Chapter 7: Book

innovations

4 types of ____: - incremental - radical - architectural - disruptive

herding effect

A ___ ___ is where the early majority enters in large numbers.

patent

A ____ is a form of intellectual property, and gives the inventor exclusive rights to benefit from commercializing a technology for a specified time period in exchange for public disclosure of the underlying idea - Expires after 20 years from the filing date

markets and technology framework

A conceptual model to categorize innovations along the market (existing/new) and technology (existing/new) dimensions.

absorptive capacity

A firm's ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones.

innovation ecosystem

A firm's embeddedness in a complex network of suppliers, buyers, and complementors, which requires interdependent strategic decision making. - They no longer make independent decisions but must consider the ramifications on other parties in their innovation ecosystem.

open innovation

A framework for R&D that proposes permeable firm boundaries to allow a firm to benefit not only from internal ideas and inventions, but also from external ones. The sharing goes both ways: some external ideas and inventions are insourced while others are spun out. - External sources of knowledge can be customers, suppliers, universities, start-up companies, and even competitors.

late majority

A wave of growth comes from buyers in the ___ ___ entering the market in the maturity stage. Like the early majority, they are a large customer segment, making up approximately 34 percent of the total market potential. - They prefer to wait until standards have emerged and are firmly entrenched, so that uncertainty is much reduced. - They also prefers to buy from well-established firms with a strong brand image rather than from unknown new ventures.

incremental innovation

An ____ ___ squarely builds on an established knowledge base and steadily improves an existing product or service offering.60 It targets existing markets using existing technology. - An emphasis on this strengthens the incumbent firm's position and thus maintains high entry barriers. - A focus on this is particularly attractive once an industry standard has emerged and technological uncertainty is reduced.

disruptive innovation

An innovation that leverages new technologies to attack existing markets from the bottom up. - The dynamic process begins when a firm, frequently a startup, introduces a new product or process based on a new technology to meet existing customer needs.

early majority

The customers coming into the market in the shakeout stage are called ___ ___. Their main consideration in deciding whether or not to adopt a new technological innovation is a strong sense of practicality. They are pragmatists and are most concerned with the question of what the new technology can do for them. - Are aware that many hyped new product introductions will fade away, so they prefer to wait and see how things shake out.

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 tools and concepts from strategic management.

innovation

The third step in the innovation process and is the commercialization of any new product or process, or the modification and recombination of existing ones.

massive open online courses (MOOCs)

Using the web to provide large-scale, interactive online courses with open access.

invention

____ is the second element in the innovation process that describes the transformation of an idea into a new product or process, or the modification and recombination of existing ones. - The practical application of basic knowledge in a particular area frequently results in new technology.

intrapreneurs

____: those pursuing corporate entrepreneurship.

capital intensive

a ___ ___ process, in which the innovator is investing in designing a unique product, trying new ideas to attract customers, and producing small quantities

cloud computing

a real-time network of shared computing resources via the Internet Example: Google Drive

peering

creating dedicated and direct connections

Oprah Winfrey

founder of Harpo Productions

Reed Hastings

founder of Netflix

Jimmy Wales

founder of Wikipedia

Elon Musk

founder of Zip2 (an online provider of content publishing software for news organizations) and co-founder of PayPal (an online payment processor.)

digital divide

inequality in access to and speed of the Internet

chasm

otherwise known as the big gulf, separating the early adopters from the early and late majority that make up the mass market.

double edged sword

patents are a ___ ___ ___. - On the one hand, patents provide a temporary monopoly as they bestow exclusive rights on the patent owner to use a novel technology for a specific time period. - On the other hand, patents require full disclosure of the underlying technology and know-how so that others can use it freely once the patent protection has expired, however, many firms find it strategically beneficial not to patent their technology.

Jeff Bezos

the founder of Amazon.com

innovation

the successful introduction of a new product, process, or business model—is a powerful driver in the competitive process.

crossing the chasm framework

Conceptual model that shows how each stage of the industry life cycle is dominated by a different customer group.

Maintain

Decision to continuing to support marketing efforts at a given level despite the fact that consumption of the product has been declining.

innovation process

Describes the discovery, development, and transformation of new knowledge in a four-step process captured in the four I's: - Idea - Invention - Innovation - Imitation

introductory stage

In the ___ ___, the innovator's core competency is R&D, which is necessary to creating a new product category that will attract customers. - The initial market size is small, and growth is slow.

growth stage

The ___ ____ is process where innovation ramps up (at increasing marginal returns) as firms attempt to keep up with rapidly rising demand while attempting to bring down costs at the same time. - after the initial innovation has gained some market acceptance, demand increases rapidly as first-time buyers rush to enter the market. - Distribution channels are expanded, and complementary assets in the form of products and services become widely available and efficient and inefficient firms thrive

technology enthusiasts

The customer segment in the introductory stage of the industry life cycle is called ___ ___. Its the smallest market segment, making up some 2.5 percent of total market potential.

organizational inertia

____ is resistance to changes in the status quo.

winner take all markets

Markets where the market leader captures almost all of the market share and is able to extract a significant amount of the value created.

Connect+Develop

P&G's ___+___ is a web-based interface that connects the company's internal-innovation capability with the distributed knowledge in the global community. From that external community, researchers, entrepreneurs, and consumers can submit ideas that might solve some of P&G's toughest innovation challenges.

early adopters

The customers entering the market in the growth stage are ___ ___. They make up roughly 13.5 percent of the total market potential. Are eager to buy early into a new technology or product concept. - Demand is driven by their imagination and creativity rather than by the technology per se.

decline stage

The final stage of the industry life cycle, the size of the market contracts further as demand falls, often rapidly. - managers generally have four strategic options including: - exit - harvest - maintain - consolidate

industry life cycle

The five different stages of ___ __ ___ include - introduction - growth - shakeout - maturity -decline — that occur in the evolution of an industry over time.

maturity stage

The fourth stage of the industry life cycle where the industry structure morphs into an oligopoly with only a few large firms. - Demand now consists of replacement or repeat purchases. - The market has reached its maximum size, and industry growth is likely to be zero or even negative going forward. This decrease in market demand increases competitive intensity within the industry.

imitation

The fourth step in the innovation process where if an innovation is successful in the marketplace, competitors will attempt to ___ it.

consolidate

Where although market size shrinks in a declining industry, some firms may choose to ___ the industry by buying rivals. Allows firms to stake out a strong position

Exit (decline stage)

Where some firms are forced to exit the industry by bankruptcy or liquidation.

Harvest (decline stage)

Where the firm reduces investments in product support and allocates only a minimum of human and other resources.

shakeout stage

Where the rate of growth declines. And firms begin to compete directly against one another for market share, rather than trying to capture a share of an increasing pie. - As competitive intensity increases, the weaker firms are forced out of the industry. - A type of cut-throat competition - Key success factors at this stage are the manufacturing and process engineering capabilities that can be used to drive costs down.

first mover advantages

___ ___ ___ are competitive benefits that accrue to the successful innovator. - Include economies of scale as well as experience and learning-curve effects

corporate level strategy

___ ___ ___ is used to help us understand how executives make decisions about where to compete (in terms of industries, value chains, and geography) and how to execute it through strategic alliances as well as mergers and acquisitions.

closed innovation approach

___ ___ ___ was the dominant research and development (R&D) approach for most firms: They tended to discover, develop, and commercialize new products internally.

trade secrets

___ ___ are defined as valuable proprietary information that is not in the public domain and where the firm makes every effort to maintain its secrecy. Example: Coca Cola

Product innovations

___ ___ are new or recombined knowledge embodied in new products Example: - jet airplanes - electric vehicles - smartphones - wearable computers.

Process innovations

___ ___ are new ways to produce existing products or to deliver existing services. Made possible through: - Internet - lean manufacturing - Six Sigma - biotechnology - nanotechnology * Must be high tech to be impactful

Social entrepreneurship

___ ___ describes the pursuit of social goals while creating profitable businesses. Social entrepreneurs evaluate the performance of their ventures not only by financial metrics but also by ecological and social contribution (profits, planet, and people).

razor razorblade

___ ___ is a business model (introduced in Chapter 5), where the consumer purchases the handle at a low price, but must pay a premium for replacement refills and pads over time. Created by Gillette

network effects

___ ___ is the positive effect that one user of a product or service has on the value of that product for other users.

technology enthusiasts

___ ___ often have an engineering mind-set and pursue new technology proactively. They frequently seek out new products before the products are officially introduced into the market. - Enjoy using beta versions of products, tinkering with the product's imperfections and providing (free) feedback and suggestions to companies.

radical innovation

___ ____ draws on novel methods or materials, is derived either from an entirely different knowledge base or from a recombination of existing knowledge bases with a new stream of knowledge

technology

___ refers to the methods and materials used to achieve a commercial objective.

standard

___ signals the market's agreement on a common set of engineering features and design choices. - Can emerge bottom up through competition in the marketplace or be imposed top-down by government or other standard-setting agencies - tends to capture a larger market share and can persist for a long time. - emerges during the growth stage of the industry life cycle

Entrepreneurs

____ are the agents who introduce change into the competitive system. Innovate by commercializing ideas and inventions.

laggards

____ are the last consumer segment to come into the market, entering in the declining stage of the industry life cycle. - These are customers who adopt a new product only if it is absolutely necessary, such as first-time cell phone adopters in the United States today. These customers generally don't want new technology. - Makes up 16 percent of total market potential

idea

____ first element in the innovation process that is often presented in terms of abstract concepts or as findings derived from basic research. Basic research is conducted to discover new knowledge and is often published in academic journals. This

architectural innovation

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

reverse innovation

____ is an innovation that was developed for emerging economies before being introduced in developed economies. Sometimes also called frugal innovation.