Smart low cost design in complex value networks : The case of public transport

Abstract : “Low cost” is nowadays a very mobilized concept in innovation and new product development both in the general press and in the scientific literature. In management sciences, theconcept is widely mobilized in strategy, marketing as well as new product development. However, there seems to be a lack of a design model for such an approach, making difficult for managers to implement the development of low cost offers. Our work shows that existent low cost products had followed different design rules that could be modelled. We propose a low cost design model that distinguishes two approaches: low cost adaptation and smart low cost design. In low cost adaptation approach, the product is designed through a “no-frills” approach to a regular product: the aim here is to reduce the performance of the existent product on secondary needs to reduce the reference cost. In the smart low cost design approach, a new solution is designed for an existing need with a cost goal. Thus, this specific design approach allows creating products with lower cost and higher value than regular products.Beyond the design rules of a product, we show the possibilities opened by smart low cost design to renew the dominant design through a longitudinal study done in the urban public transport sector. The case study underlined three main results: 1/ legitimization of a low cost adaptation needs a dual strategy that combines both approaches; 2/ the performance of low cost strategy relies on the strategy performance beyond products and its capacity to renew the public transport's dominant design; 3/ Low cost approach supports the dynamic capability for innovation when low cost is used as a tool to redefine the organizations' research and design space limits, as well as a tool to create new partnerships.Finally, the study of such industrial context, as a complex value network, underlined how low cost design help to overcome ecosystem barriers to innovation and propose new partnerships, leading firms to redesign and reconfigure their ecosystem and the value creation process.
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Submitted on : Wednesday, April 20, 2016 - 1:13:08 PM
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  • HAL Id : tel-01304806, version 1

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Milena Klasing Chen. Smart low cost design in complex value networks : The case of public transport. Business administration. Ecole Nationale Supérieure des Mines de Paris, 2015. English. ⟨NNT : 2015ENMP0041⟩. ⟨tel-01304806⟩

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