Innovation Economics

Chapter 6

  Key Words

Central concepts presented and defined. Included in a glossary in Annex 3

(…and bootstrapping out)

Fundamental dilemma in new product development that requires a developer to either fix technological specifications to determine detailed user requirements or assume user requirements to determine basic specifications for technology to develop. Both decisions limit future options. The solution proposed here is to ‘bootstrap’ out by alternating between obtaining user feedback with increasingly more specific designs and trying to materialize new product technology based on
increasingly more concrete user requirements.

 (face-to-face communication of tacit knowledge)

Given the market failure for and the uncertain temporary value of knowledge, firms prefer collaboration in exchange and creation over market transactions (‘buy’) and vertical integration (‘make’).

Whenever everyone can use new knowledge for free, nobody is willing to invest in research and
development, such that, consequently, the amount invested in research and development is (too) low.

Strategy to expand the group and type of stakeholders involved in specifying user requirements, and test/ pilot runs over the course of several new product development iterations. For example, first focus on stylized requirements defined in-house, then involve intermediaries, then involve lead-users, etc.

For more key terms, please see the Glossary (Annex 3).

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