Chapter 7: Innovation and Entrepreneurship

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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


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