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