Innovating by scaling up
Costas Markides and Paul Geroski once more write about colonizers and consolidators in Strategy + Business (Issue 35). They now recommend large corporations to stick with what they do best in I. : operating at large scale. So instead of treating discovery as the only holy grail in I. (as many consultants are advising them apparently), they argue scaling up is actually as innovative as discovery. More importantly, it is also creating a tremendous amount of value.
Moreover, the authors also explain the skills a company needs to excel in turning niche markets into mass markets. They are:
1. Focus on the price/performance trade-off (don't focus on creating a technically superior product but compete on a reasonable quality at an attractive price to mass consumers)
2. Get a bandwagon rolling (alliance strategies, merge with a major rival or use marketing to create the illusion that a design has already become dominant)
3. Reduce consumer risk in adopting the new product
4. Build a strong mass distribution channel
5. Create complementary products (or support complementary products from other parties).
Do you agree that large corporations are wise not to invest in discovering new products themselves?