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When the nearly new beats the really new - remanufacturing and product innovation.

When the nearly new beats the really new - remanufacturing and product innovation

Perhaps it’s a sign of the times, but modern product innovation increasingly seems to draw on the technologies of the past.

First, take so-called ‘remanufacturing’ – the restoration of old products to a ‘like-new’ state ready for resale in the marketplace. Recycling by another name? The skilful application of new technology in response to the modern ‘green’ agenda? Or just a way of making money out of clapped-out goods? Whatever the reason for the rise of remanufacturing, one thing is certain: it is increasingly practised in products from tyres to toner cartridges, copiers to cameras and phones to printers. The odd thing is that, while some consumers seem to reject remanufactured goods completely, others are willing to pay more for them as a gesture towards saving the environment.

Linton (Journal of Product Innovation Management, May 2008) amasses evidence to reveal that consumers weigh the advantages and disadvantages of new and remanufactured products differently for different types of product. From a manufacturer’s viewpoint, meanwhile, remanufacturing should generate additional sales and/or prevent third parties entering the market to divert sales. An original-equipment manufacturer who holds a monopoly can increase profits by remanufacturing, even if some of the sales are to consumers who would otherwise have bought an entirely new product.

Secondly, take the practice of calling extensively on existing technologies when developing a new product for a clearly defined group of users. Meyer (Journal of Product Innovation Management, May 2008) reports how Honda did this with its Element sports-utility vehicle, which has been so successful among its target market – 19 to 29-year-old, single US males with unconventional or extreme lifestyles – that sales are around 25% above projected rates.

Having identified a gap in the market for this vehicle, Honda conducted specific market research to reveal how members of the Element’s target market think and act. Senior Honda managers even went on a camping weekend with a group of potential customers. The Element, Honda decided, had to be an adaptable, function-orientated vehicle, with ‘credibility, attitude and expression’.

As a result, the Element has unique exterior styling. Notable features of its interior include reconfigurable, waterproof seats and waterproof carpets. But its 2.4-litre VTEC engine had already been used on three other vehicles, as had other major platforms incorporated in the vehicle.

Meyer believes that other companies could learn from the approach Honda used on the Element: identify new market opportunities; learn the new users’ needs; and employ user-centred design at sub-system level.

Another auto-maker illustrates the third way in which modern product innovation increasingly seems to draw on the technologies of the past – by using analogies when searching for innovation. BMW’s latest system for controlling the functions of its cars was developed from the aircraft joystick.

Gassmann and Zeschky (Creativity and Innovation Management, Jun 2008) examined four German and Austrian engineering companies where analogies had helped to achieve technological breakthrough or radical innovation, and draw out the lessons for other manufacturers. The authors conclude that analogies need to be carefully evaluated in order to locate transferable knowledge, and that the will to break conventional boundaries is critical if really exciting new products are to result.