Business
It is widely assumed that new products are developed by the companies that make and sell them, but that assumption is often wrong. Because it settles who counts as an innovator, the error shapes what researchers study, how firms run research and development, and how governments design innovation policy.
There is no single typical source of new products. In some fields the people who use a product develop most of its improvements. In others, the suppliers of parts and materials lead, and in still others the manufacturers really are the main innovators.
Whoever stands to capture the most value from a new product is the one who tends to develop it. That might be an end user, a supplier, or a manufacturer. Because of this, the source of innovation in a field is not random and can be predicted.
Of the four main sources of innovation, three sit outside the company that sells the product: its customers, its suppliers, and third parties such as universities and consultants. A firm that looks only to its own labs for new ideas misses most of where they come from.
Once innovation is seen as spread across users, makers, suppliers, and others, firms and policymakers can look for new ideas where they are actually likely to appear. Knowing where to look can lead to faster and better products and processes than assuming the manufacturer must invent everything.