Sometimes a market is shaken by products with unforeseen wide acceptance, which makes social actors radically revise their perceptions of existing possibilities: SMS messaging, hot-tub whirlpools, low-calorie sweeteners, shoes with transpiring soles have all changed daily life and upset the normal workings of the relevant industries. At other times, a whole new market can be created by a radical innovation.
A radical innovation results from the convergence of two major forces: customers, who supply ideas for the development of new products and services, and technology, developed by the innovative solutions afforded by novel science. An example in point is the emergence of mobile telephony, at first with analog radio, and then with the GSM, the European digital system for mobile communication that has become the global standard. To the opposite side of the newness spectrum, there are incremental innovations, perceived by the market as new product modalities for existing needs brought by moderate technological change. In certain cases, radical innovations not only alter existing market conditions, but they give rise to whole new markets. This occurs when an innovation satisfies hitherto non-existing needs.
A radical innovation that creates a new market occurs when there are structural gaps in the market, that is, when demand and supply are non-synchronous. The higher the discrepancy between the two, i.e. the larger the structural gap, and the higher is the likelihood of the appearance of a radical innovation. In rare cases, a radical innovation manages to create several industries in one shot, as it was the case with epoch-making innovations such as the steam engine and the electronic computer, whence whole clusters of related innovations ensued.
Sometimes radical innovations are met with immediate success, since the needs they satisfy are already manifest, such as with mp3 players fast conquering the affection of hundreds of millions of young people around the world. In other contexts, radical innovation is met with initial resistance and requires a longer time to get a foothold on the market. An example is videophony, which didn't have a wide diffusion at first, because for the user it wasn't a priority seeing the caller at the other end of the line, but rather using the video-enabled cell phone to enjoy innovative services, such as watching TV programs and other options that weren't available in the early phase pf cell phones.
The problem for companies is that the task of planning for market-creating radical innovations is quite complex. Innovations are not only hard to come by and often are the byproduct of random tinkerings, but often show their creative market potential ex post.
by Salvatore Vicari ,
Full Professor of Technology and Innovation Management