quality, and reliability, then the product innovation can be rendered use- less. Most product innovation takes place at the early stages of the indus- try life cycle when numerous designs are tried and tested before the product becomes established in the product portfolio. After a certain time period, the product reaches a stage of dominant design (Utterback, 1996). After this point, the rate of product innovation decreases as mindsets are constrained by the dominant design, and the relative importance of process innovation increases across the sector as companies try to find better and more cost-effective ways to produce a marketable product. Over the life cycle of the product, the scope of process innovation decreases as the optimum configuration of production process is achieved (Figure 1.2). The end of the life cycle typically is characterized by a disruptive shift that makes existing products and processes obsolete and resets the innovation cycle back to focus on product design.
EXAMPLE: Disposable baby diapers were first invented in the 1950s; they achieved only 1% market penetration because of high costs and poor performance (they leaked). The performance problem was solved after a year with more absorbent materials, but for another 10 years the product remained too costly for most consumers. Eventually a new and very complex process was developed that could produce diapers at a cost that most customers were prepared to accept. The product became a success only after the optimum process had been developed.
Radical and Incremental Innovation
The definition of innovation does not refer to the size and scope of the change to the product, process, or service. For example, introducing color television in the mid-1960s was clearly a major or radical change to the