Feb 09

Sweeping innovations: something plannable?

At times markets witness the occurrence of totally unexpected events, in a sense that something completely new occurs which the majority of players could not possibly forecast: short message service (SMS), hydro-massage, low-calorie sweetener, breathable soles certain footwear comes with, are just a few examples in the string of events bringing sweeping innovations into being and, at times, causing a given market to experience disruptive consequences.

To tell the truth, sweeping innovation occurs when two key players come into play: clients coming up with ideas for the development of new products, and technology whenever science develops cutting-edge technical solutions. A startling example is provided by the advent of mobile phones, initially grounded on analogue mobile communication and, at a later stage, on the GSM (Global System for Mobile communication) gradually grown into the standard most largely applied worldwide.

Viceversa, incremental innovations are perceived by the market as procedures to meeting needs in a manner fairly similar to the past and are the outcome of minor technological changes versus the current panorama. Sometimes innovations can be as sweeping as to disrupt the established status but also to result into brand-new markets: this holds true when the innovation fulfils needs that had not been felt up to that moment.

A sweeping innovation, one capable of bringing a new market on, comes into being in the presence of what is known as “structural gap” of the market. Such phenomenon originates due to the existence of asynchronous oscillations recorded in demand and offer. The former stem from the fact that, as society evolves, consumers’ needs, expectations and consumption behaviours change. The offer changes in that manufacturers tend to adjust their behaviours faced with the competitors’ initiatives, the change in the relation with distribution and the changes of technology and the institutional status. The change respectively witnessed in demand and offer may result into the two ends of the market being no longer aligned, thus generating a “structural market gap”. The wider the gap, the more likely a sweeping innovation is to be expected, able to bridge the gap between demand and offer, thereby generating a totally new market. In some cases, a sweeping innovation generates multiple new markets, as testified to by a few epoch-making innovations such as the steam engine and the computer which have subsequently resulted into a great many other innovations and brand new markets.

Sometimes sweeping innovations meet with immediate market success, in that the needs they meet have already become manifest, as evidenced a few years ago by the launch of mass storage music players which have immediately captured millions of youths all over the world. In other cases, a sweeping innovation may struggle to catch on and takes longer before becoming established in the market; this may be the case when consumers do not fully grasp and appreciate the innovation scope. One more example concerns video phones which, at the outset, struggled to catch on because the customer’s number one priority did not reside with the option to see their fellow people over a call but mainly with the desire to use the video phone for accessing services such as watching TV programmes and finding information, still unavailable at an early stage of their introduction.

The problem businesses are faced with concerns the fact that planning sweeping innovations susceptible of bringing a new market into being is no easy task. Nevertheless some approaches can prove effective in helping companies to report the presence of “structural gaps” and, hence, to identify sweeping innovation opportunities.

A slightly different version of the present article was published in the review "Sarfatti 25" – July/August 2008 issued by Università Bocconi, with the following headline "Pronto, chi si vede? La rivoluzione senza boom" (“Hallo? Who’s there? The boom-free revolution”).