Transformative innovation: turning commoditised products into radically high-valued products

Abstract

New product innovation is vital in technology-driven enterprises of all sizes. Literature on breakthrough innovation is characterised as unpredictable and riskiest R&D investments. Ineffectiveness of existing innovation models to facilitate in-house innovation leads large corporations to externalise innovation risks through costly acquisition of fast-growing startups and SMEs to sustain growth. This emerging phenomena has received little attention in innovation and manufacturing management literature. This paper unveils the emergence of aggressive fast-growing enterprises, equipped with radically innovative products, credibly threaten the existence of incumbent large enterprises and in occasions pushing governments to amend outdated business regulatory practises. A proposed transformative innovation model is presented, demonstrating how prolong-neglected commoditised products of having enduring needs can be selectively identified and transformed into high-valued, radically innovative new products by leveraging on new technologies as enablers. These new products are then deliberately targeted to displace their conventional counterparts and intermediaries in both upstream manufacturing supply chain and downstream distribution channels.