Concept-driven strategy for innovation
How VK differentiated its slim mobile phone from competitors
By Kim Yong-won, Son Seok-ho, Shin Young-soo and Kim Jin-woo
The most important factor leading to a success in the domestic mobile phone market where competition is fierce is product innovation. Not “technology-driven” or “market-driven” strategies but “concept-driven” planning are suitable for such a hyper-competitive market.
The “concept-driven” strategy enabled VK Ltd. to develop a card-type slim phone, VK-X100, which was a huge success in the mobile phone market where various large conglomerates had already dominated.
Various researches have been progressed for product innovation, but they mostly have emphasized the importance of technology-driven and market-driven innovations
separately. However, the concept-driven strategy is the only one that considers two important factors, “technological innovation” and “market insight,” at the same time.
Market insight means how well consumers’ potential need is recognized. The more insight on the market a company has, the more market receptivity it would enjoy.
Technological innovation means how many innovative technologies a company has. In other words, if a company holds a core technology that differs from those of its competitors, it wouldn’t be easily overtaken by the competitors because of the high "competitive barrier.” Therefore, concept-driven strategy would be ideally implemented by a company that has obtained both an excellent market insight and new technology.
The concept of a good product has the following conditions. Firstly, good concept should have “integrity” to succeed. Here, integrity means drawing integrated concepts by harmonizing consumers’ expectation and product functions. A well-developed concept for a good product can receive a positive response in the market since it satisfies consumers’ need effectively and efficiently.
Secondly, a good concept suggests a new paradigm which is clearly differentiated from those of existing products. It can change consumers’ standards by drawing a concept differentiated from other companies. In the market, the product innovation that starts from change of paradigm can take its place successfully.
Thirdly, a good concept as a goal for technology innovation in new development projects. A company connects its technology with consumers’ need when it draws the
concept of a product. At this time, the company comes to have a motive for the development of a new technology because there is demand for it.
Realize customer's need which is hidden! VK-X100 could succeed in the domestic market because of its concept in which potential needs of the market are reflected and implemented.
VK read the trend accurately ― they felt pressured about the increase in devices’ complexity and price due to the trend of convergence at that time.
The firm eventually could succeed in the market through a concept-driven strategy, holding on to its own concept which is to minimize size and cost for the slim mobile phones. The VK-X100 met the hidden needs of consumers who were looking for simple and cheap mobile phones.
Unify with a concept which has integrity! The VK-X100's different functions conflicted internally when its early concept was shaping up. However, VK created a psychological consensus by unifying the concept of the VK-X100 as a “thin slim-phone like a business card or a credit card.”
The standard in deciding the priority and importance of functions should be the concepts of products which are decided in early stages if there are conflicts between functions or needs of external consumers and internal members.
A product with a good concept has a positive influence on its success since it has integrity which unifies and accommodates all inside and outside opinions.
Create differentiated value! A good concept has a positive influence on the success of products since it provides users with new value, making one which has a new paradigm and is differentiated from previous products.
The VK-X100 supplied a new value by adopting a practical concept. For the practical concept, VK suggested a new paradigm, “divergence,” which differed from other convergence-concept products in that it removed a built-in camera function that was a popular function at that time.
Therefore, a product with a good concept can have a good influence on its success by creating a new paradigm and clearly differentiated value.
In summary, the company which held a distinctive position in technology and had an insight into the potential need of the market adopted a concept-driven strategy and could succeed.
A good concept plays an important role in the firm’s prioritizing and collecting various opinions since it has integrity. Also, a good concept suggests a new paradigm which is differentiated from that of previous products and plays a role in operating as a motive for innovation of technology. Therefore, a product which based on a good concept contributes to the long-term growth of a company by showing the way and motivating it to innovate technology in the future.