Quality or Innovations? What's best?

Two questions managers are often confronted with today are: 

1. Why should I innovate ? and 
2. Why isn`t quality enough to stay in business?

At the Center for Service Innovation (CSI) at The Norwegian School of Economics, our research has lead us toward a dynamic approach to quality, innovations, and emotions. This approach has given us new strategic insight for decision making. 

To illustrate, let me use Apple´s iPhone as an example. 

When the iPhone was launched in 2007, it became an instant success. Owners were excited and quickly developed a love relation to the phone.

But as customers got used to the phone, the excitement wore off. Today - eight versions later, many iPhone users say they are indifference to the Apple brand and their smart phone. In other words: Despite the same high product quality, customers are not that excited any more.

We call this the curse of habits of getting use to exciting products or services.  From this we draw that innovations have three goals: 
a) uphold high quality in products and services, 
b) trigger active positive emotions, i.e. to make customers excited and 
c) to strengthen customers´relationship to the firm (because satisfied and aroused customers tend to be loyal). 

But as most people will adhere to, it is impossible for them to stay excited all the time or even over a longer periode of time - because of the curse of habits. From this cycle of aroused and sleepy emotions, we draw four learning points:
1) innovations trigger active emotions
2) useage will deflate emotions
3) innovations must vary with regard to novelty
4) innovations must be launched in a predictable time-pattern

In summary, we will claim that sustainable firms have three characteristics:
1) they deliver products and services of high quality
2) they innovate according to a predictable frequency, and
3) they introduce innovations that triggers active positive emotions. 

The bottom line is: Quality is a ticket to play. Innovations are a ticket to stay!