However, this drive for innovation is often met with commercial constraints such as budget limitations, regulatory requirements, and market pressures. These constraints can either serve as a catalyst for creative solutions or act as barriers that stifle ingenuity. In this blog, we will explore how commercial constraints influence innovation, examining whether they drive companies to think outside the box or hinder their ability to bring novel ideas to fruition.
The answer of do commercial constraints encourage or inhibit innovation isn’t clear cut. Methods for working broadly fall into 2 categories, open and closed source. Closed is where a company or individual works internally and out of sight of the public to develop projects and intellectual property which they can then sell protected products off the back of or licence the IP they have generated to a 3rd party. The opposing approach to this is Open-source development where activities are performed in the community for all to see and the resulting IP is essentially available for anyone to use.
The advantage of open source is a very wide pool of experience is available to draw upon which can lead to rapid development of complex products and due to the openness of the development the resulting products can be more easily combined into other systems. It can also lead to a wide range of supply options where 2 manufactures might be making the exact same product independently so if something goes wrong with the first the second is available.
The disadvantages of open-source development are that some of the drivers which spur on innovation aren’t present. If someone holds a patent which prevents you from copying their design and you want to compete in the same space the only option is to try and innovate yourself out of the situation and develop something which is different so that it doesn’t infringe the patent. Open source can lead to a race to the bottom in terms of cost which can mitigate the financial benefits of using it, if lots of people are selling the same product essentially the only differentiators are going to be customer service and cost. If a company owns IP or puts in place measures such as complex manufacturing techniques to protect their ideas, then costs can be higher as the supply is more limited which allows more money to be invested back into R&D and therefore improved and more innovative products.
There are other advantages to commercial constraints such as understanding what the marketplace will accept and therefore how much something can cost. This may lead to innovations in manufacturing processes which allow components to be produced cheaper without affecting the quality of the product. It can also drive the company to be more efficient, going slow can often end up costing money in the long run therefore spending money and investing upfront has a finance driver to increase pay off in the long run.
Commercial constraints do have disadvantages as well which are important to understand. It can lead to short term focus, such as “we are making money now, why improve or change anything”. Patents also have a limited life of 20 years therefore if a company solely relies on legacy “cash cow” products because they are protected from being copied there is a time limit and after the patent expires your design becomes more of less open source and people can copy it.
They may also lead to risk aversion in some instances such as not wanting to invest in new technology as there may not be a payoff or only being comfortable sticking with what you know. However extreme commercial pressure can also lead to corners being cut and unnecessary risks being taken. So, a careful balance must be maintained between risk and financial reward.
In summary there are lots of reasons that commercial constraints can drive innovation and create healthy competition in the marketplace. However, there are also elements of commercial pressure which inhibit progress and it’s important that these are understood and considered when making decisions as whether to develop a new product.
Engineering Director
Jacks is responsible for the engineering aspects of projects to ensure technical risk is minimised. With expertise in simulation, drug delivery devices, and electronics, Jack guides your project team on all related deliverables.
Jack is a Chartered Engineer with a Master’s Degree in Mechanical Engineering. He has over 10 years’ experience working in both the medical sector and on complex machinery.
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