The point about the relation between tradition and innovation is very much to do with the time. It's a matter of time. If you think about it for while, every new product or very old traditional one has been launched. It has a starting point. The question is how important is this starting point over time? The tradition, the beginning, needs to be held over time in order to provide value to customers, or it has to be changed or abandoned completely. So the difference between tradition and innovation is only a matter of perspective, and has to do with time. The issue of time in management has very much to do with the idea of life cycles: of product life cycles and market life cycles. There is a very strong emphasis given by managers and entrepreneurs to the concept of the product life cycle. For me, they tend to overlook market life cycle. The two are related, obviously, but there is difference. The difference is very easy to understand. Usually, the market lasts forever. If you think about a market as a representation of customers’ needs, of customers’ benefits, every benefit in the food or beverage business usually lasts for a very long time. If you think that the food and the beverage has to do with hunger and thirst, we can consider these two needs, usually not forever. What changes is the way companies strive to satisfy those benefits, those needs, and this has to do with the product life cycle. In a product life cycle, we can consider the product, which has a birth and a death, maybe; but the market usually does not decline. A market is usually re-innovated by the launch of new products. So again, the idea of tradition and innovation should be considered within the concept of life cycles. A market life cycle, like a product life cycle is usually represented through four different stages. There is an introduction, so where the market starts, there is this growth stage, so when the sales of the market grow. Then there is a maturity when usually the sales of the market stabilize. They are steady. Then there could be a decline, which is to say, the sales start dropping. Obviously, the decline in a market is very unlikely, because if the sales of the market start dropping companies would do something to restart a new growth stage. Within the market life cycle, there are the life cycles of all the different products sold within that market. The product life cycle which again, has the same stages: the birth introduction, the growth, the maturity, and the decline; the decline is much more likely because the product which a specific component of a specific value proposition, can lose value over time for consumers and can be replaced by other products. It's the dynamic between the product life cycle and the market life cycle that is very relevant to companies for making their decisions. What is the importance of tradition and innovation here? The tradition refers to the beginning or to the history of a product, or of a market. The question is how important is it to keep the tradition the same over time. Even tradition can be re-innovated. There are some aspects of tradition that can be innovated in order to keep the traditional elements of the value proposition alive over time. The point is, how can companies use the life cycle model: the product life cycle model or the market life cycle model? There is this tendency of managers and entrepreneurs to think of life cycle as extraneous to their action, that is the market goes or the product life cycle goes independently of my action. Actually every market and every product life cycle completely depends on the actions of companies. So each individual companies and all the competitors within a market can influence the life cycle of the product, that is to say, can influence the different stages through which the product or the market go. One point could be, in order to understand how to influence the evolution of a market over a product life cycle, what are the determinants of a specific shape of the life cycle. The traditional way of representing a life cycle at the product level or the market level Is the introduction stage is a stage where sales are very limited and the growth of the sales is limited as well. Basically, the growth stage is when sales start growing. Companies do something to increase the sales and the sales start growing so the market is growing. It grows up to a point where the rate of growth reduces up to zero. This is the maturity stage. In the maturity stage, basically, the product or the market has reached its potential, the maximum level of sales. Then if the product does not correspond to a value proposition to specific customer needs, it starts declining. Sales start dropping. The question is what determinants give the product life cycle that shape. There are two basic main determinants: one regards the consumers, the second regards the competitors. As for the consumers, many researcher has shown that consumers tend to have an approach, an attitude towards innovation which can allow us to classify them in different groups. There are some consumers which are considered innovators or pioneers; they like innovation. They're a very limited amount in every market but they tend to appreciate new products very much. There is a new beer. There is a new wine. There is a new vodka. There is a new yogurt, a new value proposition with a new product, they appreciate it. It’s a very small amount. Then there are the so called early adopters. Early adopters, in terms of size, in terms of numbers, are a bigger group than the innovators. They have a slightly different characterization compared to innovators. They like innovation, but they are more opinion leaders. They are more able to influence other people through their choices and behaviors. Then there is the big majority of consumers. In every market the big majority of consumers tend to buy a new product only only after, they have seen other consumers, the early adopters, consuming the product. Basically, they need to be reassured by the choices of other consumers. Usually this majority is split into two: an early majority and a late majority, but the difference basically is not so notable between these two groups but between the majority and the early adopters. The last group is usually called the laggers: people who tend to buy a product only if a lot of other consumers have already bought and consumed that product. This shape, which is a shape given numbers, gives life to a specific shape of the product life cycle. From a company’s point of view, I can influence the product life cycle with my competitors by trying to “put back,” to anticipate as much as possible the moment in which the majority will start buying the product. If there are many consumers who tend to buy the product in advance, it will increase the sense of the product and so start the growth stage of the product life cycle. If the innovators and the early adopters are very limited, and there is no word of mouth, no passage of information between this group and the majority, the sales of the product will be very limited. The growth stage would not start. The goal of a company is how to enact the growth stage of the product life cycle in order to increase the sales. The point is how much can tradition influence this, because, obviously, this is a matter of how tradition is a fundamental part of the value proposition. This also helps us if we consider the competitive dynamics. As we said, the product life cycle depends on the consumer side and also on the supply side, because competitors play a game, which is an imitation-differentiation. If a product is successful, a competitor will try to launch a product which is slightly different, but also similar to the successful product. So this imitation game again would enact growth because the sales of the competitor would by definition steal some part of the sales of the innovator but would also add new sales to the market and so it’s the combination of imitation and differentiation which contributes to give the product life cycle each stage. Again, when playing this imitation-differentiation game, some companies decide to stick with the tradition while some companies will try to innovate. The imitation-differentiation game can also be considered as a game between tradition and innovation. But the point is also if a company for its mission, for its values, for its main goals decides to stick to the tradition, to build its authenticity on the more traditional side, this tradition should be interpreted over time. The idea here is for every company, “How can I revitalize the products, or how do I choose to go for completely new products?” The dilemma could be considered this: is it more effective, more profitable, more interesting to me, to my company, to try to revitalize an old product by revitalizing the tradition, according to which this product has been successful in the past; or launch a new product, innovate completely? Again, this is a dilemma only if we consider it as a dilemma because for every company the tradition innovation can be contextual. In my portfolio of products, I can have products which are very traditional, and on the other side I can add new products. Or I can have products whose tradition is innovated by adding new values, new symbols to the product itself and other products which are completely new and can be revitalized every time the product life cycle’s sales start dropping. Considering sparkling wine: Champagne. Champagne is a very long-story and long-history product, but obviously, the way champagne is made, although it is a traditional method, has been innovated over time, because the technology has changed, Because the way the champagne has been sold into the market has changed. Actually, the traditional champagne has been re-innovated over time.
