Search

Perspectives On Innovation

This article will appear on the Sloan Newsletter next week.

Innovation wears numerous faces at MIT. This spring, as a student of the System Design and Management program, two courses I signed up for, offer different perspectives on innovation.

The first, “Innovation in the Marketplace,” introduced two radical views on innovation. Dr. Eric von Hippel, who taught the course, proposes that innovation today is primarily customer – rather than manufacturer-driven – i.e., the user often finds a way to use a product that the manufacturer did not anticipate. These ‘lead users,’ the first in the market to use a new product or technology, often tend to be the most creative innovators for an existing product.

von Hippel argues that companies must find ways to involve the user community early and encourage them to put the product to new uses. He narrated the following story to build in case: When the LEGO Mindstorms robotic kit was first introduced to the market, it was primarily targeted at teens and high school students. However, groups of users began to create varieties of software, that bypassed the basic tools that the came with the kit. LEGO Corporation did not know how to react to this turn of events. Should it sue these users or use their ideas? After a year of silence, LEGO decided to bring in experts from these user communities to help build its latest version of the product.

The second radical view von Hippel introduced is ‘Democratizing Innovation.’ He argues that the practice of protecting intellectual property impedes innovation and hence does not benefit society. Companies and individuals must instead share their inventions openly with others, thereby allowing others to improve on the original ideas. He cites the growing Open Source movement as an example how this idea has offered benefits to corporations.

One of my most memorable moments in this class was watching a movie on skateboarding. When shortage of water caused swimming pools in Los Angeles to go bone-dry, a group of maverick skateboarders converted these pools into skateboard-rinks, thus creating a new sport that continues to grow in popularity. This is yet another case of ‘lead user innovation.’

The second class I am taking on innovation is “Disruptive Technologies: Predator or Prey?” taught by Professor James Utterback. This is another enjoyable and informative class. Two concepts introduced in this class are Dominant Design and Disruptive Technologies.

Professor Utterback theorized that when a company introduces a new product in the marketplace, new entrants enter its market causing increased competition. Soon a Dominant Design begins to take shape. Thus the Dominant Design becomes the standardized, acceptable way to build the product.

In one session, Utterback traced the history of the modern day light bulb, explaining how it stole market share from the kerosene lamp. As visual aids, Utterback showed bulbs of the Edison era, some of which actually worked! When Thomas Edison first introduced the light bulb, more companies manufactured bulbs with slight variations. However, Edison’s design soon became the standard for the light bulb.

On another occasion, Utterback traced the history of the modern day refrigerator with a spectacular presentation. He began by discussing the history of the ice industry, which had its origins in Boston. Ice was ‘cultured’ in Boston, the ‘Ice Headquarters’ of the world, in the winter season. As early as the 19th century, Boston shipped ice as far away as Calcutta. The arrival of a new technology – the refrigerator – soon brought in more players and increased competition. Soon a Dominant Design emerged for the refrigerator and ended Boston’s ice industry.

The second concept – Disruptive Technologies – will be outlined by guest lecturer and Harvard Professor Clay Christensen, an expert in the field. He describes a Disruptive Technology as meeting three criteria:

1) It always has lower cost than incumbent technology,

2) It always has lower traditional performance compared to the incumbent,

3) It always has higher ancillary performance compared to the incumbent technology.

In his book, ‘The Innovator’s Dilemma,’ one of the required readings for this class, Christenson describes how the arrival of Seagate’s 5.25 inch disk drive caused a disruption in the disk drive industry. While this kind of disk drive did not offer the storage space offered by the larger disk drives from IBM, Nixdorf, or Wang, it catered to a whole new part of the market segment, the PC industry. Soon as more players entered this market, they replaced larger drives in Mini Computers and mainframes as their capacity grew with time. The growth of this industry put an end to the manufacture of larger disk drives, causing a disruption in industry.

This is my first semester in this program. Joining the SDM program has been one of the best decisions I made. Courses like those described above, have offered me fresh insights into industry trends and innovation. It is my belief that one day, I will use these ideas in contributing to my company. For more information on the SDM program, please visit http://www.sdm.mit.edu.

blog comments powered by Disqus