Types of innovation have implications on how technology ideas diffuse in society. Product innovation out of new the invention of technology begins the wave of diffusion journey. However, process innovation has also implications. Although the role of incremental advancement makes intuitive sense of growing diffusion, however, the effects of the change of technology core creating new waves of diffusion are not well understood. Moreover, business model innovation has also implications on diffusion patterns. Hence, we should have an integrated perspective on types of innovation and diffusion patterns.
Types of innovation and diffusion patterns matter to our quality of living standards. The purpose of innovation is to get jobs done better by technology ideas, while consuming fewer resources. The types of innovation affect how we make progress in getting our jobs done. It also affects how, why, and what rate new ideas and technologies spread in society. The degree of adoption and self-sustaining of technology products depend on the types of innovation have on the quality of the purposes they serve, the resources they consume, the environmental harms they make, and the profitability of production. Some of the innovations have incremental progress in performance and profitability. However, innovation types that have far larger implications begin the loss-making journey with the radical step of changing the technology or rolling out completely new products. Furthermore, in sustaining the diffusion of technology ideas, pursuing a certain type of innovation highly matters.
Theorization of innovation diffusion patterns falls short due to the lack of an integral approach
There have been many attempts to theories the diffusion of innovation in society. However, such theories are not sufficient enough to explain how technology innovations diffuse in society. Particularly, the effect of competition on the diffusion of certain products is not well clarified. Moreover, the effect of process innovation and externality effects on the diffusion of technology and ideas are not adequately addressed in most of the innovation diffusion theories. As types of innovation and diffusion patterns are highly coupled, we should have an integrated perspective.
Types of Innovation affect diffusion patterns
We leverage technology and ideas around them in the form of products. Types of innovation affect the availability of the number of products and their evolutions. Furthermore, the innovation of the process and business model for the production and distribution of those products also affect the diffusion. Hence, at a high level, we have three types of innovation: i. Product innovation, ii. Process innovation and iii. Business model innovation. Why and at what rate new ideas and technology spread in society heavily depends on these innovations.
Product innovation—its diffusion patterns depends on other types of innovation
Technology invention leads to product innovation. For example, the invention of electromagnetic radiation-based technology led to radio, television, and cellular phone innovation. Similarly, the invention of the microwave heating of food led to the innovation of the microwave oven. However, all technologies do not lead to the innovation of new products. Some of the technologies contribute more to improving existing products, as opposed to innovating new ones. For example, an electronic image sensor is a great technology. However, its contribution has been mostly in improving existing products. Furthermore, process innovation plays an important role in affecting the quality and diffusion of product innovation. Initially, the diffusion of product innovation depends on utility and cost. However, it keeps changing with incremental advancement, externality effect, and also competition responses.
Process innovation—affects the diffusion of product innovation
Often, every product innovation needs a unique process to produce. Moreover, technologies also need unique processes for production. Hence, we need to innovate processes for the production of both technologies and innovative products. Besides, process innovation highly influences how technologies and innovations diffuse in society. Often, process innovation plays a vital role in realizing reliable technologies at an affordable price. For example, photolithography-based process innovation played a vital role in producing increasingly higher quality transistors at a decreasing cost.
Incremental innovation for increasing the utility, reducing cost, and sustaining innovation
Incremental progress of both products and processes plays a vital role in empowering products diffusing in society. In fact, every product innovation emerges in a primitive form. Only a handful of customers, in the innovator category, buy such products. For enabling the product innovation to diffuse in other segments, like early adopters, majority, and laggards, we need to keep improving the quality and reducing the resource need of the products. For advancing quality, we keep adding features and improving existing ones of incumbent products. We also keep incrementally improving production processes, so that process improvement keeps reducing resource wastages and improving the precision of operation.
Hence, incremental innovation of both products and processes leads to increasing utility and reducing cost. Such continued progress of utility and cost is vital for increasing the diffusion of product innovation. For example, mobile phones have defused to every corner of society due to the continuum of ideas of incremental innovation.
Incremental innovation also plays a vital role in sustaining the diffusion of products. Invariably, every product innovation suffers from externality and competitive forces. Externality force in the form of complementary products, network externality effects, and compatibility keeps improving utility, perceived value or willingness to pay for products. However, the competition response in the form of replication, imitation, and innovation keeps lowering the willingness to pay. Hence, the willingness to pay for a product is a function of time. To leverage the externality effect and counter competition, innovators are compelled to keep adding features. Often such incremental innovation manifests in the form of the subsequent release of better versions. As a matter of fact, competition makes product innovation a seasonal crop. Often existing diffusion theories fail to consider this effect of the market on the diffusion of particular technology innovations.
Changing the technology core—starting new wave, underpinning creative destruction and disruptive innovation
Incremental innovations are vital to keep advancing products and processes for advancing quality, reducing cost. To keep availing of this opportunity, we keep improving the core technologies and increasing the supply of complementary technologies. However, due to the maturity of core technologies, such an incremental advancement trend starts flattening out. Subsequently, the diffusion rate of the innovative product also starts slowing down. The next opportunity of expanding the diffusion shows up by changing the technology. For example, over 100 years, film cameras reached the hands of a fraction population of the world. Similarly, after 50 years of invention, radio innovation diffused to only households of rich countries. The big change emerged with the change of the technology core.
The radical step of changing the technology core leads to creative waves. Despite having the potential of offering better substitution at a lower cost and diffusing far deeper in the society, invariably, such a radical step leads to the emergence of primitive versions of incumbent products. Such primitive emergence often causes switching decision-making dilemmas to innovators of incumbent products. However, the race of incremental progression of primitive emergences leads to making substitution better and also cheaper. Subsequently, this creative wave leads to offering a far better version driving another wave of diffusion in the society. Often, a single product innovation goes through a change of technology core multiple times. Each change leads to another fresh wave. Through successive waves, the product keeps diffusing dipper in the society. Hence, we should take into consideration the effect of change of technology core of existing products on the diffusion patterns.
Change of technology core has serious implications on types of innovation and diffusion pattern
The uprising of a new wave of substitution due to the change of technology core is called Schumpeter’s creative destruction. Due to the switching decision dilemma, often incumbent firms producing products around the mature technology core suffers from disruption. Hence, Prof. Clayton called this effect of creative destruction disruptive innovation. In fact, these two effects due to the change of technology core have serious implications on types of innovation and their diffusion patterns.
Business model innovation
Three party business model of Google or Facebook is quite popular now in the digital space. They have made their main product free while earning revenue from 3rd party advertisers. In fact, this business model innovation played a vital role in the diffusion of their products. The invention of technology, product innovation, externality effects, and innovation of the distribution process leads to the opening of business model innovation. For example, the increasing role of software is leading to supply-driven business model innovation. Along with product and process innovation, innovators should also pay serious attention to leveraging business model innovation for the rapid diffusion rate of their product innovation.
All these types of innovation seriously affect profitability and diffusion patterns of technology products. We should look into types of innovation and diffusion patterns in a holistic, integrated manner.