Neither Apple nor Nichia invented a smartphone or the light bulb. But how have they created tremendous innovation success stories in these products? How to create such a remarkable opportunity is often a daunting challenge. Is it an act of imitation, or an act of creative sparks? Or, is it the innovation magic through ideas of the redesign?
Of course, a creative spark in the mind of genius sometimes creates new products. Subsequently, it creates a new window of producing economic outputs through innovation. But what about redesigning existing products to open new frontiers of growth? Major innovation opportunities are created through such an approach. Through ideas of the redesign, new entrants create entry opportunities and take a market share from initial innovators. Sometimes, new entrants are so powerful that they may disrupt incumbent innovators. Hence, it’s time to focus on interpreting and creating innovation magic through ideas of the redesign.
In any product, we add value through three primary means: Natural resources, Labor, and Ideas. The addition of value in products through ideas has been gaining importance. So far, developing countries are adding value through labor and natural resources. But the income growth through such an approach has been shrinking. To find a sustained growth path, they need to find ways of producing economic outputs through ideas.
On the other hand, companies looking for the opportunity into new products or industries should also figure out how to create the entry. One of the options has been to redesign existing products by leveraging emerging technology cores. This path appears to be far less risky than attempting to innovate completely new products. Here are a few examples.
The idea of changing horse with an internal combustion engine
Transportation has been a basic necessity for human beings. In the 19th century, people were using horse wagons. In 1886, Carl Benz, among others, came up with the idea of redesigning the horse carriage. The idea was to replace the horse with an internal combustion engine. Since then, this idea has been expanding economic output. The number of units produced per year grew from 900 in 1899 to as high as 92 million motor vehicles in 2019. The sale of these vehicles produced around $4 trillion. German automobile behemoths alone made approximately $500 billion. This idea has been making a significant contribution to making Germany a rich country.
Some of the countries like Japan entered into this industry by taking the low-cost labor advantage. But such entry is not sustainable, as labor content has been continuously falling. Hence, Japanese companies like Toyota and Honda have been focusing on innovation. They have been adding new features and improving existing ones for sustaining their entry and expanding the footprint.
As labor content has come down to less than 20 percent of the total cost, for china, it was very difficult to take a share of this huge pie. Hence, China has become desperate to create an entry through the idea of changing the polluting gasoline engine with electric batteries and motors. However, China is not the initiator of this idea. At the dawn of the 21st century, Tesla started vigorously pursuing the idea of electric vehicles (EV). The idea of EV does not appear to be an act of genius. It has been around us for more than a century. Nevertheless, it has already started creating a fortune for Tesla.
The business of Thomas Alpha Edison’s iconic innovation light bulb
Of course, Thomas Alpha Edison created a significant new wealth by pursuing the idea of producing light from the heating of filament by electricity. The business of producing light from electricity since then has been expanding. In order to make an entry into this lucrative industry, a small Japanese company Nichia started pursuing the idea of changing filament with Light Emitting Diode (LED). In order to make LED a strong substitute to the filament and also fluorescent effect, Nichia sponsored R&D for having suitable LED. To succeed in this mission, the R&D effort even made Nobel Prize-winning scientific discovery. In the end, through this idea of changing the technology core of lighting, Nichia has emerged as the world’s best and largest LED producer. This idea of the redesign has been accelerating the LED lighting industry’s growth, likely reaching $98 billion by 2023.
Moreover, this idea of changing the technology core of lighting through LED has caused a disruptive effect on Thomas Alpha Edison’s company GE. Hence, the entry into existing products through innovation appears to be highly effective. Nichia’s success is innovation magic through the idea of redesign indeed.
Innovation magic through the idea of redesign —Apple’s iPhone
Upon reaching $2.3 trillion market capitalization, Apple has emerged as the most expensive company in the world. At the core of this achievement is its iPhone. Although Steve Jobs was termed a magician, he did not invent a smartphone. He made entry through the idea of the redesign of existing products–smartphones. His idea was to change the user interface technology core. He replaced the keyboard and stylus with a soft keyboard and multi-touch user interface. He implemented the idea so well that this redesign feature compelled customers to embrace the iPhone. The success is so much that Apple has been taking home more than 60 percent profit of global more than $500 billion in smartphone revenue.
However, his initial idea did not produce success. To make it successful, Apple has been releasing subsequent better versions. In each of the versions, Apple has been adding new features and also improving existing ones. Of course, component technology suppliers have been playing a great role in making Steve’s innovation magic through the idea of redesign to keep unfolding.
Japan’s entry in Microwave oven
The microwave oven is a magical innovation. Its sales have been steadily increasing, likely reaching $12 billion by 2022. Although it emerged accidentally in the R&D laboratory of America’s Raytheon. However, upon looking into its future prospects, the Japanese became interested in it. As opposed to just adding value through labor in manufacturing, they wanted to have a far stronger position. Hence, they pursued innovation magic through the idea of the redesign.
They found that a huge energy-hungry microwave generating tube was limiting the utility and escalating the cost of this very useful product. The idea was to redesign the oven with a smaller and less energy-consuming tube. Hence, they got into R&D, which resulted in getting the desired result. Subsequently, they succeeded in having a far better one. Upon exporting far better as well as less costly microwave ovens to the American market, the Japanese showed innovation magic through ideas of a redesign.
The refrigerator is waiting for innovation magic through the idea of redesign
The market of the refrigerator does not appear to have any end. It’s expected that by 2025, the refrigerator will face $130 billion in revenue. A long journey began in 1755, culminating in offering a substitute to icehouses in American households in the 1930s. Despite incremental advancements, still, the core technology has remained the same. Through the process of compression and expansion of refrigerant, heat is extracted. What about changing all the moving components? An attempt was made in the 1950s to use the thermoelectric effect. Despite having early potential, the technology did not show much flexibility to grow. There appears to be a scope of changing mechanical technology core with electrical ones. Moreover, extracted heat should also be harvested to improve efficiency. Aspiring companies should look into the refrigerator to show innovation magic through ideas of the redesign.
Toshiba’s Flash Memory is innovation magic through the idea of redesign
IBM started the computer memory business through the redesign of punch cards used in automated looms. From 1930 to 1960, IBM made a fortune from this idea of the redesign. IBM also redesigned the magnetic drum memory into magnetic disk memory, known as a hard disk drive (HDD). IBM also made a fortune from it. To take a stake in the growing computer storage business, Toshiba’s R&D team redesigned semiconductor memory technology of electrically erasable programmable read-only memory into flash memory. In addition to creating a fortune for Toshiba and others, the uprising of flash memory has made many HDD makers bankrupt. The revenue of flash memory of $56 billion in 2018 has been showing steady growth. This redesign idea was so magical that Toshiba’s management could not fully realize its potential initially, resulting in a lawsuit filed by the inventor Fujio Masuoka.
Image Sensor—Sony’s innovation magic through the idea of the redesign of Camera
In 1970, Sony wanted to get into the camera industry. The strategy was to redesign the camera by changing the film with a semiconductor image sensor. Upon looking around, Sony found the just invented idea at the Bell Laboratories. Sony kept refining it, leading to the release of a portable video camera in 1985. Well, Sony’s success to profit from it was short-lived due to the uprising of the smartphone. But through the process, Sony’s innovation magic through the idea of redesign made Camera inventor Kodak bankrupt. The smartphone camera has taken over the market of both still and video cameras. Nevertheless, neither Sony nor the electronic image sensor lost the appeal. To date, Sony is the preferred supplier in the high-end segment of the image sensor market, which reached $18.4 billion in 2019.
Although we perceive that innovation is the sudden creative sparks in the minds of Genii, business success is in the meticulous journey of showing innovation magic through ideas of the redesign. Moreover, creative sparks also need a relentless journey of redesign to profit from ideas.