The role of unexpected market events in market creation strategies

One of the major tenets of modern marketing is that market-driven innovations are more likely to be successful in the market because they stem from a deep knowledge of customer needs and preferences, and responsive design and implementation processes which make them different form their competitors’. However, strategic management researchers have challenged this thesis, by contending that market-driven innovations are only incremental, consist of minor changes of existing products and do not contribute to build a sustainable competitive advantage in the long term. Recent literature has tried to answer to this criticism, by suggesting that there are two different components of market orientation that can differently affect innovation performance. On the one hand, in fact, responsive market orientation is likely to produce incremental innovations, by being it focuses on expressed customer needs; on the other hand, proactive market orientation is more likely to produce radical innovation, by being itfocused on latent, unexpressed customer needs. The two types are not alternative and can be coexistent in a company which beneficial effects on innovation. Associated with them, two type of learning approaches can be adopted by companies. The first one, exploitative learning, is based on the full exploitation of prior (market) knowledge, whereas the second, called exploratory learning, is based on the experimental search of new information and generation of new knowledge. However, the assumption behind this distinction is that reactive and proactive market orientation, and alongside with them, exploitative and exploratory learning, are processes that can be planned and implemented by a firm in a rational fashion. Our aim in this chapter is to give evidence to the role of chance, unexpected market events, surprising events, that make market creation strategies emergent, and can shape innovation processes in a very peculiar manner. Unexpected market events (UME) are those market events which deviate from the system of expectations of a firm, so fostering a reinterpretation of market representations. Hence, if properly managed, they bring to the creation of new product categories, at the redefinition of market boundaries, and the development of new businesses and products. The chapter will start with a definition of UME and the way they influence organizational learning processes. Then, we will propose a taxonomy of UME, and we will describe the different processes that can enhance their occurrence. Finally, we will focus our attention on the managerial processes that can foster an efficient and effective market creation strategy based on the exploitation of UME