|Faculty Speaker||Professor Vish Krishnan [University of California, San Diego]|
|Title||Inclusive Innovation: Broader Market Coverage for Innovative Products|
|Date & Time||Friday, October 25, 2013 at 10:30am|
|Place||UCLA Anderson School of Management
New technological and product innovations, including some life-saving innovations, conventionally traverse a sequentially downward path of gradually lowering cost and prices which limits their availability to the lower-end of the market for a period of time. In this paper, we focus on the central question of how to achieve inclusive innovation or getting broader market coverage for new innovative products. We unearth a new degree of freedom in a multi-tiered supply chain that offers the ability for innovating firms to expand market coverage. Through an analytical model grounded in industrial practice, we show that deliberately choosing who in a multi-tiered supply chain invests in innovation and product development can have a significant impact on the market coverage of the product. Our model deals with products that have non-linear development and production costs and a product lifecycle which is characterized initially by product innovation being most dominant effect followed by a period of process innovation. Our results have important and subtle implications for firms launching innovative products and seeking to be more inclusive. Specifically, to obtain broader market coverage for its innovations, a downstream supply chain firm should initially drive investments in component innovation while gradually conferring a greater decision making role to its suppliers as the product development becomes easier and costs go down. Once the product is mature and the improvements are in reducing production costs, it makes sense for a downstream firm to take greater control of the decision making about innovation investments.