Function innovation

A performance innovation changes the customer's cost of using a product. For the customer of a channel of distribution, function innovations change the choice of a product available or the physical surroundings where the product is presented for sale. For the final customer of a manufactured product, function innovations change the operating capability of the product, the environment in which the product can function, or the capability of the product's operator.

Example 1:

In 1987, ASK Computer System's lot tracking system was designed for regulated manufacturers or companies that handle regulated substances. The software can manage lot genealogy from purchase-order receipt through production to final shipment. It also facilitates product recalls. (Year 1987 SIC 3500)

Explanation: This Function Innovation enabled the company's customers to find quickly, and dispose of, defective product.

Example 2:

It used to be that audiophiles had to shell out up to $1,000 for a customized system tailored to their vehicle's characteristics. But with new sound amplifiers by Robert Bosch, a device's output can be tailored to 83 different car models for about $169. (Year1997 SIC 3651)

Explanation: This Function Innovation reduced the consumer's cost of using the product.

Example 3:

Networks argue that they can reach every corner of America, something cable companies still cannot duplicate. NBC says it reaches 59% of all adults under the age of 50 in a single week, 21% more than the top 10 cable networks combined. It also boasts that it reaches 32% more upper-income viewers (viewers with more than $75,000 household income) than the top 10 cable networks combined. NBC says its viewers spend $24 billion more a year than viewers of the top 10 cable networks combined. (Year 1998 SIC 4833)

Explanation: Function. The networks are selling viewers as potential consumers to advertising agencies. By having viewers in areas of the country that a cable company does not reach, the networks offer product selection that the cable companies do not have. As a result, the advertising agencies have a lower cost to use the networks than they do to use cable companies to reach all viewers.

Example 4:

In 1987, Boston Beer Co. introduced a low-calorie ale that won some acclaim for its taste. (Year 1987 SIC 2082)

Explanation: Function. The low calorie ale was a new benefit for customers wishing to lose weight.

Example 5:

In 1988, Dolphin Products marketed a plastic cork with a four-inch tether that keeps it attached to the bottle, permitting it to pop without flying free and hurting someone. (Year 1988 SIC 2821)

Explanation: Dolphin Products sells to beverage bottler customers. This is a Function Innovation that reduces the cost of maintaining their bottled product.

Example 6:

There is a new way to produce wool textiles. This process blends silk particles with wool and yields a cloth that is both light and warm – and, like pure silk, is also more comfortable because it naturally wicks away perspiration.
(Year 1991-SIC 2200)

Explanation: This Function Innovation improved the operating capability of the product.

Example 7:

IBM's tape library data-server uses only one robot arm, which makes it much slower than a two-arm device Storage Technology announced last week.
(Year 1992-SIC 3570)

Explanation: Storage Technology's product increases the speed with which the product's user can operate.

Example 8:

IBM announced enhancements that should substantially improve the performance of its RT workstations. Its three RT models will run 2 to 8 times faster than current models because of faster central processors and more densely packed memory.
(Year 1987-SIC 3571)

Explanation: This Function Innovation changes the operating capability of the product by changing speed.

Example 9:

Lowe's is making its stores lighter and brighter to appeal to women shoppers.
(Year 1995-SIC 5211)

Explanation: This Function Innovation improves the physical surroundings where the product is presented for sale.

Example 10:

U.S. Robotics has sold 3 million modems that can be reprogrammed to faster speeds with software or new chips. Modems using Rockwell chips are hardwired, and can't be changed. But Rockwell promises to change that.
(Year 1997-SIC 3669)

Explanation: U.S. Robotics offers a Function Innovation that allows the customer to change the operating capability of the product.