Process innovation typically overtakes product innovation in importance during the shakeout stage of the industry life cycle.

Question

Quizplus · Accepted Answer

As illustrated in Exhibit 7.7, the level of product innovation is at a maximum during the introductory stage because new features increasing perceived consumer value are critical to gaining traction in the market. In contrast, process innovation is at a minimum in the introductory stage because companies produce only a small number of products, often just prototypes or beta versions. During the growth stage, process innovation gains in importance while product innovation decline in importance. Finally, during the shakeout stage, when controlling costs becomes more important than increasing perceived product value, process innovation surpasses product innovation in importance.

Process Innovation Typically Overtakes Product Innovation in Importance During the Shakeout