The ‘tipping point’ of innovation | KPMG | UK

How to predict the 'tipping point' of innovation

How to predict the 'tipping point' of innovation

Whatever your product or industry, businesses need to understand if and when an interesting idea or innovation will go mass market.

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Predicting the rate at which a new product or innovation will gain popularity is a vital part of business – and you usually only know you’re right in hindsight.

For an innovation to replace an existing product that serves the same purpose, two things must be in place:

  1. The new product must actually be an improvement.
  2. The cost of moving away from the existing product must be low enough to encourage the change.

Only with both of these factors offering compelling reasons for change will people’s habits and choices also switch.

In this exclusive interview Dr Mark Kennedy, director of strategy and organisational behaviour at the Imperial Centre for Business Analytics, looks at the difficulty of predicting tech trends, the challenges for analytics and how the key to profiting from a product’s tipping point comes in the timing.

The S-curve

  • Academics have traditionally explained the move to a new product as following an S-curve: a gentle rise from early adopters; a steep increase from people jumping on the bandwagon; and a drop off period as the more risk averse get on board.
  • The situation is in fact more complicated. Some things explode in popularity, whereas others are slow-burners. “That’s a challenge for analytics which we’re tackling right now.”

Understanding the trends

  • Smartphones surprised everyone by the speed of their uptake. Conversely, artificial intelligence has seen much hype but with little adoption as yet.
  • We need more models to help make sense of these trends.

The second movers

  • The model of Apple is an interesting one. They may be seen as pioneers, but they’re very rarely first to the market. They wait for the point when demand appears to be there before striking with a superior product.

 

  • On your reading list: Platforms, Markets and Innovation by Professor Annabelle Gawer. This 2009 book has been updated and remains a definitive guide to how industrial innovation has changed in the 21st century.
  • On your board agenda: Do we have a sufficiently broad portfolio of innovative developments to adopt an efficient “innovation trading” approach to riding new product waves?
  • Anticipate tomorrow…: Cycles of adoption continue to accelerate, but the sophistication of many genuinely innovative technologies will demand more, and more sophisticated, co-ordination through the supply chain and horizontally (even among rivals). Are you capable of working that way?
  • …deliver today: Look for incremental innovation to build on existing products. It’s a way of prolonging their life and creating a more defensible position against external innovation by raising consumers’ perception of the cost of leaving your product.

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