Example-Sucessful Innovation

Low Cost Airlines

One of the most recent examples of Successful Innovation is low cost airlines.

Traditional airlines have been displaced in various parts of the world, particularly due to the
great innovation in the business model of low-cost airlines. These managed to reduce the
prices of plane tickets by 50% to 90%, thus achieving that a large mass of people who could
not pay the prices of the planes could go up to one. This was accomplished by doing the
following.

They eliminated: The airlines practically eliminated the services on board included in the
price, as well as the first class seats, in order to have more space to sell tickets, all of economy
class. Likewise, the typical sales offices of traditional airlines were eliminated, so practically
all of their tickets are sold through their website.

They reduced: The price of tickets was significantly reduced, thus offering a great value
proposition, this mainly due to the reduction in costs brought about by the use of secondary
airports, the limitation of the weight allowed to passengers and the elimination of first class.

They increased: The use of secondary airports in major cities around the world was
increased, this because low-cost airlines used cheap secondary airports to reduce taxes and
their costs. On the other hand, low-cost airlines increased connectivity between secondary
cities, thus expanding the offer in cities that had practically no air flow.

They created: The airlines created a business model with the ability to travel at the speed of
an airplane, but at the price of doing it by bus, this brought great results, increased demand,
and repeated absolute success by various companies in various countries.
Example - Unsuccessful Innovation

Netbooks

Netbooks took off in 2007 only to be wiped off the market seven years later.

Cheap, tiny laptops with tight keyboards, slow processors, and reduced versions of Windows
XP became so popular that Intel designed a full line of processors for them. There was even
a time when Apple was criticized for not launching a netbook of its own.

But then came the iPad, and netbooks became irrelevant.

Netbook sales peaked at just over $ 32 million in 2010, according to IHS iSuppli. Last year,
less than 4 million units were sold, and they are expected to be out of the market next year.
Example-Successful Innovation

Microwave Oven

One interesting successful example is that of the microwave oven, which traces its history
back to the cavity magnetron tube. The magnetron was extensively used by the Allied Forces
during World War II as a microwave-emitting component of radar systems used to detect
distant enemy aircraft and ships. Anyone who had worked with magnetrons noticed that
"soft" organic objects would heat up when exposed to high power radiation. The legendary
story is that Percy Spencer, an early employee of Raytheon, a manufacturer of radar
equipment, noticed that a candy bar in his pocket melted due to stray radiation when he was
working with a magnetron. Spencer would later file patents describing the use of microwaves
to heat other foods, including, the now ubiquitous use of microwaves to heat corn. However,
he was not alone in thinking of the heating applications of microwaves to food. General
Electric also reported on equipment to thaw and heat frozen food in restaurants in the early
1940s. Raytheon’s management soon felt there was commercial potential. Marvin Bock,
another senior engineer at Raytheon later went on to develop the first commercially viable
microwave oven labeled the Radarange, a giant six-foot-tall device used exclusively in
restaurants and ships’ galleys in the late 1940s. This evolved to a countertop version first
marketed in 1967 by Raytheon’s subsidiary Amana, as a convenience for homes, to the now
near-ubiquitous appliance

Example-Unsuccessful Innovation

Audio Tapes (DATs)

An interesting unsuccessful example is arguably that of digital audio tapes (DATs), which
were first introduced by Sony in 1987, envisioning that they would replace the then-standard
audio cassettes. DATs could record at CD quality or better, were more durable, and offered
several recording lengths. While superior to existing audio media, DATs arguably failed due
to two major issues, which highlight the systemic nature of technology commercialization.
First, DATs faced severe opposition from the Recording Industry Association of America
(RIAA), due to the capability they offered (unlike standard CDs) of being able to make high
quality multi-generation (successive copying) copies of music. The RIAA lobbied initially
to impose restrictions on DAT recorders, which eventually resulted in Serial Copy
Management Systems on recorders which prevented copying beyond a single generation. The
Audio Home Recording Act of 1992 made this a legal requirement and also imposed taxes
on the recorders and blank media. This entire legislative battle slowed the diffusion of DATs,
and the RIAA’s opposition meant little audio material was released on this medium.
Secondly, the imposed taxes and relative novelty and utility of the technology also meant
that DAT-associated devices and media were priced at a higher point relative to cassettes,
and eventually, CDs. Consumer uptake was relatively slow (although they saw some success
in Japan), and DATs were relegated to mostly studio use for professional recording and
archiving. Eventually, as recordable CDs emerged (which were exempt from the restrictions
on DATs), they disrupted this medium.