5.12 Process innovation
Once a product innovation is well established creative energies tend to turn towards incremental improvements and process innovation, which is an improvement in the organisation and/or method of manufacture that often leads to reduced supply costs.
These two factors typically result in a better-performing product yet one that can be manufactured in less time, possibly using fewer components and possibly using machinery operated by less skilled, less costly workers. For example incremental improvements in the type of filaments used, tungsten gradually replacing carbon, led to a threefold increase in the efficiency of the electric light. And process innovations made the manufacturing more efficient – for example hand blowing of bulbs was replaced by a semi-automated machine in 1894.
All of these process innovations can lead to a dramatic fall in the production costs, and therefore the sales price, of an innovation in the early years of its use. For example, after 15 years of production, the number of steps involved in producing an electric lamp had been reduced from 200 to 20 and the labour time from nearly an hour to 20 seconds. Not surprisingly the price of a carbon filament electric lamp over this period fell to less than 20 per cent of its original price.