The dynamics of product innovation and firm

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Literature review on the article, “The dynamics of product innovation and firm

competencies”

In the current situation, there is need for organizations to continually renew themselves
to remain competitive to survive and prosper. However, there is an issue that deters many firms
from achieving their objectives and remaining competitive. These factors include changes in the
customer, technologies and the level of competition. Product innovation is one of the recognized
and appreciated primary means that corporate and other organizations can renew themselves and
achieve their desired levels of competencies.
Most companies that yearn to remain competitive have no obligation rather that to invest
in innovations and not in incremental products and to come up with marketing strategies for the
innovative products (Erwin, 2005). Renewal of organizational concerns includes items such as
such as expansion and building of organizational competencies over certain duration of time.
This process involves exploiting existing competencies as well as exploring new options. This
exploitation and exploration, helps a company to come up with new products that will help to
renew the organization.
In achieving these innovations, there are different factors or things that the organization
needs to factor in. The organization must have the will to learn and to be flexible to changes. It

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also must have the resources and the capabilities to initiate the changes aimed at renewing the
organization. The dynamics of product innovation or rather competencies include ‘customer
competence’ which is the ability of the product to serve certain customers. The new product
innovated must be appeal to certain kinds of customers. Technological competencies are also
important as it helps or aids in the manufacturing of new products. Product innovation is also
concerned with exploitation whereby product is developed from existing resources and
exploration where a product is developed from new resources (Erwin, 2005). Furthermore, to
achieve innovation, there can be re-linking or delinking of the products with competencies that
they embody, marketing, product and development and path dependency competencies.
Technological and customer competence are essential in the achievement of product
innovation. Among the technological competencies, the company must have the necessary
technologies to ensure that new products are developed. This includes availability of the
manufacturing plant, the relevant equipment, knowhow and quality assurance tools. These will
help the organization to develop new products. On the other side, it is important for the
organization to have customer competences because customers contribute to the success of the
organization. Therefore, the organization should have knowledge on the needs and processes of
customers know and understand the distribution and sales channels, communication channels and
brand. Company reputation should also be maintained. For the product innovation to be
successfully there is need to use appropriate technologies and to understand customer dynamics.
The customers’ preferences, needs and desires must also be addressed. Furthermore, enough
marketing need to be done to create awareness about the products.
It is also important for organizations to adapt to strategies that would ensure that they
create a long-term competitive advantage. In this dynamic world we are living, it is only

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dynamic firms that are able to build new strategic assets quicker and cheaper than their
competitors will be able to earn high returns in the long run. This therefore means that,
companies must aim at achieving innovations that are viable and which will help them or give
them a competitive advantage over their rival for quiet longer period.
In conclusion, it is evident that organizations can indeed become competent if they invest
in product innovations. Currently, the level of competition is high and this requires
organizations to exploit and exploit new ways of making them competitive. Using technology
and customer competencies, it is possible for an organization to be innovative and remain
competitive.

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Bibliography

Erwin, Danneels. The dynamics of product innovation and firm competences, Strategic
management journal, 23:1095-1121 (2002).

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