THE DYNAMICS OF INNOVATIVE INDUSTRIES

This work captures and analyzes the fundamental dynamics of innovative industries with a System Dynamics model. We selectively reviewed the innovation literature, identified the dynamics to be modelled, formulated a conceptual model of these dynamics, and then developed the initial simulation model. By design the conceptual model is simple and generic. It is intended to apply to a broad range of products and services - assembled and process-based, complex and simple, physical and digital, business and consumer, early stage and mature, 19th century and 21st century. That is what we mean by the "fundamental dynamics" of innovative industries. In many variations and combinations they can explain the evolution of most markets. The initial simulation model was developed from the conceptual model. It represents products based on two generations of technology. At this stage the simulation model does not represent a specific market or industry. It is quantified with hypothetical inputs, parameters, and cause/effect relationships. The simulation model recreates well- documented reference modes of market evolution. We currently are building the information base which will enable the initial model to be applied to the photography and display markets.