The presentation talks about how one can introduce new innovations to the market, what are the factors that resist new innovation and how to counter those factors.

1. Rules for Bringing Innovations to Market
Renaissance Strategic Consultants

2. Structure
Nature of Networked Markets
Characteristics of Networked Markets
Challenges for Innovators
Framework for entering into Network market

3. Nature of Market’s
• Markets resist new ideas & products
– Television acceptance in Mass Media
– Launch of PC’s, Mobile phones
• Despite the risks, companies love innovations as they drive profits,
growth and Shareholder value

4. Why do markets resist innovation?

5. Markets are adverse to innovation as they crave for
EQUILIBRIUM

6. Nature of Market’s
EQUILIBRIUM…….
Equilibrium is a situation where every player in the market believes that he or
she is making the best possible choices & that every other player is doing
the same

7. Nature of Market’s
• Equilibrium in the market lends
“Innovations
– Stability to the players expectations
change the
– Validation to their choices
Equilibrium, which
– Reinforcement to their behavior
is why markets
• When Innovation enters the market
resist them”
– It upsets the players expectations and choices
– Introduces uncertainty in decision making

8. Nature of Networked Market’s
In a networked
Virtual connections
market, hostility to
between players can
innovations becomes
also affect the
stronger when players
adoption of products
are interconnected

9. Nature of Networked Market’s
Once enough players in a
networked market decide to
switch to a new product,
other players motivation to
do so becomes stronger

10. Characteristics of Network
Network
Effects
Equilibrium
Hub

11. Characteristics of Network
Network Effects:
a) Products that have large networks around them are often cheaper to use than
products than products that have small network around them
b) Products value to each user increases as the size of the network grows
“Hence companies with superior products often can’t topple market
leaders!!! “

12. Characteristics of Network
Equilibrium: Networks look for Equilibrium
a) Companies must choose their strategies only after systematically considering
the decisions that other players will make.
b) As the interconnection between players increases, the payoffs on their choices
depend even more on others’ decisions.

13. Characteristics of Network
Network Hubs
a) As the network becomes bigger, the interconnections between players tend to
cluster around just a few, also known as network hubs
b) Power distribution within networks is mostly concentrated in the hubs because
of the efficiencies that come with that concentration
c) By tapping the most powerful parties in a network, innovators can reach
virtually everyone in the network “Small world Phenomenon”

14. Challenges for Innovators
They have to create a new
Equilibrium where many
They have to unravel the
players have adopted the
Equilibrium
innovation and believe
systematically
they are better off because
of it

15. Framework for entering the Networked Market
Begin at the endgame
Complement the power
players
Offer incentives
Preserve flexibility

16. Begin at the End Game
Think several
steps ahead and
Begin with the
work back from
end in mind….
the endgame
wanted
Innovator should
implement only
The endgame is those strategies
plausible but that maximize its
speculative guess chances of getting
to its desired
endgame

17. Complement the Power Players
To get the desired
Endgame, the innovator
has to change the
behaviors of many
players in the market
The network hubs
can help propagate
A few Power
an innovation’s
players can help this
benefits because of
happen
their ties with many
other players

18. Offer coordinated switching incentives
• Players need to be convinced that their best choices ought to be
different because choices of other participants have changed

19. Maintain Flexibility
• Every potential endgame is based on its expectations about events
that will happen or on the behavior of other players, which creates
uncertainty
• Flexibility is essential in the plans

20. Think EQUILIBRIUM!!!!
Imagine the future while reasoning back, complement powerful
players while creating change, offer incentives – & remain flexible at
all times……..

21. Individual Behavior
For a student the way he solves a problem during exams he always
feels it to be the right way and his friends are also using the same
technique
“What happens if someone tells him a new method of solving the problem…..”

22. Individual Behavior
The student is comfortable with his method of solving the problem
– He has validated his method
– He has confidence in it
“The new method would make him move away from his comfort zone and so
he is not willing to accept the new method”

23. Challenge to the Innovator
• Understanding why is he comfortable with the old method
• Show him that the new method is better!!!

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