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Functional consequences are desirable effects of an innovation in a social system. Dysfunctional consequences are undesirable effects of an innovation in a social system. The degree to which consequences are desirable or undesirable ultimately depends, on how the innovation affects the members of the system.
An innovation may be functional for a system but not functional for certain individuals in the system. For example fogging may keep away mosiquitoes but at the same time some people may be allergic to the smoke.
The functionality of consequences also depends on time. Obviously, an innovation’s short-range and long range effects may be quite different.
If a person is very early in adopting an innovation he may earn a lot of money in a very short while. This can be called windfall profits. Windfall profits are a special advantage earned by the first adopters of a new idea in a social system.
Windfall profits are a special advantage earned by the first adopters of a new idea in a system. Their unit costs are usually lower and their additions total production have little effect on the selling price of the product. But when all members of a system adopt a new idea, total production increases and the price of the product or service eventually drops.
A very good example are the mobile phones which entered the market sometime during the late 1990’s. Over a period of time the cost of mobiles has reduced considerably. The initial sales brought windfall profits to the manufacturers of mobile hand sets.
An innovator must take risks in order to earn windfall profits. Not all new ideas turn out successfully and occasionally the innovator gets his or her fingers burned. Adoption of a non-economic or unsuccessful innovation can result in “windfall losses” for the first individuals to adopt.
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