Innovation Framework
Drive industry change
The Innovation Framework is a tool for understanding how innovations in marketing, distribution, and manufacturing can change industry structure. It highlights the importance of considering the impact of innovations on industry structure and the potential for chain reactions of change. The framework consists of three classes of innovation: marketing, distribution, and manufacturing, each with its own set of potential effects on industry structure.
- Innovations can change industry structure
- Innovations can have a chain reaction effect on industry structure
- Companies must be aware of potential innovations and their impact on industry structure
- Identify potential innovationsIdentify potential innovations in marketing, distribution, and manufacturing that could impact industry structure.Pro tipConsider the potential impact of innovations on industry structure and the potential for chain reactions of change.WarningFailure to identify potential innovations can leave a company unprepared for changes in industry structure.
- Assess the impact of innovationsAssess the potential impact of innovations on industry structure, including the potential for chain reactions of change.Pro tipConsider the potential effects of innovations on industry structure, including changes in mobility barriers, power dynamics, and profitability.WarningFailure to assess the impact of innovations can lead to missed opportunities or unpreparedness for changes in industry structure.
- Develop a strategy to respond to innovationsDevelop a strategy to respond to innovations, including potential changes in industry structure.Pro tipConsider the potential effects of innovations on industry structure and develop a strategy to respond to these changes.WarningFailure to develop a strategy to respond to innovations can leave a company unprepared for changes in industry structure.
The entry of large consumer marketing companies into the wine industry led to significant changes in industry structure, including increased advertising and promotion, and the introduction of new brand names.
The development of minicomputers led to changes in the computer service bureau industry, including the growth of large regional and national service bureaus.
The Innovation Framework was developed by Michael E. Porter as part of his work on competitive strategy. It is based on the idea that innovations can have a profound impact on industry structure and that companies must be aware of these potential changes in order to remain competitive.