Innovation exam 2

Timing of entry, three categories first movers, early followers, late entrants

Advantages first movers brand loyalty, preemption of scarce assets, buyer switching cost, increasing returns advantages

Disadvantages first movers high R&D costs, undeveloped distribution channels, immature complements, uncertainty customer requirements

9 factors influencing optimal timing of entry customer preferences, improvement over previous solutions, require enabling technologies, complementary goods available, competitive entry, increasing returns to adoption, withstand early losses, resources to accelerate market acceptance, reputation

Disruptive innovation process where a smaller company with fewer resources successfully challenge established business

Why? Incumbents are focused on improving products services, demanding/profitable customers, exceed needs

Disruptive innovation origins from low end or new market

Most suitable to survive is having a fast cycle development process , thus take both first mover and second mover advantages

How shorten NPD-time? By using... strategic alliances, cross-functional teams, parallel development process

Two most common tools for analysing external environment Porter's, stakeholder analysis

Porter - buyer reliant on us, switching cost, backward integrate

porter - suppliers reliant on them, switching cost, forward integrate

porter - substitutes similar, better, lower price

porter - new entrants attractive, entry barriers

porter - existing rivals demand growth, market concentration, differentiation, exit barriers, cost conditions

porter - complements availability

Stakeholder analysis - two ways strategic, normative

strategic stakeholder analysis management issues

normative stakeholder analysis ethical or moral implications

First step of analysis identify all stakeholders

Then for each party identify... interests, resources, claim

Identifying firm's strengths and weaknesses by examining primary activities, support activities

Support activities firm infrastructure, HR, technology, procurement

Primary activities inbound logistics, operations, outbound logistics, marketing and sales, service

Once key strengths and weaknesses identified, firm asses if it can be a source of sustainable competitive advantage

To be a potential source of sustainable competitive advantage rare, valuable, durable, inimitable

resources not imitable tacit, socially complex, causally ambiguous

core competencies differentiate the firm strategically

Identify core competences by asking significant, transcend a single business, hard to imitate

Risk with identifying core competence firm rigid, overly committed

dynamic capabilities makes a firm more agile and responsive to change

A firm's purpose is to create value

strategic intent is long-term ambitious goal

Why solo development? not put proprietary tech at risk, full control, challenge company to develop skills and resources

Advantages of collaboration obtain skills and resources quickly, decreases development cycle time, reduce fixed assets, flexible, share cost and risk

Forms of collaboration strategic alliances, joint ventures, licensing, outsourcing, collective research organisations

strategic alliances could fail due to self-interest and opportunism

The matrix strategic alliances capability complementation, capability transfer, individual alliance, network of alliances

complementation + individual often when trade secrets involved

transfer + individual exchanging capabilities but producing own, more independent

complementation + network extended enterprise, flexible

transfer + network jointly develop new, share and utilise knowledge

joint ventures significant structure, commitment, equity investment, often new entity

licensing rights to use proprietary technology of other, rapid and sharing profits. Restrictions

outsourcing, one common form contract manufacturers

participation in collective research organisation long-term commitment, form can vary

Partner selection, two dimensions resource fit, strategic fit

resource fit access resources

strategic fit compatible objectives and styles

governance ensure rights and obligations

alliance contracts legally binding, rights obligations, legal remedies

equity ownership aligns incentives, contribute capital owns a share

relational governance self-enforcing based on goodwill, trust, reputation

Advantages larger firms greater financing, split cost over units, often complementary activities, global reach

Disadvantages large firm difficult managerial control, incentives for employees diminish, large fixed assets

structural dimensions of the firm centralisation, decentralisation, formalisation, standardisation

centralisation / decentralisation what level decision-making

formalisation rules, procedures etc to structure behaviour of individuals within firm

combination of formalisation and standardisation mechanic structure

ambidextrous organisation complex, composed of multiple internal inconsistent architectures that collectively achieve both short-term efficiency and long-term innovation

Ambidextrous organisation defintion; organisation rooted in structural separation

modularity components may be separated and recombined

Exploitation success today, efficient, existing capabilities, centralised, tight control, standard, specialisation

exploration innovative, growth, investing, building capabilities, delegation of power, small units, flexible

Ways of structuring organisation sequential alternation, structural separation, spherical separation, behavioural integration

sequential alternation change back and forth

structural separation separate units with different structures

spherical separation supplemental projects, employees switch between

behavioural integration combine two dimension at front lines

Dominant design single product or process architecture that dominates a product category

Why dominant design increasing returns to adoption, revenue used to further refine, greater understanding, complementary assets

learning effects performance increase or cost decrease with number of units produced

learning curve standard dorm y=ax^-b

absorptive capacity ability to recognise, assimilate and utilise new knowledge

network externalities benefit from using a good increases with number of users

number of users installed base

dominant design could be due to large installed base but could also be government regulation

why would government want dominant design? consumer welfare benefits of having compatibility among technologies

Path dependency End results depend greatly on events that took place leading up to the outcome, often impossible to reproduce

different aspects of technology's stand alone value, make use of buyer utility map

six stages of buyer experience cycle purchase, delivery, use, supplements, maintenance, disposal

six utility levels productivity, simplicity, convenience, risk, dun, image, environmental friendliness

platform is a two sided market, consumers - platform - third parties

Key mechanism platform low marginal cost

Ecosystem of platforms owner, provider, producer, consumer

owner control intellectual property, governance

providers serve as platform interface with users

producers creates offerings

consumers use offerings

Move from pipeline to platform resource control to resource orchestration, internal optimisation to external interaction, focus customer value to ecosystem value

Competitive threats platforms tend to follow one of three patterns; established with superior network, target overlapping customer base, collects the same data and competes for market share

platform not only focus on sales but growing numbers of interactions

key element in radical innovation testing hypotheses

demand side disruption changes the customers' wants and needs

supply-side disruption changes the basic architecture of product

firms survive architectural disruption if they have integrated organisational model, ownership of important features, strong sense of corporate identity

disruptors often don't make customers switch but rather make non-consumers into consumers

four points important to understand disruption long process, different business models, not all succeed, should focus on sustained innovation not solve problem that doesn't exist

possible solution to "stay in the game" create separate division operates under protection of senior leadership to explore and exploit a new disruptive model

success in fast moving environment requires dynamic capabilities

dynamic capabilities broken down into three clusters sensing, slicing, reconfiguring

sensing identification and assessment of opportunities and threats (front line)

seizing mobilisation of resources to address above mentioned (front-line)

reconfiguring continuous renewal of firm's tangible and intangible assets (top executives)

Ambidexterity capacity of firm to address mutually conflicting demands

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