Innovation Barriers

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Why Don’t People Innovate?

Even if there are strong triggers that are acting on people to get them to innovate, there can be barriers that get in the way.

Transaction costs

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There are several types of barriers getting in the way of innovation. The first of these are transaction costs. These are the costs and time involved in searching for, evaluating and purchasing a solution.

Learning costs

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Secondly there are learning costs. These arise form the time and expense of implementing a new solution and learning how to use it.

Obsolescence costs

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The last type of costs are obsolescence costs. These are the costs of getting rid of your old solution or transferring what you produced using old technology to the newer platform..

Risk to innovating

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There are also risks to innovating as the new solution may be worse than the last or may fail totally.

Psychological costs

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People must also recognize they are currently doing something wrong in order to think that they should change it and innovate. People have a hard time making that switch. that’s why you hear them say things like “It has worked for us for 10 years so why should we change what isn’t broken.”

Endowment Effect

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Consumers view what they own as part of their endowment. They assess innovations in terms of what they gain and lose relative to their endowment.

Status Quo Bias

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Provide a consumer with a new benefit and she will see it as a gain. Take away a benefit and she will see it as a loss. The loss increases with time of ownership.

The Sloth Factor

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People are lazy and innovation requires work, effort, and thought. The status quo requires no work.

Psychological Costs

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People irrationally overvalue benefits they currently possess relative to those that they don’t.

Consumers overvalue existing benefits

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They value the advantages of the products they own more than the benefits of the new one.

Executives overvalue innovation benefits

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Suppliers value the benefits of innovations they’ve developed over the advantages of incumbent products.

The 9X Effect

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If there are strong barriers

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People will resist a call to innovate, even if there are strong triggers. You will end up with a product in search of a market.

Before you build a product, find out what their barriers are and how you can change your product or marketing to avoid or negate the barriers.

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In addition to barriers

There are triggers to innovation and competitive forces you must overcome to succeed. But more of those issues in another slide deck.

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We help technology entrepreneurs innovate, communicate and execute. We focus on helping improve business processes that require an in-depth understanding of human behavior for them to be effective. We provide Business Advisory Services, Workshops and speak at events. Charles Plant cplant (at) materialminds.com @cplant 416.458.4850

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