Chapter 7 MGMT 425

early adopters

People who adopt new products early, choose new products carefully, and are viewed as "the people to check with" by later adopters part of growth stage.

long tail

business model in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choices

platform businesses tend to frequently outperform _________________ ________________. by :

pipeline businesses by eliminating gatekeepers.

early majority

shakeout stage. strong sense of practicality. weighs costs and benefits carefully

incremental innovation

squarely builds on an established knowledge base and steadily improves an existing product or service offering

strategic entrepreneurship

the pursuit of innovation using tools and concepts from strategic management combining strategic actions with entrepreneurial actions.

moving from the traditional pipeline business to a platform business model implies three important shifts in strategy focus:

1. from resource control to resource orchestration. 2. from internal optimization to external interactions. 3. from customer value to ecosystem value.

radical innovation

a new product, service, or technology that completely replaces an existing one

network effects occur when the value of a product or service ________________

increases

industry life cycle

introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time

disruptive innovation

leverages new technologies to attack existing markets. invades existing market from the bottom up.

innovation ecosystem

a network of suppliers, buyers, complementors, etc. requires interdependent strategic decision making.

Architectural Innovation

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

shakeout stage

Firms begin to compete more intensely. Weaker firms forced out The industry consolidates Only the strongest competitors survive. Biggest competitive weapon: low price

advantages to the platform business model

1. platforms scale more efficiently than pipelines by eliminating gatekeepers 2. platforms unlock new sources of value creation and supply 3. platforms benefit from community feedback

markets-and-technology framework

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

standard

an agreed-upon solution about a common set of engineering features and design choices

platform business

an enterprise that creates value by matching external producers and consumers in a way that creates value for all participants, and that depends on the infrastructure or platform that the enterprise manages

the innovation process begins with

an idea, often presented in terms of abstract concepts or as findings derived form basic research.

entrepreneurs innovate by _____________________ ideas and inventions.

commercializing

First Mover advantages

competitive benefits that accrue to the successful innovator.

late majority

customers in maturity stage. large segment. differ from early majority in that they are not confident in ability to master the new technology. they prefer to wait until standard have emerged and become firmly entrenched.

laggards

the last adopters, who distrust new products. enter in declining stage. Will adopt a new product only if absolutely necessary, generally don't want new technology, and are generally not a customer segment worth pursuing."

platform ecosystem

the market environment in which all players participate relative to the platform

network effects

the positive effect (externality) that one user of a product or service has on the value of that product for other users

reverse innovation

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

innovation

Commercialization of an invention the successful introduction of a new product, process, or business model.

harvest strategy

When a company reduces to a minimum the assets it employs in a business to reduce its cost structure and extract maximum profits from its investment

social entrepreneurship

The pursuit of social goals while creating profitable businesses Evaluate performance by financial, ecological and social contribution metrics

invention

Transformation of an idea into a product. The modification and recombination of products

crossing-the-chasm framework

a conceptual model that shows how each stage of the industry life cycle is dominated by a different customer group. btwn early adopters and the early majority.

technology enthusiasts

a customer segment that pursues new technology proactively. frequently seek out new products before products are officially introduced.

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.

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

process innovation

new ways to produce existing products.

exclusive rights often translate into a ____________ _______________ __________ until the patent expires.

temporary monopoly decision

trade secret

valuable proprietary information that is not in the public domain and where the firm makes every effort to maintain its secrecy