Chapter 7: Innovation and Entrepreneurship
What are the five phases of industry lifecycle
Intro> growth> shakeout> maturity> decline
what are intro stage network effects
Postivive effect that one user has on value of product for other users
What is the markets and technology framework
conceptual model to catagorize innovsations - Four types of innovaition ermege: incramental, radial, architectural and disruptie
How do you respond to disurptive innocation
continue to innovate, guard against disurptive innovation by protecting low end of market and disrupt yourself
What is included in the decline stage
demand falls, strong pressure on prices, four strategic options to pursue( exit, harvest, maintain, consolidate)
What are the four steps of the innovation process
idea> invention> innovation> imitation
What portion of the market do tech enthusiasts comprise
2.5%, pursue new tech proactively
Who is the early majority
34% of total market potential, main consideration is if its partical
Who is the late majority
34% of total market potential, not as confident in ability to master tech
What characteristics are required of a disriptive froce
begins as low cost solution to existing problem and rate of tech improvement increases
What does crossing the chasm refer to
being able to transition from one stage to the next in the lifecycle
What are the characteristics of the growth stage
demand rapidly increases, competitive rivalry, product/service standards emerge, basis of competition is process innovation, core competencies are manufacturing and marketing
Why are incumbent firms focused on incramental innovation
economic incentives, organizational intertia and innovation ecosystem
What are the characteristics of the maturity stage
few large firms, additional market demand is limited, market reached max size, compettiive intensity increases
What is absorptive capacity
firm's ability to understand external tech, evaluate them and integrate them into current products
What are the characteristics of the shakeout stage
firms begin to compete more intensely, biggest competitive weapon is low price
What caused shift from closed to open innovation
increasing supply and mobility of skilled workers, exponential growth of venture capital, availability of options to commercialize ideas and increasing capability of suppliers globally
What casues rapid technological diffusion and adoption
initial innovations are foundational for rapid innovation, new business models, satellite and cable distribution systems, emergence of internet
What are the early adopter
13.5% of market potential, demand driven by imagination, intuition
What are th elaggards
16% of market potential, only adopt new tech ifits necessary
What is innovation
Novel and useful idea that is succesfully implemented
What are some examples of innovations leading to new industries
-IT and logistics: lead to overnight express delvieries and big box retailing -Internet: online retailing and revolutionized advertising -Nanotech: medical disgnostics and surgery, lighter and stronger airline components
What is architectural vs. disurptive innovation
-architectural: leverages existing tech into new markets and alters architecture of product -Disruptive: leverages new technoligies in existing markets, new product/process meets existing customer needs
What is closed vs. open innovation
-closed: new products discovered internally -open: ideas and innovation can originate from external sources
What occurs during the intro stage of an industry
-core comeptency: R+D -Strategic Objective: market accpetance -Emphasis: unqiueness and eprfromance -Initial market size: small -barriers to entry: high
What is incramental vs. radical innovation
-increamental: builds on established knowledge, results from stady improvement and targets existing markets -radical innovation: draws on novel mtheods and materials, forms entirely new knowledge base and forms recombination of existing knowledge