Chapter 2 - Describing Innovations, Entrepreneurship and Business Strategies

Q.2.1. What is the difference between: Innovation/diffusion

An innovation diffuses to the buyer and the seller side of an actor. Diffusion means that the innovation is being used by more and more companies/people.

Q.2.1. What is the difference between: Invention/innovation

An innovation is an invention with success in commercial application.

Q.2.6. An R&D manager has from past experience assessed that 40% of all innovation projects of a certain type have been technically successful, 15% of all projects have been commercially successful, and only 5% of all projects have been economically successful. Judging from this experience a new project of a similar type for which the technical objectives have been accomplished, what are: a) The chances of commercial success? b) The risk (probability) that the project will ultimately fail economically?

40% tech success 15% comm. success 5% econ. success "economically successful projects" is a subset of "commercially successful projects" which in turn is a subset of "technically successful projects". a) Vi vet att projektet i fråga är bland de 40% som är tech sucess. Chansen för comm. success är därmed 15%/40% För säg att vi har 100 projekt, vi vet att av dessa är 40 st tech. success. Av dessa 40 är 15 st comm. success och av dessa 15 är 5 st econ. success. Så chansen för comm. success är helt enkelt 15/40 givet att vi redan vet tech. success. (=37.5%) b) Givet att projektet är tech success så har vi att 5/40 är sannolikheten för economic success. Detta är dock inte det vi är ute efter, eftersom vi söker economic *fail*. Chansen för economic fail är ju dels de som inte är comm. success men också de som *är* comm. success men *ej* econ. success. Alltså: (25+10)/40=87.5% (25: de som är tech men inte comm, 10: de som är både tech och comm, men inte econ) OBS! Man får samma svar om man tar (1-5/40), men är förmodligen ändå bra att förstå logiken bakom den andra uträkningen.

Q.2.10.e. What is the difference between: Adoption-immitation

Adoption is something that takes place on the buyer and seller side when diffusion happens. Immitation is something that takes place on the seller side when seller diffusion happens.

Q.2.1. What is the difference between: Buyer/seller diffusion

Buyer: Is when the innovation is being used by buyers. Seller: Is when the innovation is being sold by competitors.

Q.2.7. What is meant by the following concepts and how do they relate to each other, if at all? a) Technical success b) Commercial success c) Economic success d) Invention e) Innovation f) Imitation g) adoption h) diffusion

For *technical, commercial, and economic success*, see Q.2.2. Further, economic is a subset of commercial which is a subset of technical. An *invention* becomes an *innovation* when it is *commercially successful.* In order for *diffusion* to take place, *adoption* by a number of indivduals (companies) must take place (regardless of whether it's buyer or seller diffusion.) In order for *diffusion* to take place on the seller side, *imitation* in some form must take place. *Buyer and seller diffusion* jointly decide *economic success*, where seller diffusion (in general) has a negative effect and buyer diffusion has a positive effect.

Q.2.1. What is the difference between: Innovation/immitation

Innovation is if you're the first inventing it. Immitation is if you're attempting to copy someone else's innovation.

Q.2.1. What is the difference between: Invention/discovery

Invention is based on human ingenuity whereas a discovery is a pre-exisiting feature of nature such as a in ore-deposit or natural law.

Q.2.10.a. What is the difference between: Invention-discovery

Invention is based on human ingenuity whereas a discovery is a pre-exisiting feature of nature such as a in ore-deposit or natural law.

Q.2.8.q. What is meant by the following concept? Imitation decision lag

Lag between competitor awareness and competitor decision to start imitative R&D.

Q.2.8.q. What is meant by the following concept? Imitation awareness lag

Lag between time of patent application and a competitor's awareness

Q.2.8.m. What is meant by the following concept? Market lead time

Market lead time with patent: Time from market introduction to patent expires. Market lead time without patent: Time from market introduction to market introduction of product imitation without patent blockage.

Q.2.5. What influences in general do patents, trade secrets and trademarks have on diffusion of innovations?

Patents and trademarks can increase buyer diffusion because of a company being seen as superior. Patents and trade secrets decrease seller diffusion, hopefully giving a company an increased market share early in the introduction process.

Q.2.2. What is the difference between technical, commercial, and economic success?

Technical: specifications have been met Commercial: Commercial application has been found (product is useful to some) Economic: Acceptable RoI

Q.11.a. Explain the different generic strategies for acquisition and exploitation of technology. b) How do these strategies relate to the concept of open innovation?

Technology acquisition: Internal R&D Acquisition Joint ventures Licensing in Technology exploitation: Internal exploitation Divestment/spin-off Joint ventures Licensing out b)???

Q.2.4.b. What is the main critique of the linear innovation model?

That activities don't necessarily have to follow upon each other in a neat sequential order in an innovation process. (Think about concurrent engineering and how it relates to reduced amount of engineering changes late in the process and thus reduced time to market and time to quantity)

Q.2.9.a. What is the main citique of the linear innovation models? b) What is supposedly a better alternative model?

That activities don't necessarily have to follow upon each other in a neat sequential order in an innovation process. (Think about concurrent engineering and how it relates to reduced amount of engineering changes late in the process and thus reduced time to market and time to quantity). A better model would be the interactive one.

Q.2.4.b. What are the main features of an alternative (non-linear) innovation model?

That all parts of the innovation process (ideas, new needs, needs of society and the marketplace, marketing, new technological capability) all affect each other in the innovation process and that there is little (if any) order between stages.

Q.2.8.l. What is meant by the following concept? Imitation time

Time (of competitor) from decision to start imitative R&D to Market introduction of product imitation.

Q.2.8.j. What is meant by the following concept? Time to patent

Time between R&D-start to basic patent application filed (technical success). Negative cash flow.

Q.2.8.i. What is meant by the following concept? Time to market

Time between R&D-start to market introduction (commercial success). Also called innovation time. Cash flow during this time is negative.

Q.2.8.o. What is meant by the following concept? Time to break even

Time from R&D start to economic success (when total income of project exceeds total expenditure).

Q.2.8.k. What is meant by the following concept? Patent life time

Time from basic patent application filed (technical success) to basic patent expires. During this period, cash flow is negative until commercial success is reached. Then cash flow is positive with a peak when patent expires.

Q.2.8.p. What is meant by the following concept? Effective patent protection time

Time from basic patent application filed to basic patent expires. Patent lifetime (max 20 years)

Q.2.8.n. What is meant by the following concept? Product life time

Time from market introduction to product expiry.

Q.2.3. Which are the main features of the product life cycle model?

Typically graphs cash flow over the PLC, with heavy investment early in process and then heavy sales income later on. Assumes life cycle is finite with an "expiration date" for any product. Different stages of the cycle: development, introduction to market, growth, Maturity, saturation, decline.

Q.2.4.a. Which are the main features of the two extreme sub-types of the linear innovation activity model?

Views the innovation process as linear with a distinct order of events. The two extreme types are the "science pushes, technology produces, firm markets" and the "need pulls, technology makes"