Combining Innovation and Capacity Utilization in High Throughput Systems: Moving Beyond the Product Life Cycle Model by Introducing Second-Order Innovations

The literature on the product life cycle and on high throughput systems has been preoccupied with studying an apparent lack of flexibility in capital-intensive production systems. Companies in capital-intensive industries need to maintain a high level of capacity utilization in order to stay economically viable, however, their efforts to uphold the throughput of their systems often have the unforeseen and unintended consequence of limiting their ability to introduce new products and services. Nevertheless, some companies have managed to resolve these tensions by introducing what we describe as “second-order innovations”, a type of innovation which acts on the innovation process itself and enables new products and services to be introduced without a steep decline in capacity utilization. By focusing on these cases and discussing their theoretical implications, we want to contribute to the existing literature on high throughput systems by identifying key mechanisms for introducing and maintaining such second-order innovations and describing the patterns of industrial evolution that they create.