Platt Perspective on Business and Technology

Rethinking innovation in an age of online social media 2: setting the stage for a fuller discussion

Posted in macroeconomics, social networking and business by Timothy Platt on August 19, 2016

This is my second installment to a series that I see as fitting on the intersection of macroeconomics and economic considerations in general, and the study of the interactive online and social media as a collective source of communicated influence. See Part 1: a supply and demand story.

I began this series with a brief discussion of how innovation might be driven by either the supply side and its manufacturers and producers, or by the demand side and its marketplaces and purchasing consumers. And I continued from there by noting how ongoing and essentially immediate feedback from the marketplace, through the interactive online experience and social media has shifted the dynamics of manufacturing and consumption from following a much more supply-side driven model to following and much more demand-side driven model. And I noted in this context, how increasingly direct and real-time feedback from the marketplace and its active participants, to producers and manufacturers has created a fundamental shift in where the primary driving forces that shape product innovation, arise from.

• Before the advent of the interactive internet and online social media, and even more so before the advent of the internet per se, innovation and the determination of what would be produced and offered to the market was primarily manufacturer-determined and supply-side driven.
• Since then, innovation, and product development and evolution have become much more demand-side driven.

This and my Part 1 narrative, addresses the issues of how innovation and its transition into marketable products has been prioritized as an ongoing cyclical process and both historically and more recently. But it leaves open the equally important issues of pace and timing. And in a fast paced industry and when a marketplace is always demanding New and different, the pace of innovation and of change can effectively become everything. And this brings me to the core complex of issues that I would at least begin to address in this series as a whole, beginning here in this second installment to it:

1. The pressures for innovation and the economics of it for manufacturers – representing the supply side,
2. The demand for New and different, and the dynamics of innovation diffusion into a marketplace, and how that impacts upon the scale of the consumer base that would be ready to buy New at any given time – representing the demand side,
3. And the dynamics of how these factors and forces impact upon and shape each other.
4. Marketing on the supply side is only one element of this, where for example it can be argued that a fad is a production and marketplace demand-side context where the usual innovation diffusion curve limitations to new product acceptance in the marketplace are shorted out, and seemingly everyone at least by their more usual positions on the innovation adaptation curve, suddenly want some new offering and seemingly all at once.
5. In anticipation of discussion to come, I will also consider how disruptive innovation can be seen as representing both a demand and a supply-side wildcard here. And I will, among other things compare fads and more generally disruptive innovation in that context, for how they do and do not fit into the narrative offered in this series’ Part 1.
6. And I will go beyond the exceptional of fads and disruptive innovation to consider innovation more generally in this context and the diffusion and the shift from exclusivity of innovation ownership to productive commonality.

I begin discussing this progression of topics with the empirically based model offered in my Part 1 narrative, and by acknowledging that while it might represent a useful cartoon and even an at-times strategically essential one, it still offers a fundamentally cartoon simplification of what of necessity are more complex realities. The final decision making authority that determines what can profitably work and prevail for businesses and their markets, in driving innovation has shifted in many respects and for many industries from a more primarily supply side to a more primarily demand side as new communications channels have opened up and come into widespread use.

• Ultimately, it is the interactions between those two sides to this dynamic
• That make the entire system that producers and consumers collectively comprise, work.

I am going to continue this discussion in a next series installment, beginning with Point 1 from my above numbered list. And in anticipation of that discussion to come, I note here that I will consider the supply side from both a pre-internet perspective, and from a current and still emerging interactive online and social media driven perspective – and where both businesses and consumers enter into all of these new ongoing conversations through these new and still rapidly evolving channels. And I will discuss the dynamics involved in all of this at least in part, in terms of relative bandwidth availability and communications capability, and within businesses, among consumers, and between businesses and their markets and potential markets. And as a part of that I will, of necessity also begin discussing the above Point 2 as well.

Meanwhile, you can find this and related postings at Macroeconomics and Business and its Page 2 continuation. And you can also find this and related material at Social Networking and Business and its continuation page too.

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