Ch 7: Innovation

evaluate different types of innovation and derive their strategic implications

four type of innovation emerge when applying the existing versus new dimension of technology and markets: incremental, radical, architectural, and disruptive innovations

identify the process leading to hyper competition and explain why competitive advantage can be sustained through continuous innovation

hyper competition can result from a lack of strategic positioning no single strategy can sustain competitive advantage over time any competitive advantage must be a string of short-lived advantages. this is achieved through a constant escalation of competition in the areas of price, quality, timing, and know how, capital commitments, and supply chain management

Competitive implications of different stages in the industry life cycle

innovaitons frequently lead to the birth of new industries. industries generally follow a predictable industry life cycle, with four distinct stages; introduction, growth, maturity, decline Different life style stages have different consumer adoption rates and different competitive implicaitons

product innovations

new products, such as jet airplane, electric vehicle, mp3 player, and netbook

process innovations

new ways to produce existing products or deliver existing services

strategic management concepts to entrepreneurship and innovation

strategic entrepreneurship focuses on generating integrated insights pertaining to innovation and change using the concepts available in strategic management

innovation

the commercialization of any new product, process, or idea, or the modification and recombination of existing ones. To drive growth, innovation also needs to be useful and successfully implemented

industry life cycle

the four different stages, introduction, growth, maturity, and decline - that occur in the evolution of an industry over time

describe the long tail concept and derive strategic implications

the internet is strongly disruptive that digitizes any industry that can be digitized. the long tail describes a business model in which companies can obtain a significant part of their revenues by selling a small number of units rom among almost unlimited choices

network effects

the positive effect (externality) that one user of a product or service has on the value of that product for other users

entrepreneurship

the process by which people undertake economic risk to innovate - to create new products, processes, and sometimes new organizations

strategic entrepreneurship

the pursuit of innovation using the tools and concepts available in strategic management

Innovation Summary

continuous innovation is the engine behind successful companies. innovation is a potent competitive weapon: it enables firms to redefine the marketplace in their favor and achieve much-needed growth The successful commercialization of a new product or service allows a firm to extract temporary monopoly profits

evaluate discontinuities and describe the dynamics of paradigm changes

discontinuities can lead to a paradigm shift, in which a new technology revolutionizes an existing industry and eventually establishes itself as the new standard technologies follow a predictable technology s-curve, improving in performance over time as a consequence of continued r&d effort the probability of discontinuity increases when a given technology approaches its physical limit

reverse innovation

a firm develops products specifically for emerging markets such as china and india

absorptive capacity

a firm's ability to understand, evaluate, and integrate external technology environments

architectural innovation

a new product in which known components, based on existing technologies, are reconfigured in a novel way to attack new markets

hyper competition

a situation in which competitive intensity has increased and periods of competitive advantage have shortened, especially in newer, technology based industries, making any competitive advantage a thing of short lived advantages

standard

an agreed upon solution about a common set of engineering features and design choices: dominant design

radical innovation

an innovation that draws on novel methods or materials, is derived from either an entirely different knowledge base or form the recombination of the firm's existing knowledge base with a new stream of knowledge, or targets new markets by using new technologies

disruptive innovation

an innovation that leverages new technologies to attack existing markets from the bottom up

incremental innovation

an innovation that squarely builds on the firm's established knowledge base, steadily improves the product or service it offers and targets existing markets by using existing technology