Technovation 24 (2004) 279–285

www.elsevier.com/locate/technovation

Dealing with innovation push and market need

S. Ottosson ∗
Mardvagen 65, 44834 Floda, Sweden

Abstract

Some important trends can be noticed in the global market place. Such trends are increased demands on more individualized
products, cheaper product prices, faster delivery, improved product quality, and shorter product life cycles. These trends call for
stability and efficiency at the same time as they call for creativity and flexibility, which is a contradiction. To solve one part of
the problem, two types of organization must live side by side; the innovation push project organization for new innovations, and
the process-centered organization that takes care of the present market need. A recommendation is that 20% of the total R&D
budget is allocated to innovation push projects. Money is, however, not enough to be successful. By using methods that shorten
the product development time and that simultaneously increase creativity in the product and process development processes, the
odds for success are improved. Dynamic Product Development (DPD) is such a method. However, another annoyingly strong trend
is that larger companies are increasingly outsourcing their production, which means a step backwards as new physical and mental
walls are raised between product developers and production process developers. This paper also points out the importance of
distinguishing between customers and users when performing product development.
 2002 Elsevier Ltd. All rights reserved.

Keywords: Customer; Innovation push; Market need; Product development; Product values; Users

1. Introduction

All products have a commercial product life cycle

(PLC) that starts with new products being brought to the
market and ends with them being discontinued when
sales have dropped and/or profit levels become too small
or negative. PLC varies from less than a year for
software products to decades for mechanical products
(Ottosson, 1997). For most branches, the PLCs are get-
ting ever shorter for mass-produced products, which
calls for product development methods that are efficient.
Fig. 1 shows in principle the different stages from the
birth of a new product, i.e., from when new discoveries
and/or new product ideas have emerged, to when the
product is removed from production and sales. Discover-
ies are often the result of research in physics, medicine,
chemistry, and biology. Such discoveries transformed
into possible technological solutions are often seen as
technology push solutions. New product ideas are cre-
ated, for example, by product developers and/or inven-
tors. The objective of innovative development is to bring

∗
Tel.: +46-708-905-714; fax: +46-302-34180. Fig. 1. Different central terms used for the product development pro-
E-mail address: stiot@telia.com (S. Ottosson). cess.

0166-4972/$ - see front matter  2002 Elsevier Ltd. All rights reserved.
doi:10.1016/S0166-4972(02)00078-0
280 S. Ottosson / Technovation 24 (2004) 279–285
forward products that can be sold. From when the pro-
ducts have been sold and taken in use, re-engineering
takes place to ensure that the market need for the pro-
ducts is cultivated. Innovative product development has
so far gained little common interest (Freisleben, 2001,
p. 14) as the main focus has been on engineering of
details and re-engineering. Examples of modern product
development methods to take care of a market need are
Concurrent Engineering (CE), Simultaneous Engineering
(SE), and Integrated Product Development (IPD). These
three methods have many similarities. A new method
that takes care of innovation push as well as market need
is Dynamic Product Development (DPD) (Ottosson,
2002).
Compared to when unique products such as handi-
crafts, customer-made products, models, and prototypes
are produced, industrial serial production offers obvious
advantages measured in quality, cost, and time (QCT)
seen both from the industrial point of view and from the
customer and user points of view. To get good values
on the industrial QCT, it is important in the production
process to develop and follow strict rules, to minimize
uncertainty, and to avoid disturbances and chaos situ-
ations. However, a strong market need tendency is to get
ever more individually designed/composed products as
the sensual/perceptual values and image values of the
products (we will revert to these important expressions)
thereby can be increased to satisfy complicated individ-
ual wishes.
By offering product modules that the customers can
choose from and combine, the individualized product
wishes can to some extent be satisfied. However, indi-
vidually designed products call for more complex manu-
facturing and assembly processes. To be able to maintain
or to improve QCT means an increased need for better
planning systems. Thus the market pushes the industrial
process to be increasingly flexible, which means an
unstable and heterogeneous situation for the industry. At
the same time our own demands on QCT and customer
demands on QCT force the industry to be less flexible
and more efficient in planning different activities, which
means acting as if a stable and homogenous situation
existed. In addition, product life cycles are getting ever
shorter. For example, less than ten years ago the product
life cycles for European car makers tended to be more
than ten years while an opinion that is often heard today
is that the product life cycles can now be a maximum
of six years.
To be successful in the future industrial world, flexi-
bility and stability, chaos and order, revolution and evol-
ution must therefore be satisfied. This paper is about how
to organize businesses in a turbulent and more and more
unpredictable world so that simultaneous demands on
innovation push and market need are satisfied.
2. Research
Making “good” research on industrial processes, seen
in a classical perspective, is difficult because reliability
does not exist, simply due to the fact that processes can-
not be repeated with the same result. The reason for this
is that industrial processes are truly complex, and
reduction to one simple factor that is kept stable during
measurement will often give an incomplete picture. As
the systems change all the time, validity is also problem-
atic when studying complex systems. Thus, causality is
the best that can be achieved studying real industrial pro-
cesses. The aim in research of industrial processes
should therefore eventually be moved from absolute
knowledge to relative knowledge. This is also in accord-
ance with the quantum paradigm, which in turn is the
basis for Participation Action Research (Ottosson,
2002b).
The research behind this paper is largely based on Par-
ticipation Action Research in Swedish industry (ITT
Flygt AB, SKF AB, Nordinvent AB, and Handiquip AB)
during 1979 to 1993. These findings were followed up
in 1993 to 1996 by comparing tests between classical
development methods and DPD in about 150 large stud-
ent development projects at Halmstad University in
Sweden. Further DPD development tests were performed
between 1997 and 2000 in about 150 student projects
in Halmstad and at Linköping University. From 2000,
industrial tests have been done, for example, in Frontec
Research & Technology AB. During the Spring of 2001,
case studies of eight Swedish producers for the IKEA
Group were also performed. When the case studies were
completed, these companies together employed about
1160 people and had a combined turnover exceeding
1700 million SEK (about 170 million USD).
3. Customers and users
Our research has revealed that it is of utmost impor-
tance to distinguish between customers and users, even
though they sometimes are the same person. Keeping
focus on the wrong category during the product develop-
ment process will often lead to products with partly the
wrong performance, impracticable shape, etc. We can
cite many examples where customer-ordered products
have been negatively received by the users although the
products on delivery satisfied all the demands set at the
start of product development.
Today, the term ‘customer’ is a very central term in
business, as customers are needed for a commercial life.
Customers are therefore in classical product develop-
ment theories the focus of interest. In daily life, we also
frequently use the terms ‘user’ and ‘consumer’. How-
ever, these terms are not well defined and even ISO 9000
does not clearly define what a customer is.
 S. Ottosson / Technovation 24 (2004) 279–285
If the term ‘user’ and its relative ‘consumer’ are not
well defined in the literature, it is different for the term
‘usability’, which the International Standardization
Organization in 1992 defined as
The effectiveness, efficiency, performance capability
and satisfaction with which specific users can attain
specific goals in special environments (ISO 9241).
The fields of man–machine interaction (MMI) and
graphical interface design in particular have drawn much
attention (e.g. Jordan, 1998). One important reason for
the interest in usability is that it offers marketing and
selling advantages — e.g. for mobile telephones pro-
ducers — to have easily understandable graphics built
into the products.
In the author’s opinion, on a simple level, what
characterizes users is that, as a collective, they use the
products over and over again. We can often distinguish
between primary users who use the products more often
and secondary users who only occasionally use the pro-
ducts. Consumers, on the other hand, mostly benefit from
a product only once or a few times. This is the case, for
example, when an individual is consuming a hamburger,
watching a movie, or listening to a CD. We also con-
sume petrol when we use a car. If we hire a sports car
to experience it, we are also consumers when driving the
hired car. Thus, sharp definitions are difficult to make.
Of importance to the customer is product requirement
fulfillment, price, quality, and time of delivery. Service
and maintenance cost is also important to evaluate for
the customers. On the other hand, of importance to the
user is a good function of the products as well as the
cost for using the products. Users and consumers
acknowledge soft values that can be called sensual
(perceptual) values and image values to a higher degree
than only considering the fulfillment of functional
values. The three important product values that can be
(and are) all individually studied to a deeper level are
in short recognized by the following:
앫 Functional values are in general hidden within the
product.
앫 Sensual (perceptual) values come to us from/through
the surfaces of the product.
앫 Image values represent the image the product has in
our minds, thus the virtual product.
Note that industrial design is only one of the ingredi-
ents of sensual values. The same accounts for ‘symbolic
values’, which is also a term used in connection with
industrial design.
For ‘pure’ customers in general, high sensual and high
image values mean higher product prices — which they
do not like. Individualization is also not appreciated as
that means higher purchase prices, more spare parts,
281
more complicated service, etc. Thus, there is a principal
difference between being a pure customer and a pure
user. When large organizations order products — i.e.,
goods and services — these differences between pure
customers and users are often dramatic. This can be
noted especially in the public health care sector (Björk,
1999) for which also the third market force — society —
is extremely important.
The role of societies is to take care of the well-being
of people and the environment, which is why societies
create laws and rules. Societies can be local, such as
clubs and religious societies. Geographical societies are
states and countries. Representatives from the society are
secondary users, e.g., when they take care of scrapped
products and secondary products such as wrapping
material, transport boxes, etc.
The market-need view is ‘reactive’, as the customers
are thought to have the right answers to what they want.
Business success is, according to this view, equal to
finding out what the customers want to have and to sup-
ply them with it. However, in most cases, customers can
only have opinions on what they have experienced from
existing solutions, which means that they in principle
can only contribute to re-engineering of existing pro-
ducts. Often, the customers also do not know best what
they really need.
To underline and motivate the somewhat questionable
focus on customers, a popular saying inside companies
is: “Don’t forget that it is the customers who pay your
salary!” Only listening to the voice of the customers can
eventually lead to the development of ‘unsellable’ pro-
ducts, of which there have unfortunately been many
examples in real life.
In IPD/CE/SE, a market need is the starting point for
development. For example, APQP — which is an
example of Simultaneous Engineering (SE) — sets out
the following input demands that have to be completed
before the planning of the development process can start
(APQP, 1994):
앫 Voice of the Customer
앫 Market Research
앫 Historical Warranty and Quality Information
앫 Team Experience
앫 Business Plan/Marketing Strategy
앫 Product/Process Assumptions
앫 Product Reliability Studies
앫 Customer Inputs
Also, in the modern process-centered organization think-
ing, the focus is on the customers, which Fig. 2 shows.
Thus, except for the danger of ‘unsellable’ products,
we have found the focus on customers to be too limiting,
as customers are primary users or consumers in only a
fraction of the total lifetime of the products. (The total
lifetime is often much longer than the PLC of a product.)
282 S. Ottosson / Technovation 24 (2004) 279–285
Fig. 2. A modern example of customer focus is the Process-centered
organization (after Hammer (1996)). Thus, except for the danger of
developing ‘unsellable’ products, we have found the focus on cus-
tomers to be too limiting, as customers are primary users or consumers
in only a fraction of the total lifetime of the products (The total lifetime
is often much longer than the PLC of a product).
4. Marketing considerations
Although there are many advantages to selling the
products before they have been developed to a final
stage, innovative development is in general performed
before market introductions of new products are done.
Market introduction means to actively push a new pro-
duct to the market, which is why it is meaningful to
talk about ‘innovation push’ — which is different from
technology push as technology has its main focus on
technical questions and not on market questions as well.
With a continuous sales and marketing pressure on the
market, sales numbers will gradually increase if the pro-
ducts are equipped with good functional, good sensual,
and good image values. Price, performance, quality, and
delivery time will also influence the speed in sales
growth but not in a simple way as, for example, a low
sales price can turn off pioneer buyers.
When the product starts to be locally well known, a
‘market need’ starts to take over from the innovation
push, meaning that it will be easier to sell the products.
Spontaneous orders will also arrive when the products
start to be locally well known. When the products have
been in use for some time, feedback from the market
and own experience give input for re-engineering the
product. This is the situation thought of for classical pro-
duct development methods such as IPD/CE/SE, as these
methods all build on the concept of taking care of a mar-
ket need. Probing techniques such as market studies and
Quality Function Deployment (QFD) have also been
developed for the purpose of finding out market needs.
Before a local market need exists, however, market
investigations and QFD of inventions and new products
are not especially useful to perform (Ottosson and Nor-
din, 1997). This is because innovations represent unique
(single) products and that market investigations and
QFD are used to study large sets of similar products.
The poor outcome using such tools on inventions is well
known from the market struggle when introducing rad-
ical innovations such as electricity, telephones, TV, com-
puters, etc.
Our research has shown that there are no easy ways
to prepare innovation push other than to find pioneer
buyers, to try to sell the products to them, to gradually
build up knowledge of the product and the market, and
to adjust the argumentation by using the principle of
‘trial and error’ — which is also called the Pareto Prin-
ciple (The imbalance often noticed between input and
output is called the ‘Pareto Principle’ or the ‘80:20 Prin-
ciple’ as professor Vilfredo Pareto found in around 1900
what he called a ‘predictable imbalance’ of wealth in
most countries. See, for example, Koch, 1998).
To be able to quickly reach a sustainable situation in
the product development process, the product developers
initially must have a strong use/user perspective also tak-
ing into consideration society demands and QCT seen
from an industrial point of view. Further satisfying a
‘wish’ and not only a ‘need’ is important when innov-
ative development is to be done, as a need is only a part
of what wishes represent. Also, when a need is recog-
nized, there are probably many people already working
on solutions for that need!
Other planning tools used when a market need exists
(e.g., PERT), are of little use early in the innovation pro-
cess, as a deterministic and stable situation does not exist
until a local market need has been established. Com-
pared to when re-engineering is planned and performed,
the situation for innovative development is not only
complicated — it is also complex. The principles of the
‘Quantum paradigm’, therefore, are important to have as
mindset especially early in the innovation process
(Ottosson, 2002b).
5. Industrial process organizations
First in line in the product supply chain process is sub
suppliers delivering raw material, goods, and services to
the main suppliers. The main suppliers manufacture and
assemble complete products to be sold on the market.
The main suppliers perform — as the sub suppliers also
do — production development, logistics, purchasing,
manufacturing and assembly of the primary products.
The marketing people — the marketers — are respon-
sible for contacts with the market. Marketers perform
market and competitor analyses, market communication,
sales, installation/delivery, and service support. Fig. 3
shows a simplified supply chain for goods. In the case
of IKEA, IKEA takes care of Engineering and
Marketing/sales of the products. IKEA also has some of
its own factories acting as main suppliers in competition
with other main suppliers.
As customers of existing products in general ask for
lower prices, increased quality, and faster deliveries, that
means that the earlier in the product supply chain in Fig.
 S. Ottosson / Technovation 24 (2004) 279–285
Fig. 3. Simplified product supply chain. The figure also shows how product and production engineering often takes place.
3 an actor is, the more “squeezed” he will be. This is
especially the case if his contribution is sole production
development. This is because the costs of the products
according to rules of thumb are set to as much as 80%
in the early innovative product development phase (e.g.
Nevins and Whitney (1989); Hundal (1998). In addition,
life will be increasingly tougher for all suppliers and pro-
ducers due to ever increasing global competition. Also,
the more independent units there are in the production
chain, the smaller the margins will be for each of them,
which is a severe negative side effect not much talked
about in the core business thinking doctrine so popular
nowadays.
Behind each main supplier for IKEA, there is a large
number of sub suppliers. In most contacts with the IKEA
purchasers, the main suppliers have become acquainted
with the four words “You are too expensive”. However,
since IKEA develops the products themselves, mainly in
Sweden, the suppliers have only a very limited possi-
bility to be more rational in production because all the
boundaries have been set in the product definition by
IKEA. A consequence of this is that the larger pro-
duction series are moved away from Sweden to be pro-
duced in countries with cheaper salary costs and lower
company taxes. Nowadays, therefore, only the start-up
production of popular items for IKEA in general is done
in Sweden. When the production is moved away by
IKEA, the Swedish companies are given no compen-
sation for the work they have contributed in developing
the processes other than what they have received from
the deliveries of the commercial products during the
start-up production. However, as they are heavily depen-
dent on production for IKEA — the turnover from sales
to IKEA was, in the studied companies, between 54%
and 100% — they cannot do much about the situation
other than complain and appeal for fairer treatment in
their view.
Today, it is popular to outsource production from
larger companies. In Sweden, Ericsson, for example, has
outsourced much of its production to Flextronics during
2000 and 2001. Similar situations as for the IKEA sup-
pliers and the sub-suppliers are therefore to be expected
when the product development is performed in the same
283
region as the start-up production and the longer serial
production is moved away. As it is important for the
product developers to have close contacts with creative
producers who they can sit together with without spend-
ing much time on traveling, the start-up production will
for practical reasons probably remain as long as the
development is left in the region. But can these compa-
nies maintain their competence and can they invest in
the latest production equipment and technology if they
cannot benefit from long serial production any more?
Will they be willing to host competent process devel-
opers when they have to supply solutions and test them
free of charge only until everything works well?
An important reason for the development of Concur-
rent Engineering (CE), Simultaneous Engineering (SE),
and Integrated Product Development (IPD) was that pro-
duct development was performed isolated from pro-
duction and marketing (see, for example,Olsson (1985);
Andreasen and Hein (1987). The physical and mental
walls between the different disciplines were therefore
taken away. With outsourcing of production to external
companies, the suppliers are often not allowed to take
part in the product development process on a daily basis
until functional prototypes exist for new products. If they
can take part on a daily basis there is an obvious risk
that mentally, they first will take care of their own com-
panies’ situation and not first look after the product
owner’s situation. Thus, the outsourcing trend means —
as the IKEA case shows — that we are taking one step
back in development as the product developers now
become increasingly isolated from the production devel-
opers.
6. Innovation push organizations
Our research clearly points out that, for the complex
situations existing in innovation processes, it is
extremely important to have ‘eyes and ears’ in the whole
chain shown in Fig. 3. Without such a view it is difficult
to quickly come out with new innovations and new pro-
duct variants on the market. Thus, it is extremely
important that the people working with innovative devel-
284 S. Ottosson / Technovation 24 (2004) 279–285
opment must have their own contacts in the whole distri-
bution chain, not only relying on the marketer’s infor-
mation and directives. This is accomplished by having
innovative development teams working in projects out-
side and in parallel with the main business process. Fig.
4 shows how this can be arranged. This was how the
ball bearing company SKF arranged their innovation
activities in the separate unit called SKF New Products.
The unit has brought large economical values to SKF.
For example, when one of the business units, Flew-Link
Systems, was sold in 1997, the profit for SKF was about
80 MUSD according to information in Swedish news-
papers (e.g. Göteborgs-Posten 1997-05-02). [Flew-Link
Systems was formed and raised in 1982 within SKF
New Products.]
In rational Swedish production process organizations
we have found many examples that changes of any type
are in general initially regarded as being irritating and
annoying. Productivity will also drop during the
implementation of new solutions and new products.
Therefore, the more complete and production tested the
new solutions are before implementation, the easier the
implementation will be. If pilot studies and pilot tests
have been done before implementation in the process
organization, the more problem-free the implementation
will be. The ideal situation is if the innovative develop-
ment teams also sell the first innovations, produce and
deliver the new products and new product variants to the
users, and correct what needs to be corrected in the pro-
duct design before the products are handed over to the
process organization. Thus, the innovative development
team should to a large extent be responsible for the
future market situation while the marketers in the pro-
Fig. 4. For innovation push, it is important that the innovative development teams (only one example is shown in the figure) have direct contact
with all parties in the distribution chain shown in Fig. 3. Preferably, they should also sell and deliver the first new products to the users.
cess organizations are responsible for the daily market
situation and the short-term market situation.
For a good result for all parties, we have found that
the innovative product developers must constantly have
the primary use and the primary users in focus. As devel-
opment proceeds, the scope of secondary users must
gradually be included by the product developers and
demands from the societies where the product are going
to be sold must also be considered. In parallel with the
development work, failure consequences must be dis-
cussed and worst-case scenarios must also be illustrated
to make sure the products meet the highest possible stan-
dards if unexpected difficulties should occur in the use
of the products. Such discussions can be seen as
extended FMEA analyses.
It is important when concentrating on users that the
‘soft’ sensual values and image values are often more
important for the user’s acceptance than the ‘hard’ tech-
nical functional values that are generally hidden inside
the products (e.g., engines, circuit boards, micro-com-
puters, programs, etc.). A ‘good’ innovative product
developer, therefore, must have technical skills as well
as skills in softer issues such as ergonomics, aesthetics,
and man–machine interaction (MMI). Being responsible
for the future market situation also calls for knowledge
and experience in the marketing and selling of new pro-
ducts. As preferably every innovative development team
should also act as a small business unit, knowledge and
experience of small business administration is valuable.
Later in the development process, experts with limited
“side view” can be used.
Innovative push projects are initially chaotic, so it is
important to have someone to make sure the book keep-
 S. Ottosson / Technovation 24 (2004) 279–285
ing is kept in good order. As the business administrative
systems for the “bread and butter business” are not feas-
ible for innovation push activities, it is advantageous if
an administrative officer is coupled to each project so
that the project leaders can fully concentrate on
developing the new products and bringing them to the
market. This aim, we have seen, is supported by using
the organizational form of ‘planetary organizations’
(Ottosson, 1999).
Performing innovation push is relatively cheap, as the
investments in fixed assets should initially be kept low
when final forms have not been set. Therefore, a rec-
ommendation is that 20% of the total company spending
on R&D should be spent on innovation push projects.
7. Conclusions
The present popular trend of outsourcing production
means a step backwards, as new walls are raised between
product development and production development.
Strategic thinking has made business increasingly
rational and regulated, and order and stability are key
issues. This is especially a trend where companies
expand through mergers and acquisitions. At the same
time, the market situation gets ever more chaotic, and
stable/homogenous situations will last for an ever-
shorter time. Two organization forms therefore need to
exist in parallel with each other (see Fig. 4). The pro-
cess-centered organization will take care of the
stable/homogenous situation while the innovation push
organization will take care of the unstable/heterogeneous
situation as well as the introduction of new products onto
the market. The innovative product development team
members must have a holistic view and an entrepreneur-
ial behavior.
Of the total company R&D budget, a recommendation
is that 20% should be allocated for the innovation
push projects.
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Sig Ottosson has 20 years of industrial manage-
ment including, innovation management and
product development within ITT-Flygt AB, SKF
AB, Handiquip AB, etc. and turn around pro-
ducts within Frontec AB, IUC Skaraborg AB,
etc. His entrepreneurial activities include, plan-
ning of the new laboratory of ITT Flygt AB,
start up and growth of SKF New Products (e.g.
the units Flex-Link Systems and Linear
Actuators), start up and growth of Nordinvent
Support AB, start up, growth and expansion of
Handiquip AB until it was sold to an American
company at the turnover of 17 MSEK. Also the redesign and implemen-
tation of the new Innovation Management Programme at Halmstad Uni-
versity that is still in use and that has been an example for other university
programmes in Sweden and abroad (e.g. Argentina, Estonia, etc.). Finally,
the start up and growth of Center for Product Development Research at
Halmstad University and turnaround of Frontec Research and Technology
AB (125 employees). He has also International experiences from Estonia,
Tjeckien, Bulgaria, Argentina, etc. (EU-projects).