Chapter 7: Innovation and Entrepreneurship
Not-Invented-Here Syndrome
"if the R&D leading to a discovery and a new developmental project was not conducted in-house, it cannot be good"
4 Examples of Successful Entrepreneurs
1. Reed Hastings 2. Jeff Bezos 3. Oprah Winfrey 4. Elon Musk
3 Strategic Initiatives Some Have Used to Counter Disruptive Innovation
1. continue to innovate in order to stay ahead of the competition 2. guard against disruptive innovation by protecting the low end of the market 3. disrupt yourself, rather than wait for others to disrupt you
4 Strategic Options for Managers at Final States of Industry Life Cycle
1. exit 2. harvest 3. maintain 4. consolidate
Four I's
1. idea 2. invention 3. innovation 4. imitation
Two Characteristics New Technology Must Have to be a Disruptive Force
1. it begins as a low-cost solution to an existing problem 2. initially, its performance is inferior to the existing technology, but its rate of technological improvement over time is faster than the rate of performance increases required by different market segments
4 Factors that Led to a Shift in the Knowledge Landscape from Closed Innovation to Open Innovation
1. the increasing supply and mobility of skilled workers 2. the exponential growth of venture capital 3. the increasing availability of external options (such as spinning out new ventures) to commercialize ideas that were previously shelved or insource promising ideas and inventions 4. the increasing capability of external suppliers globally
3 Requirements of an Invention to be Patented
1. useful 2. novel 3. non-obvious
Entrepreneurs
the agents that introduce change into the competitive system
Innovation
the commercialization of any new product or process, or the modification and recombination of existing ones
Early Adopters
the customer segment in the growth stage of the industry life cycle
Technology Enthusiasts
the customer segment in the introductory stage of the industry life cycle
Industry Life Cycle
the five different stages - introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time
Trade Secrets
valuable proprietary information that is not in the public domain and where the firm makes every effort to maintain its secrecy
Standard
an agreed-upon solution about a common set of engineering features and design choices
Radical Innovation
an innovation that draws on novel methods or materials, is derived either from an entirely different knowledge base or from a recombination of the existing knowledge bases with a new stream of knowledge
Disruptive Innovation
an innovation that leverages new technologies to attack existing markets from the bottom up
Incremental Innovation
an innovation that squarely builds on an established knowledge base and steadily improves an existing product or service
Reverse Innovation
an innovation that was developed for emerging economies before being introduced in developed economies. sometimes also called frugal innovation
First-Mover Advantages
competitive benefits (such as economies of scale, experience and learning-curve effects, and network effects) that accrue to the successful innovator
Crossing-the-Chasm Framework
conceptual model that shows how each stage of the industry life cycle is dominated by a different customer group
Late Majoritry
customers coming into the market during the maturity stage
Early Majority
customers coming into the market during the shakeout stage difference between them and early adopters is signified by the wide competitive gulf (the chasm)( between these two consumer segments
Laggards
last consumer segment to come into the market, entering in the declining stage of the industry life cycle generally not considered worth pursuing
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
Product Innovation
new or recombined knowledge embodied in new products
Process Innovation
new ways to produce existing products or deliver existing products
Architectural Innovation
a new product in which known components, based on existing technologies, are reconfigured in a novel way to attack new markets
Markets-and-Technology
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 marking
Patent
a form of intellectual property that 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 in u.s., patent period is 20 years
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
Technology
refers to the methods and materials used to achieve a commercial objective
Organizational Inertia
resistance to changes in the status quo
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 tools and concepts from strategic management
Social Entrepreneurship
the pursuit of social goals while creating a profitable business use a triple-bottom-line approach to assess performance
Invention
the transformation of an idea into a new product or process, or the modification and recombination of existing ones
Intrapreneurs
those pursuing corporate entrepreneurship