to work on ideas, experiences, considerations or doubts—independent from a cynical, dogmatic or academic exclusiveness.
Altogether, it can be stated that promoters play not only an important role for innovations—and account for a helpful mindset for innovation projects—but that they furnish special innovative results, too. In order to enhance innovations, it seems therefore equally advisable to promote an ample cultivation of different mindsets.
For instance, eclectic is a mindset to select randomly single components of other mindsets in a somewhat cynic way of pragmatic opportunism. And an eclectic innovation would perhaps be to add more and more features to a machine, like a modern car, which is not only built to drive but provide considerable comfort—or a modern computer, which is not only contrived to compute but also to be used as a game station.
Then, ethereous is a mindset to summarize different mindsets under a new superior label—since ether means literally the blue sky and was estimated as the fifth classical element, where earth, water, air, and fire have their origin. Accordingly, the sum of other mindsets forms a somehow superior dogma. And an ethereous innovation can perhaps be to merge two or more features to a new product, like the modern smartphone comprising telephone, camera, media player, navigation unit, digital assistants, motion sensors, calculator, and many more.
Further, relativized is a mindset in between other mindsets and therefore somehow an academic way to combine cynic, dogmatic, skeptic or even other academic mindsets. And an example for a relativized innovation may be the diversification of products, like a modern sports utility vehicle (SUV) for off-road-on-road applications or an augmented reality (AR) for virtual inputs to real perceptions.
At last, a pluralistic mindset combines more and more elements of other mindsets in a skeptical manner, that is, without striving for a terminal result, just adding up suitable features. Corresponding pluralistic innovations seem to be a characteristic of our time, like the boom of innovative products due to the merging of devices for mechanics, electronics, informatics and communications, or like cyber physical systems (CPS) or technological transhumanism, as previously described.
Although the aspects of these other mindsets are similar to the classical ones before, they are different in their perspective. And the distinction between an aspect and a perspective may be an essential ambiguity for innovation, too.
For instance, according to the entelechy of different phases of an innovation project, there may be firstly a more eclectic mindset required to generate an arbitrary amount of ideas for conception and exploration. But subsequently, in order to achieve organization and feasibility, a more ethereous approach seems appropriate. Yet, when it comes to planning and testing, a relativized proceeding is recommended. And in the end, for launch and control, a pluralistic manner is advisable to avoid failures and take all the chances. Again, these mindsets seem rather helpful to fulfill the duties of an innovation management.
A more recent approach to seize the categories of human mindsets is the concept of intelligence—literally meaning reading between the lines. And intelligence comprises the ability to discern several levels of thinking at once, for example, to combine perception, application and business to a comprehensive idea for an innovation with some respect to coincidences. In its extents, intelligence seems to be a unique property of mankind and is supposedly the origin of the human dominance on earth. For it requires an intelligent mindset to recognize a sharp edged stone as a possible tool for hunting with various ways of handling and individual implementations—at once.
Therefore, it has been a scientific goal to measure intelligence and to establish a degree of giftedness. Around 1900 Adler introduced a comparative test to derive an Intelligence Quotient (IQ), although initially just to check the ability of children for school enrollment, when this became mandatory in France. For sure, some maturity is required to follow the abstract instructions of an education. And the IQ proved rather to be suitable for that purpose.
However, in performance of adult abilities, a single factor turned out to be quite inappropriate, because the variety of roles and the related mindsets cannot be seized any more by prescribed test functions. A standardized test is incapable to discern, whether an achievement is due to previous training or to spontaneous cognition. Therefore, Gartner developed by 1983 a new concept of Multiple Intelligences, where he attributed intelligent capabilities to different categories [61]17 (see Figure 3.12):
The kinesthetic intelligence concerns the bodily abilities of a person to move and to handle objects skillfully, like for sports and for crafts. A kinesthetic promoter of innovations may anticipate possible interactions of people and of activities, or sees options to coordinate different movements in a dynamic way. Accordingly, kinesthetic innovations may be sport equipment or vehicles, like the surfboard, the paraglider or the Segway.
The spatial intelligence concerns the visual abilities of a person to show and to judge proportions, like required for design and for architecture. A spatial promoter of innovations may seize the dimensions in construction and support the configuration for a packaging. Accordingly, spatial innovations may be particular entertainment equipment or platforms, like 3-D glasses, navigational instruments or image evaluation.
The linguistic intelligence concerns the verbal abilities of a person to explain and to argue convincingly, like demanded for journalists and salesmen. A linguistic promoter of innovations may find some catchy words and suitably convincing expressions to assure the plausibility and the uniqueness of a claim. Accordingly, linguistic innovations may be emoticons, where a flipped punctuation stands for feelings like joy :), or irony ;), regrets :(, or surprise :o.
The harmonic intelligence concerns the musical or the rhythmical abilities of a person in order to harmonize or to coordinate appropriately, like for spectacles or for negotiations. A harmonic promoter of innovations may discern the right place at the right time with the right purpose for a successful launch of a projected result. Accordingly, harmonic innovations may be equipped with a special feeling and some verve, like the sound of a Porsche or that of a Harley-Davidson.
The logical intelligence concerns the mathematical abilities of a person to transform and to justify consequentially, like expected from engineers and from information scientists. A logical promoter of innovations may generate new structures or new arrangements of the given settings in a novel logical manner. Accordingly, logical innovations may contribute to the encoding or to the decoding of confidential data in cryptographics.
The intrapersonal intelligence concerns the abilities of a person for self-reflection and for abstractions, like required for philosophy and for natural sciences. An intrapersonal promoter of innovations may contribute an individual understanding of a technology with principal effects to a product or to a process. Accordingly, intrapersonal innovations may be derived from fundamental detections, like the vaccination or other medical therapies against immune deficiencies.
The interpersonal intelligence concerns the social abilities of a person to sense the moods of other people and to establish relationship, for example, for psychology and for coaching. An interpersonal promoter of innovations may remark hidden feelings or stimulate occasional empathies to enable improved collaboration and some organizational learning. Interpersonal innovations may be due to possibilities of communication, like blogs or social networks.
The naturalistic intelligence concerns the holistic abilities of a person to feel as an integrated part of a universal whole, like presumed for ecological and—hopefully—for leadership activities in politics and management. A naturalistic promoter of innovations may see the greater aims of a project case or integrate a wider range of possible impacts. Accordingly, naturalistic innovations may be about ecology, share economy or transhumanism, like renewable energy, complementary currencies or self tracking.
The latter form of intelligence has been added by Gardner in 1995, and in 1999 he suggested a further “half-form” of existential intelligence concerning the spiritual and religious abilities of a person. Like all categorical approaches the final amount is somewhat arbitrary, or, as explained before, due to an 80–20 rule of imperfection by the Pareto principle.
In any case, there can never be a perfect personality, who combines all the aspects of different intelligences on a superior level. Especially, some forms of intelligence imply in certain contradiction to others, like a superior intrapersonal reflection as well as an extraordinary interpersonal empathy—or an equally elevated logical as well as naturalistic intelligence.
On the other hand, all people seem to be equipped with a considerable degree of all sorts of intelligence, even those dozen of mostly men, who suffer from the savant syndrome of autism. Although they exhibit an outstanding mental capacity in a particular form of intelligence, they have a rather low IQ in general.
Apparently, each person disposes on a unique distribution of various intelligent abilities, in grade and in combination. This seems to make all of us somehow individual and unique. And the strength of a team is that by cooperation a larger coverage of intelligences becomes available for everybody, as even contradictory aspects may become solvable.
Besides, everybody has the potential to change deliberately the personal profile of intelligence, by and by. Surely, disruptions in character and in personality are rare and not desirable at all. Yet, some plasticity can be achieved, because intelligence raises or diminishes due to steady exercise and due to an individual demand. Most people may not become outstanding in a special category but they will always be outstanding in a suitable combination of categories.
Again, this is somewhat similar to innovations, since novel appearances dispose of a special characteristic of almost everything to a certain extent. The special feature of an innovation is an appropriate selection of diverse properties combined just for a unique purpose. And no innovation can be outside the known universe, because it would then be inexplicable and unintentional, like a wonder. For the economic advantage can only be achieved for things of known and feasible conditions.
Finally, each innovation contributes to a slight change of abilities and of the mindsets. By and by the options become feasible due to the technological environment, and under consideration and selection of advantages and of disadvantages. By an intelligent adaptation for improvements—or exaptation for disruptions— the management of innovation projects will be successfully completed.
Lesson 16
An innovation has to be supported by manifold mindsets!
3.2Marketing
There are two aspects on which all success of undertakings depends:
The first is to determine well the purpose and the aim of activities.
The second is to find the right actions for that aim;
for the right means and the desired results may agree or disagree.
from: Politics, book 7, chapter 13 by Aristotle about 350 BC
Innovations belong to that particular fraction of projects that have to become applied on the market in an economically viable way. The aim of an innovation project is the deliverance of a new economic good, yet with the purpose of its diffusion on the market.
There are many other project cases that just aim for a technical demonstration of feasibility, for instance according to scientific, educational, military or personal purposes. But the purpose of an innovation project is a profitable rewarding on the market. Thus, the successful marketing becomes compulsory, too. It is often the cause for the failure of innovation cases that this peculiarity is neglected—or maybe it is just expected that the market is ready somehow and free markets will rule everything autonomously for the best by themselves.
Consequently, it seems helpful to recognize an innovation always as some sort of program, which consists of two interlinked project cases: An engineering project to accomplish the factual invention and a marketing project to realize a reasonable economic viability. The predominant duty of an innovation manager is therefore to align two project tracks to a concerted success. Or, in regard to the quotation above: The purpose and the aim of an innovation is the establishment of a marketable novelty with an economic viability—and the actions for that aim are derived by means of project management.
The managerial duties for marketing were established by Borden in 1953 as a Marketing Mix [62] and structured by McCarthy in 1960 under the acronym of 4P [63], which was reassessed in 1990 by Lauterborn to 4C [64]. As these duties are related to the public, they are sometimes also called marketing policies, too. Similar to the managerial duties for projects—that is, conception, organization, planning, and controlling— each of the P- or C-terms represents a graduated structure of tasks and of activities [10] (see Figure 3.13).
Figure 3.13: The four pillars of marketing to support an innovation.
In detail, the Product Policy18 concerns the particular item produced to satisfy the demand of a customer. It depends on a distinguishable offer from an assortment of goods and services, in which a wholesaler offers a broad assembly of products and their combinations, whereas a retailer is mainly focused on variations of a few products. A brand is the distinctive tag or label for product communications, serving for recognition and for differentiation. A related service will coin the appreciation of the customer pre sale and after sale, including further liabilities, like the warranty or goodwill.
The Price Policy concerns the economical viability of a business due to the appreciation of the customer. The price fixing depends on a fair margin between a cost-oriented lowest limit and a demand-oriented highest limit. The price level is the proportion of a product in regard to comparable goods by an analysis of the market basket. By price differentiation the particular conditions of sales are considered, like seasonal effects, market segmentation or buyer groups. And the price strategy is based on further desires of the customers like the packaging, a fixed price or the willingness to pay.
The Promotion Policy concerns public information and communication regarding to the offer. By advertisement a broader publicity becomes informed and influenced, be it media like notifications, posters, stickers, spots or pop-ups, or be it promotions like shirts, giveaways, coupons or jingles. Merchandizing stands for concerted campaigns or other events, which stimulate a spontaneous impulse for the acquisition. In contrast, sponsoring is rather an attempt to impress a peer group and to enhance the general image of a label by public relations.
Finally, Placement Policy, also known as distribution policy, concerns the path of a product to the customer. By logistics the concrete physical transport is understood, for instance through stores, outlets, shops or agencies or even home delivery. In contrast, the trade channel for acquisition is maintained by representatives, by agents or by salesmen via a consignment or franchising. Sales competence regards the qualification of the staff according to some guidance and a support to obtain appropriate customer satisfaction. And sales distribution includes an assessment of the product diffusion and a rating due to the overall market volume.
Obviously, these pillars of marketing seem equally applicable for innovations. And the underlying tasks can be understood and interpreted by other wordings, like a factorization of product quality, price quantity, related promotion and the modalities of placement—or maybe a scientific entelechy of imaginable products, recognized pricing, promoted information and displayed placement. Similarly, the 4Cs can be aligned according to the customer claims for the product, the cost correlation for the pricing, the communication covering for the promotion and the convenience commensurability for the placement. And many other Ps or Cs may become added, too.
Scientifically, the market belongs to the truths of reason, which is therefore subjected to the law of entropic increase and shows some dispersion potential, as previously explained. As a consequence, a permanent abundance of new considerations and affluent wordings is mandatory to keep the sales on the market running. This appears to be somewhat innovative, although without a genuine factual achievement for the required objectivation of an innovation.
But a higher relevance for innovation management can be discerned by a closer look the Market Basket and the related classification of goods. Frequently, innovations do occur by a novel combination of different classes on the basis of improvements, of disruptions or of technology (see Figure 3.14).
For instance, an innovation is generally a scarce good, which therefore has to be procured and supplied by human activities and efforts. And it appears just due to these efforts that a reasonable remuneration becomes justified. There are also abundant goods procured almost for free by nature and without any perceptible innovation reward. However, regarding the considerable efforts for the detection of a natural resource like gold claims, wide-band broadcasting radio network or the genetic code, this distinction becomes arguable. On one hand, nature represents a gifted heritage in abundance, yet, on the other hand, a newly discerned resource enables enormous advantages for appreciation, for communication or for medical treatments. And this discovery relies equally on expensive work as well as on sophisticated management according to the corresponding innovation projects. Therefore, an appropriate remuneration seems to be justified for their innovative use.
Another example is the distinction between real goods with a due exchange value on one side and nominal goods with just a certificate of value on the other side. Nominal goods are generally without a sizeable innovation reward because a new certificate, like a novel banknote or a fancy pawn ticket, does not really count for a perceptible achievement. However, the financial crisis of 2008 was caused by innovations of financial products, that is, novel certificates consisting of bonds, mortgages, pawns and even other certificates, which occasionally contained further certificates and so on. Obviously, this enables some sort of value creation for nominal values, without a connection to objectivity, anymore. In such cases, the innovation reward is obtained mainly due to the effort of the marketing of those novel nominal values.
A further example for market innovations is the discrimination between consumer products and industrial goods in order to the way the goods are distributed. However, through Internet stores and delivery services the traditional frontiers between retail, intermediate or wholesale trade have vanished. For an Internet trader it is not necessary any more—or important to know—whether a client orders for his business or for his personal needs, that is, business to business B2B or to customers B2C. The original equipment manufacturer (OEM) may even start an own trading platform. And the client may even use the product for an own redistribution, that is, customer to customer (C2C). Notably, disruptive sales and organizational innovations are due to the destruction of the traditional trade channels.
As for a last example, a differentiation can be questioned between material and immaterial goods, like commodities and services, respectively. Although the difference appears quite clear, its comprehensive disruption is connected to a prominent achievement in innovation history. In order to make the potentials of the steam engine marketable as a power engine, Boulton invented a special way of marketing by contracting, as already explained as a success factor before. Ever since, the customer can chose to pay for immaterial power supply instead of purchasing the corresponding machine. Meanwhile, it is familiar to use an electric socket instead of a generator, a central heating network instead of an own boiler, compressed air piping instead of a local compressor or tap water instead of a built-in water pump. Similarly, the past years have effused a novel trend toward a share economy, where goods like mobile phones, cars, aircrafts, and even entire production plants are available by service contracts. In agreement with the scientific explanations before, any innovation is based on some sort of line allegory between factual exclusivity and reasonable abundance.
Apparently, the marketing is not just a managerial field of duties for innovation projects, but may become also a source of innovations by itself. More than the marketing of innovations, an innovative marketing is possible, too. And this exhibits a considerable impact on the scientific proceedings of innovations as follows:
Technology push is called the inductive way in marketing from factual feasibility to reasonable use (see Figure 3.15). An innovator executes a new product and tries to find suitable applications for a justified business case. In this way, the essential purpose is a follow-up of the real existence—to recall Sartre’s statement about the duality in sciences, which has been mentioned previously. For example, concept cars or similar novelties on other exhibitions and trade fairs serve the purpose to cause desires for new technologies and the related improvements—and to tie that to customer expectations for the other offerings.
But Market pull is inversely the deductive way from reasonable demand to technical facts. The marketer conceives a new application in order to elaborate a suitable product for a comparably justified business case. That way around, the factual structure follows a reasonable strategy—to recall now Chandler’s statement about the order in culture. For example, a market research by primary poll or secondary customer survey serves to understand the needs and the wants of the market players— and to tie these reasonable grounds to a further product development for the own innovative offerings.
Lesson 17
The economic value of an innovation is generated on the market!
3.2.1Barriers
The reasonable man adapts himself to the world:
The unreasonable man persists in trying to adapt the world to himself.
Therefore, all progress depends on the unreasonable man.
from: Maxims for Revolutionists #124 by George Bernhard Shaw 1903
Innovations head for a certain exclusivity and therefore are inherently somewhat barred from the market. Hence, the marketing barriers are genuinely due to the particular intentions of an innovation project case. Furthermore, potential customers for innovations are initially not aware of the new offer, in general. Additionally, the administration authorities do not know about reliability, related permissions or hidden risks to allow a distribution. And innovators ignore the market conditions, since the business is novel, too.
In total, every beginning of innovation marketing has to face an early ignorance in regard to the new offer. And the primordial task of an innovation marketer is to convert this ignorance into knowledge. Again, the scientific method of elenctic turns out to be required for getting started.
Just to trust the facts is an insurmountable barrier for any innovation because everything is and stays exclusively as it is. As pure matter of fact, there is never a chance to get things become otherwise than factually stated.
But to trust just the reasoning is also a considerable barrier for an innovation because mere reasoning has no substance and is therefore hard to trade. Hence, a suitable confinement is necessary in order to protect a reasonable idea from dissolution by verboseness. In consequence, the barriers for innovations do always appear as a joint matter of facts and reason, as any other topic in science.
Scientifically, the line between facts and reason is divided into an “exclusive” section for facts, which is ruled by the law of conservation on one side—and on the other side a somehow “diffusive” section, which is ruled by the law of entropy. These two sections are obviously contradictory, incompatible and incommensurable with each other. Therefore, a considerable effort is necessary in order to surmount the unseen or hidden barriers in between. And an ingenious action to tear down the barrier between facts and reason is always required to bring an innovation to market. In particular, a marketing project needs an appropriate culture in order to handle these barriers.
However, such a barrier is rather useful to separate a project case in an inner and an outer region. In that way a barrier—literally meaning a fence or a hindrance, like a bar or a barricade—is also a limit for all kind of hurly-burly changes. Within the protected framework of a project case, the exchange with the outer world becomes hindered, restrained or even completely prohibited. Consequently, project achievements are protected from outer incidents or threatening consequences. And especially an innovation project is mostly shielded from outer impacts during the time accredited. Within the cage of a project case an innovation may maturate to a stage of self-reliance, and becomes thereby fit for the outer circumstances.
Barriers encase a necessary shelter for a due time of a project, without the permanent requirement of business routines to maintain an economic balance. And without a barrier, all achievements due to project work and project management would be equally accessible to competitors for free and therefore without a suitable reward by marketing in order to obtain remuneration for the expenses. Virtually nobody would then go ahead and strive for improvements. This is the reason why intellectual property rights are justified by laws, for example, through patents, protections of utility models and registered design or even just company secrets.
In allegory to nature each species exists within its ecological niche, habitat or biotope. In this special environment it can survive and develop. When the barriers vanish, for instance by an exodus or due to a change in climate, a murderous selection begins. Notably, the human species subsists not just on natural circumstances but on cultural conditions, too, which clearly discerns a particular location of the earth from others. If those cultural barriers tumble, a higher risk to lose money or life occurs.
But then again, a barrier is also a nuisance, because resources and expansion is limited within its fencings. Especially the introduction of novel products, processes, sales, and organizations would be considerably eased without any barriers. A free exchange of goods and of services is better to allocate wealth and prosperity, which can be subsequently invested in innovation projects. The natural evolution of species needs also certain clearance to improve and expand. The extinction of one species allows the emergence of others. A change of the living conditions is a pressure to adapt by improvement. And the history of humanity and of culture has examples, how flight or expulsion led to novel cultural achievements, eventually turning out extraordinarily advantageous.
In consequence, a barrier is apparently an ambivalent issue. It stands for protection and for limitation, for opportunity and for threats. In science and in business it is equally necessary to respect or even to establish barriers, as it is essential to surmount or even to tear down barriers from time to time. This makes the managerial duty of a business culture somehow paradox. Especially innovations include this discrepancy, where barriers are used as a support and barriers have to be broken for an advance. The latter duty, in particular, consists of some elenctic patterns for the marketing, as follows:
Factual barriers can be generally broken by hard work, for instance by the promotion of masters, of crafters, of planners and of networkers. The barring facts become surmounted by a culture of communication, of directives, of organizational structures and of organizational learning. Further, they become resolved by subsequent phases of exploration, feasibility, testing, and the launch in alignment with repeated conception, organization, planning, and controlling. And they become successful by the joint action of success factors for the technical execution, for the reasonable application and for the justified business case—with respect to an occasional coincidence. All these works are due to project cases and have been largely explained before.
With these preliminary works one can already maintain the most frequent barriers of an innovation project. In an early stage the technical barriers are usually predominant, like the limits by natural laws, the availability of raw material and of tools, the compatibility of different components or even the maturity or crudeness of a technology. Later on, the organizational barriers become mostly important, like a limited knowledge or an inferior experience due to the required competences or the abilities in work and in management, the available resources, the budget and the capacity of the workers and of the staff or even the motivation and the interests of the stakeholders. Then, there are always regulative barriers to consider, like the records, reviews, audits, and reports within the project scheduling, as well as work instructions, product specifications or homologation. Yet, finally the highest barrier appears always to be the effort to reach beyond the limits of knowledge.
Human understanding is limited to the extent of being compatible with the requirements of our existence—to paraphrase the Anthropic Principle, previously explained for promoters. In his psychoanalysis Freud coined the idea of an internal censor inside the human mind, which separates the existential needs of reality from the essential abilities of imagination [65]. Awake, most notions of imagination are unconsciously suppressed by that censor to allow a practical existence. Yet, in our dreams the essential purpose of life is worked out. To a certain extent, this psychological model seems to be appropriate for innovation management, too. Practically, a project target requires work and management; yet, essentially, perpetual strive for purpose and ideation is necessary, too.
In science, the limitations of the human mind have been already elaborated and described by Bacon in his oeuvre Magna Instauration in 1620, as cited before. In order to confine the limits of the human understanding, he discerned four types of idols— literally meaning illusions or errors. For the marketing of innovations these typical patterns of error may serve as a starting point to make use of the elenctic method (see Figure 3.16):
Figure 3.16: Barriers to objectivation by human illusions.
The first illusion is the misperception due to the human senses, called idola tribus, which means due to tribal descent of the human species. For instance, people are practically inept to perceive radio frequencies, infrared light or ultra- or infrasound, as some animals do, such as sharks, snakes, bats or elephants, for instance. Our sensing of the world is therefore restricted. For example, this barrier is an obvious limitation for every progress in electronic data transmission, which is accessible to mankind just by sophisticated appliances and requires arduous academic studies. Yet, it offers tremendous possibilities and rewards, if surmounted, for example, by suitable devices for a universal mobile telecommunication system (UMTS) or for longterm evolution (LTE) for wireless communication.
The second illusion is the bias of prejudice due to human experience and comparison, called idola specus, which means due to individual aspects and related perspectives. For instance, a frequent experience of a failed innovation and its technology may be that any change bears a certain risk and that human requirements are mostly satisfied and not worth to advance any more. The perspective is therefore influenced by personal expectations, impatience, intolerance or plain incompetence. For example, the combustion engines for cars are nowadays well established by sophisticated mass production and by a network of service stations, as matter of fact. Therefore, electric drives have the problem that manufacturers and related service stations have to elaborate appropriate technologies for mass production, for repair services and for standardized fast refueling—just to name some basic barriers. And virtually nobody knows for sure if the electric way of power generation, distribution, onboard storage and overall consumption turns out finally more efficient and less polluting than further engine improvements by selective catalytic reduction (SCR) and biomass to liquid fuel (BtL). The illusion is here the pretended knowledge by experience, and some comprehensive information may be an appropriate mean for a spectacular marketing.
The third illusion is the misunderstanding due to the human language and the articulation, called idola fori, meaning the forum for discussions and discourse. For instance, the reasonable application and the appreciation of a device are always negotiable, like a purchase decision between wood or plastics, shirt or pullover, vacation at the sea side or at the mountain side. Everything is somehow arbitrary and therefore arguable. For example, biotechnology and nanotechnology are originally quite natural ways of production and of the material structure due to the genetic code—which is notably a biological and nanoscopic process. Hence, traditional products like wool, leather, ink or wood can be veritably praised and marketed as products from biologically processes—or from nanotechnology, as well.
The fourth and final illusion is wishful thinking due to the human flowering imagination, called idola theatri, which means due to the personal passion by the performance. For instance, the hope and the desire for eternal health and survival are not realistic. Yet, the fantasy knows no bounds, especially when enhanced by technology and virtual reality. For example, the barrier between life and death is basically known to everybody. But survival is an utmost reason and so highly desirable that probable healthy and life prolonging means and therapies are placed on the market over and over again. The business about healthcare and related medical treatments is the biggest and most profitable on the global market. The illusion of perpetual health for body and mind spurs equally perpetual novel financial products to an ever increasing market, like life and long-term care insurances.
Lesson 18
Barriers for innovations are useful, yet even more useful if surmounted!
3.2.2Diffusion
God, grant me the serenity
to accept the things I cannot change,
the courage to change the things I can,
and the wisdom to know the difference.
Serenity Prayer attributed to the theologian Reinhold Niebuhr around 1940
As previously described, an innovation project consists of an entelechy of factual advancements, which are achieved by managed activities during phases, and reasonable management routines, which are performed during phase changes. Now, for a thorough management, it seems of superior interest to find out when one or the other prevails. Therefore, an appropriate understanding of the entelechy for changes in marketing appears to be helpful.19
Scientifically, management concern reasonable activities in order to obtain factual changes and related achievements, in general. In detail, the progress by the marketing of an innovation becomes perceptible with the changes of the market conditions, like the product sales, the price level, the distribution and the brand awareness of the marketing mix. And innovation managers try to affect their market by suitable marketing actions in an appropriate way.
In order to obtain a straight line between the reasonable management input and the factual marketing output the three success factors of the magic triangle have to be simplified. Therefore the two items at the baseline, that is, time and costs, are virtually merged to the inputs of management, for instance the activities due to the workforce, to the budget, to the investment, to a delay or just to the required management attention. The related output for an innovation project is then merely due to the achievements of the intended effects, like remuneration, improvement, disruption or technological progress (see Figure 3.17).
The usual way to proceed scientifically is to divide the line of intentional change into several sections according to the factual achievements gained in between. According to Rogers, the perceptible output can be discerned by the adoption of innovations [66]. And the phases of such a course can be seized by different types of adopters.
In the beginning, merely a few innovators will take the risk of purchasing a novel good from the market and early adopters begin to buy, test, experience and appreciate an innovation and to diffuse their conviction to a broader community. Subsequently, in case of success, followers will adopt the offer, sooner or later. This will lead further on to a majority of adopters. Later on, further adoption will be increasingly harder to achieve according to laggards, who prefer to wait until an innovation has become familiarized, virtually at the limit of being called novel. Although there may also be leapfroggers, who even outwait some innovation cycles entirely, these four phases characterize suitably well the different phases of the marketing of innovations (see Figure 3.18).
Figure 3.17: Simplified input-output relation of the magic triangle.
Most interestingly, the particular form of this course complies with the earlier observation and the demand for self-similarity of project management as a fractal pattern. A superposition of two or more adoption courses yields again an adoption course by its envelope (see Figure 3.19).
For instance, the diffusion of photovoltaics started in 1953 with a first version of (mono-) crystalline silicon c-Si, which was improved in 1981 to an advanced version of polycrystalline silicon mc-Si and then became substituted by a version of amorphous silicon a-Si in 1999, ready for thin film applications and large solar cells, until the version of organic photovoltaic cells OPC became available by 2009. The cumulating superposition of the adoption curves for each single technological version yields to an envelope course for the total adoption of the photovoltaic technology. Thereby, the bell-shaped course of adoption shows to be particularly suited to cope with the demand for the management integration of several innovation cycles.
The challenge for innovation managers is to integrate routines and projects into a justified business case. The problem with management routines, cycles, circles or circuits is the absence of a beginning or an ending—just a perpetual loop to be kept in equilibrium. However, projects are defined by target-orientation, by uniqueness, by limitation, and by autonomy. The managerial task to integrate routines as well as projects to a business case for marketing may give a genuine sense to the saying: The market has its own rules.
Mathematically, integration is represented by the surface area underneath a curve up to each point of consecutive input. For the slightly increasing slope of innovators, early adopters, and even followers, the integration is equally an increasing slope, even though with some cumulating in the grading. Then, when majority is attained, the integration curve yields a maximum of its grade—and subsequently degrades, when the amount of new adopters recedes. Finally, according to a vanishing amount of late adopters as laggards, the integration approaches an asymptote, that is, a straight line on a higher level.
In that way, an integration of the adoption course results in an s-curved slope, which may be understood as the course for the market penetration, measurable by achievements like sales, throughput, market volume or rate of return. And the different types of adopters can be reattributed to the different phases of the life cycle in marketing, namely a first introduction stage by the innovators, a subsequent growth stage by the followers and then a maturity stage by the majority, followed by an asymptotic saturation stage according to the laggards in adoption (see Figure 3.20).
Empirical studies proved that the diffusion of most innovations and even technologies follow such an s-shaped curvature. Exceptions to that are reasonably justified by the lack of free markets and fair trades during crises, like the Second World War or a general economic recession [67]. Therefore, it seems quite promising to find a mathematical function matching that slope.
By differential analysis we are generally instructed that each line can be approximated by a sequence of linear sections, known as the differential quotient. And in many cases, this straight line is a good approximation even for a broader sector of the course. In cases, where the first linear approximation is not adequate, the inclusion of a second differentiation may be envisaged, as the change of the change. Very seldom a third differentiation becomes practically necessary.
However, for a closed loop even an arbitrarily high differentiation is not enough, since the self-similarity always reproduces a comparable course by differentiation. This behavior has to be approached by an exponential equation at the base of the Euler number. In particular, by means of statistical Logit analysis McFadden established a reasonable approach of the s-shape course to the logistic function of a sigmoid curve [68]:
where A is a scaling coefficient for the expected output at maximum input x→∞; and B is a form coefficient, representing the incline at maximum x = 0. Please note, that the differentiation equation
provides the required bell-shape course of adoption with a maximum for x = 0. This means that the s-curve attains a maximum grade of AB/4 for an output of A/2.
Apart from the difficulty to handle the exponential function, the Logit function bears simply on two parameters, similar to any linear approximation. For a practical use, however, the onset of input at x = 0 is harder to determine and more important.
Indeed, it seems reasonable to start each consideration of inputs for innovations at almost minus infinite, since the very origins may lie in early scientific observations or even in dark mythical ages. Therefore, the parameter B always requires some sort of delta diagnosis, that is, the discrete outputs y1 and y2 for an input delta Δx:
For example, if the marketing research predicts a volume of $ 240 million and projects the total manpower of about 30 years of work to raise the annual sales from $ 10 million to $ 20 million, then the scaling coefficient A is simply $ 240 million, whereas:
The maximum grade is then achieved for AB/4 ≈ $ 1.5 million sales per annum of projected work, which sounds promising for a net operating margin of 10%, providing $ 150,000 per annum of projected work. However, this level is only attained, when x = 0 and y2 = A/2, that is:
Hence, the linear performance to yield a maximum grade at the level of A/2 = $ 120 million would just be $ 110 million for 128 years of projected work, providing therefore just about $ 86,000 sales per annum of projected work.
This may appear quite hazardous in regard to the investment risks to take. The management may thus decide to wait a bit and to monitor the related market activities and the general proceedings at low costs, until the prospective becomes more promising.
The particular slope of the Logit function is recursive, that is, the output is not just a function of the input, but even influenced by the level of the output attained. For instance, a certain market penetration is required in order to obtain some perception of the offer, which can be enhanced subsequently. Inversely, the growth can be disproportionally high for a well-established offer on the market, so that the output rises almost independently from marketing efforts. This is obviously a comfortable and preferable moment for investment. Yet, the market volume is limited in general and the growth is asymptotically restricted to an upper threshold, so that the surplus may still increase, but with a decreasing margin. At a given point, it may appear futile to invest in further growth. This peculiarity has to be considered for marketing, too.
Fundamentally, each sponsor of an innovation project expects some advantages in return for the efforts made. The more input by costs, by time, by work or by attention is invested, the higher the output by remuneration, by savings, by production or by sales is expected. Otherwise, the efforts are not worthwhile.
Economically, each innovation underlies the dynamic rules for investments, that is, a comparison to mere capital assets with compounded interests. Therefore, the annual output balance bi due to the benefits and the expenses is listed for the project investment. The Net Present Value (NPV) is the cumulative output for a comparable investment with a fixed interest p within a period of n years:
where i = 0 . . . n are the annual terms, respectively.
For example, an annual investment of some $ 100,000 during three years in order to obtain afterwards an annual surplus of the same amount during six years attains a total surplus of $ 300,000. Yet, in comparison to fixed-interests of 10% per annum the NPV yields just about $ 85,000. This is but less than a third of the total surplus by a neglect of interests, but still considerable more than another capital investment at 10% interests. The Internal Rate of Return IRR, that is, the comparable interest for mere capital assets, can be gauged by some 17%. Or, it would be possible to achieve a payback already in the fourth year of surplus and reinvest further surplus of the eighth and ninth year to further project (see Figure 3.21).
Please note, however, that the relations of the Logit function may also be multivariant, because other measures of management inputs are possible, like manpower, time delay or management milestones, as well as other output correlations, like product throughput, market share or other business ratings. Similar to any linear correlation, such a regressive correlation is eligible to link two different accounts of cause and effect in a justified manner. And the advantage of this quite simple approach is to conceive, to organize, to plan, and to control better the activities of a marketing project. Hence, a qualifying analysis is advisable with respect to the changes.
Figure 3.21: Remuneration from the investment in an innovation project.
This course of economic changes for innovation marketing can be equally stated for the life cycle of improvements, of disruptions, and of technologies. And the different stages of diffusion are applicable to manage innovations as well as technological developments, although with other wordings.
During the introduction stage of an innovation the output is rather low or even negative, if the financial balance is considered as output. During that stage, the sales are dominated by the expenses, instead of a profit there is a deficit, and to obtain a later reward a previous investment is required. With regard to technologies this is called the fundamental or even embryonic stage.
For example, the introduction of the Internet required considerable efforts, like data transmission, processing, software, and education. In the beginning, the commercial interest was rather low and development was left to enthusiastic innovators. Even early customers had to be somehow passionate and patient, because products were delivered premature and become mature just by laborious implementation onsite. This is called the banana principle of marketing, since bananas are picked unripe and ripened during shipment to become ready for market onsite. It seems to be a general method for the marketing of embryonic technologies, like the callow steam engine of Newcomen in 1712, the sober steam locomotive of Trevethick in 1804, the frugal motor carriage of Benz in 1886, the fragile motor airplane by the Wrights in 1903 or the homespun calculation machine by Zuse in 1941.
During the following growth stage the output becomes positive and increasingly higher according to the early or later followers. Incrementally, the momentum of the form coefficient B becomes important, so that the benefits exceed the expenses, at last. With regard to technologies this is called the pace making stage according to a growing market.
For example, the growth of the Internet began in 1969 as ARPANET for military purposes and was transformed in 1989 by CERN for scientific purposes, that is, still with subvention of public funds. Only by 1993 it became available as a World Wide Web (WWW) for early commercial applications and attained in the late 1990s a tremendous value creation, which was then used by Internet enterprises almost for free. This is called the free rider principle of marketing, since a novel common property is used with relatively low expenses to obtain private earnings. This, too, can be observed for the marketing of pace making technologies, like the sophisticated power engine of Watt in 1769, the profitable railroad line by Stephenson in 1825, the tailored manufacture of automobiles by Peugeot in 1891, the corresponding manufacture of aircrafts by Blériot in 1909 or the electronic computer by IBM in 1947.
During the next stage of maturity the output increases almost by itself without further inputs required according to a majority of customers. The innovation is virtually self-selling. However, the curvature of the diffusion recedes, when the related phase change is passed, because the increment recedes although the surplus attains steadily new heights. With regard to technologies this is called the key stage, where a boom of products, of processes, of sales, and of reorganizations happens. In that phase, the public economy is generally rewarded for the early subvention and the patience at the embryonic stage, since an increase of wealth, of prosperity, and of a related increase of tax income could be discerned for related industrial economies in the past.
For example, at the end of the 1990s a New Economy was propagated and discussed due to Internet business. More and more enterprises found more and more applications for the respective new technology, like retail services by Amazon 1995, information services by Google 1998 or social communication services by Facebook 2004—just to name those, which attained a multibillion stock exchange value and are still leading in their business. For many startups bankrupted in 2000 according to the dotcom bubble, when it became doubtful, whether such business cases can provide sufficient surplus, since the substance is just the name of an Internet domain “.com” for company or commerce.
However, a key stage effect can be equally attributed to other technological developments, like the power contracting by Boulton in 1775, the transcontinental railroad in the United States in 1869, the customized Tin Lizzy Model T by Ford in 1908, the commercial aircraft by Junckers in 1919 or the personal computer (PC) by Hewlett-Packard in 1968.
During the final saturation stage the output approaches more and more an upper limit with increasing input efforts again to gain even the laggards as new customers. Due to the high market volume, marketing may still be profitable, yet with a considerably decreasing margin. With regard to technologies this is called the basic stage, where products, processes, sales, and organizations become standardized on an aging market.
For example, Internet services are meanwhile a basis for modern life and almost everywhere in industrialized countries available at fixed rates. The dominant companies try to defend their market position or to gain more substance by an acquisition and an incorporation of other promising business ideas and related startups. For example, take the e-book reading by Amazon Kindle, the Alphabet Inc. as a holding for former Google diversifications, including Nest Labs home automation, or the acquisition of Instagram, WhatsApp, and Oculus VR by Facebook.
Technologically, the attained basis may turn out as a further fundamental platform for a next cycle of embryonic initiatives, like a renaissance of the Sterling motor for solar power, high-speed bullet trains by magnetic levitation, electric car propulsion with fuel cells, wide-bodied or supersonic aircrafts or globally interlinked cyber physical systems (CPS)—just to name some possibilities of uncertain changes in the near future.
Generally, innovation marketing comes to an end with the adoption of laggards on a saturated market, at least. But the achieved improvements, disruptions, and technologies persist considerably longer, until being replaced by other innovations. Again, self-similarity can be obtained by considering further decline stages.
During degeneration the output decreases in spite of the occasionally strong efforts to maintain a position. The established products, processes, sales logistics or organizations will then be neglected or not serviced anymore, so that replacements or expertise cannot be supplied. With regard to technologies this corresponds to an overall stagnation and an economic recession.
For example, the former magnetic tapes or floppy discs have been substituted by DVD or USB flash drives. Technologically, this stage is characterized by a market consolidation and a progressive standardization, which is accompanied by considerable price deterioration (see Figure 3.22).
And even a follow-up stage may be considered, where work inputs are directly related to the business outputs for after sales services, like warranty, replacements or disposal. Sometimes, it may be profitable to keep remnants on stock and to provide suitable competences for former products or processes. Yet, in general, the corresponding technologies vanish and attain the status of an economic depression—if not relieved by a next cycle of improvement and growth.
Again, a bell-shape curve is obtained, ready for another integration and related management activities. The analysis of the actual stage within an innovation of technology life cycle is an enduring duty for the marketing managers.
Lesson 19
Innovation progress takes generally an s-shaped course!
Figure 3.22: Subsequent phases of the life cycles of products and of technologies.
3.2.3Design
For improved clarification
it is sometimes enough
to change the point of view.
observation attributed to the writer Antoine de Saint-Exupéry 1900–1944