Management of Technology and Innovation in Japan

Invisible Dimensions of Innovation 59
cept" here as a compressed representation of an essential customer value which
defines the external context of the product: what the product or service means to a
customer, what they use it for, and why it is valuable. 8 Visible innovations seek to
differentiate products and services along specific dimensions such as function or
quality. In contrast, while concept innovation encompasses multiple latent values,
it doesn't match these one by one with individual dimensions. Rather than boosting
existing dimensions one by one, invisible, concept innovation paints an entirely
new picture of how, why, and to whom a new product or service should appeal.
Sony's Walkman is a classic example of an invisible innovation which created a
new concept of listening to music. Before the Walkman came along, cassette tape
recorders were conceived merely as music-playing devices, and consumer interest
focused on the dimension of good sound reproduction. But the Walkman freed users
to enjoy music in almost any environment. To be sure, the Walkman was dramatically
smaller and lighter than other cassette players. But the essence of the
Walkman’s value lay not in such dimensional measures, but rather in how it enabled
consumers to experience new ways of enjoying music. In fact, in terms of
sound quality the Walkman was actually inferior to rival cassette tape players. It
lacked a high-quality speaker and recording capability. But the essence of invisible
innovation lies in disrupting existing innovation dimensions and rendering
rankings along conventional measures meaningless. Sound quality, speaker quality,
and recording capability became non-issues in the context of the Walkman’s
newly-created concept of “freedom to enjoy music anywhere.”
In the electronics industry at large, and in the digital consumer electronics sector
in particular, the trend whereby innovations along visible value dimensions
grows increasingly difficult – and the focus of competition subsequently shifts to
invisible dimensions of innovations – is becoming increasingly conspicuous. On a
unit basis, in 2003 Apple sold nearly half as many iPods as it did PCs. Despite being
considerably more expensive than rival products, the iPod became a hit, reportedly
accounting for a large portion of Apple's $44 million earnings. 9
The iPod offers a good example of how an invisible innovation can increase
customer WTP. Other companies develop and manufacture MPU and operating
system for the iPod, so black-box components aren't the source of its superiority.
In fact, in terms of visible dimensions such as weight, thinness, continuous playback
time, and recording capacity, the iPod is actually inferior to rival products.
Yet it sells for a higher price. Featuring a simple design that sharply distinguishes
it from conventional digital devices, the iPod lets users compile and continuously
update and modify their own "playlists," affording them the ultimate in a personalized
music listening experience. Like the Walkman, the iPod differentiated itself
not along visible dimensions, but through a revolutionary concept: changing the
way consumers enjoy music, just like Walkman did 25 years ago.
8 The author discusses product concept innovation in detail in “Value Differentiation:
Organizing Know-What for Product Concept Innovation" in Takeuchi and Nonaka’s
Hitotsubashi on Knowledge Management, Wiley
9 "Shootout in Gadget Land" Fortune, 11/10/2003