disruptive innovations and the greying market

1

Disruptive Innovations and the Greying

Market

2007 IEEE International Conference on Industrial Engineering and Engineering Management (IEEM), 3 December 2007

Florian Kohlbacher, German Institute for Japanese Studies, Tokyo

CC Hang Division of Engineering & Technology Management, National

University of Singapore

Copyright: Dr. Florian Kohlbacher and Prof. CC Hang 2

Agenda for today

Brief introduction to the aging/ demographic “problem”

Challenges and opportunities of demographic change: The Silver market

Disruptive innovations and the greying market


Demographic Change

Source: IMF, 2006


Population Aging…

Source: UN Population Division, 2002


… and Shrinking

Source: UN Population Division, 2002

Source: The Economist, 2006


Business Implications of Demographic Change

Demographic Change- Aging- Shrinking

Challenges/threats- Workforce crisis- Lost knowledge- Shrinking customer base

Chances/opportunities- Silver market/ Silver business- New product offerings- New service offerings

Copyright: Prof. Dr. Cornelius Herstatt and Dr. Florian Kohlbacher


Business implications of demographic change

The Silver Market


What’s the silver market reality?

Most today’s products and services are designed for young(er) people (age is difficult to market, products have to be “sexy” etc.)

Most companies lack processes, capabilities and tools (e.g. appropriate market research) to identify and respond to needs and wants of the “Silver consumers”. Hence, companies are only slowly realizing the opportunities to serve elderly people

Japanese and (some) US-firms are at the forefront of product creation for the Silver Market, followed by firms in the Northern Part of Europe (Finland, Sweden, Norway)

Academic research has started to look closer at the issue (e.gwww.wdassociation.org)


http://www.wdassociation.org/


Areas to innovate for the Silver Market

Needs and Demands Mobility and travel

Active Participation,Social contacts and Fun

Improved Live and Autonomy

Health and Safety

Technologies

Nanotechnologies and intelligent textiles

Microsystems, Software and Electronics

Design and New Materials

Pharmaceuticals and Biotech

Robotics and Mechanics

Easy-to-use products

Luxury products and services

Pharmaceuticals, gerontechnolgies and supportive devices

Transgenerational solutionsCars

Housing and sanitary equipmentsTravel, financial and insurance packages

Life long learning and education



Silver Innovation

“Concerning ageing, we are talking too much about technology and not about innovation. But what counts is not what is technically

possible. What counts is what people want.”Professor Joseph F. Coughlin, Director, AgeLab, MIT



Disruptive Technologies and Innovations


Disruptive Innovation Framework

Perf

orm

ance

Time

Performance that customers

can utilize or absorb

Pace of

Technological

Progress

Sustaining innovations

Disruptive technologies

Incumbents nearly always win

Entrants have advantages (low-end and/or new markets)

(inferior; other unique features)


2 Types of Disruptions

1) Low-end disruption: there are customers at the low end of the market who would be happy to purchase a product with less (but good enough) performance if they could get it at a lower price.

Older consumers and workers are often overburdened by complex products and too difficult to use technology.


2 Types of Disruptions

2) New-market disruption: there are customers who had not had the money, time etc. to use/ consume certain products and services. Besides, changing conditions in people’s life and health give birth to new, unprecedented needs and wants.

Products and services for the greying market have to help potential customers get a job done that they have always been trying to get done –but have not yet been able to do so in a simple, convenient and/or affordable way.


Research Propositions

Proposition I:

The greying market is an excellent field of application for low-end disruptions as elderly customers will increasingly demand low but adequate performance – easy-and-safe-to-use – and low-price products and services



Proposition II:

The greying market is an excellent field of application for new-market disruptions as elderly customers will increasingly demand new products and services they had not demanded or had not been able to demand before.



Proposition III:

The greying market is an excellent field of application for combinations of new-market disruptions as elderly customers will increasingly demand new products and services to get jobs done that they have always been trying to get done – but have not yet been able to do so in a simple, convenient and/or affordable way.



Proposition IV:

Transgenerational and ageless products and services (solutions) will become an excellent field of application for disruptive innovations as elderly customers will increasingly be interested in consuming the same products and services as other age groups and will increasingly demand to consume them jointly with other age groups.


Disruptive Innovations and the Greying Market

Case Examples


Easy-to-use products: DoCoMo

Raku-Raku

Phone

Examples



Easy-to-use products DoCoMo

Raku-Raku

Phone

Developed by Fujitsu in accordance with universal design principlesEasy-to-use (raku-raku = easy-easy)Not too many functionsBut: new optional functions such as pedometer e.g.Big screen (big fonts), big buttons

Millions of units sold; already 4th release available

Examples



Transgenerational

Solution: Nintendo Wii, Nintendo DS

Ageless productFor the whole familyConnects and integrates the whole familyBrain-training and exercise games

Examples



Wii-Party



So what?

Silver Markets are a salient area of application for disruptive innovations

Gerontechnologies and other products and services for the elderly as corporate social responsibility/ social innovation for those at he bottom (top?) of the aging pyramid?!?!



Further Research and Events

Edited Book: “The Silver Market Phenomenon: Business Opportunities and Responsibilities in an Era of Demographic Change”, to be published by Springer in 2008 (editors Herstatt/Kohlbacher)

Workshop on The Silver Market Phenomenon,Sendai-Finland Wellbeing Center, Sendai, Japan, 07 March 2008

International Symposium on The Silver Market Phenomenon”, Tokyo, 2-4 October 2008 (together with Tokyo Institute of Technology, SIMOT)



Q&A

Thank you!

ご清聴ありがとうございました。

谢谢

95 years old: 100 meters in 57.58 seconds


Further information:

www.dijtokyo.org

[email protected]

http://www.dijtokyo.org/

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disruptive innovations and the greying market

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