The logical limits of product innovation
There are many reasons why it is easier to focus on channel, packaging or business model innovation rather than core product or service innovation. As I noted previously, there may be a significant standard to overcome - the internal combustion engine or electricity distribution. There may be a significant investment that's necessary to move to a new technology, or significant change resistors from customers. Of course there's always fear of the new or unknown.
So, in order to bring this high falutin concept to regular mortals, we'll resort to the method that many characters use on the Simpsons to explain big ideas to Homer. We'll relate it to beer. And, after all, this is a blog post for a Friday.
Back to beer. Coor's beer, specifically.
Beer has been brewed for thousands of years. We know a LOT about how to brew, flavor, package, preserve and distribute beer. For a while Coors was exotic because it was hard to get east of the Mississippi. A whole movie with Bert Reynolds was made celebrating the difficulty of obtaining the beer.
So, the question becomes, is there more innovation that can be applied to beer? We've perfected the brewing of beer. We've created thousands of types of beer - lager, stout, porter, hefeweizen (my favorite), bock, etc. Have we reached the point of diminishing returns for beer innovation? I think the signals are flashing "yes". Here's why.
Coors recently ran an ad that highlighted the beer can. The can had three significant attributes they wanted to call to attention. First, the mountains on the can change color when the beer is cold. Second, the can has a liner to keep the beer cold. Third, the can has a new pop-top to improve airflow and drinkability. All of these things may be labelled "innovation", but they are innovation in packaging, in marketing and in information signalling, not beer innovation. When you see a brewer place more emphasis on innovation in the pop top than in the beer, then you know we've reached a limiting point. The next big beer innovation will require a step change in brewing or chemistry.
Note that some of these "innovations" are a bit perverse. Many beer drinkers will tell you that beer shouldn't be too cold, otherwise you lose the flavor. And does anyone need a more technical pop-top? Were there unacceptable incidents of beer spillage or individuals who failed to get the beer from can to mouth previously?
When product manufacturers start innovating the packaging, the information about the product, the channel or the business model, it's a good signal that they've reached a diminishing return on innovation in the product itself, and only a significant disruption will spark new product innovation in the sector.
Innovation itself isn't stalled, it's simply on hold for the next disruptive evolutionary cycle. Innovation isn't a smooth, continuous process but a spiky discontinuous process made up of long period of incremental innovation punctuated by short bursts of disruptive innovation.