DisruptiveInnovation.Org - Key Concepts

Resource Allocation Process

Companies have many types of resources, including people, machines, land and capital. Determing how to allocate these resources and deciding where to prioritize innovation, is known as the resource allocation process. Depending on a company's business model, certain types of innovations will receive investment, while others will not. Specifically, companies depend on investors to deliver capital and customers to generate revenue. For this reason, companies will almost always prioritize investments that are believed to satisfy customers and generate increasingly attractive profits to satisfy investors. This tendency, and its impact on all resource allocate decisions in a company, are understood to be the priorities of a company.