Innovation Final exam

1) Strategic Alliances 2) Joint ventures 3) Licensing 4) Outsourcing 5) collective research organizations

Give 4 examples of collaborative arrangements

In industries categorized by increasing returns to adoption (aka the more adopted it it the more valuable it becomes)

In what industry can timing of entry be crucial

Joint Venture: 1) has Significant structure and commitment 2) There is Significant equity from each partner and typically a new established separate entity (dividing profits and making contract too)

Joint Ventures: * what are they

Complements: = Products that enhance the usefulness or desirability of another product: 1) The availability, quality, price will influence the threats and opportunities posed by an industry 2) Consider: a)How important are complements in this industry? b) How differentiated are the complements c) Who captures value form complements

(A potential 6th porter-force could be..?)

resources must be (ALL?) 1) Rare 2) Valuable 3) Durable 4) INIMITATABLE

(After identifying strengths and weaknesses ) what is required to be a source of sustainable competitive advantage...

1) alliance contracts a)= Legally binding contractural arrangements to ensure that partners: are fully aware of their rights/obligations in the collab, and have legal remedies available is a partner should violate the agreement (may require periodic auditing) 2) Equity ownership a) = when each partnership contributes capital and owns a specified right to a percentage of the proceeds from the alliance b)Aligns the partners' incentives since their returns are focus on shared success c)Provides a sense of ownership and commitment to project that can facilitate supervision and monitoring of the alliance 3) Relational Governance a) = self-enforcing norms based on goodwill, trust and reputation of the partners...Typically emerge over time through repeated experiences of working together b) Can reduce contracting and monitoring costs and facilitate more extensive cooperation, sharing, learning

(Partner monitoring and governance mechanisms) What are the three main types of governance mechnisms

1) Availability of Capabilities a) a firm might already possess all necessary capabilities/resources for a development project, in-house b) or there might want to obtain complementary skills/resouces but there is no one available/appropriate/willing 2) Protecting Proprietary Technologies a) or because you want full control over the development and the returns and reputational effects 3) Controlling technology development and use a)eg. because they dont want to share the high margins or their company culture emphasized independence and self reliance 4) building and renewing capabilities a) developing your technological innovation challenges the firm to develop new skills, resources and market knowledge, and a solomission might give more such opportunities

(collaboration strategies) Name 4 reasons for going solo

1) Capability Complementation = pooling/combining the capabilities and other resources of partner firms, but not necessarily transferring those resources between the partners 2) Capability Transfer = Exchange of capabilities across firms in such a manner that partners can internalize the capabilities and use them independently of the particular development project

(strategic alliances) what is capability complementation vs capability transfer

1) Resource fit = the degree to which potential partners have resources that can be effectively integrated into a strategy that creates value * Complementary or supplementary resources( the latter to achieve market power and economies of scales) 2) Strategic fit = the degree to which partners have compatible objectives and styles *The objectives don't have to be the same, just non-harming to alliance *Not knowing the partner's objectives/incompatible objectives --> conflict, wasted resources, forfeited opportunities Additional factors 3) Relative size and strenth 4) complementarity of resources 5)alignment of objectives 6) Similarity of values and culture

Choosing partners: What two factors influence partner selection and what factors influence the fit of them

* Organizations can be made modular through adoption of structures that enable "loose coupling" What Loosely coupled is like: 1) Development and production are not tightly integrated... coordination through adherence to shared objectives and common standards 2) (Standard interface enable embedded coordination throughout) 3) Components can be produced by highly autonomous divisions, or even multiple independent firms 4) Information technology enables this at a lower cost 5) Firms can become more specialized by focusing on few key aspects on the tech-innovation that relate to the firm's core competencies, while obtaining other activities from outsourcing 6) Focusing on its own competitive advantage: --> developing product with good price to value ratio for customers while reducing overhead and administrative complexity --> Smaller nimbler specialized, producers BUT: a) Less synergy when not integrated.. b) Many activities require frequent exchange or tacit knowledge ... they require closer integration (Ongoing and intensive coordination might be required) c) Integrated firm might have better conflict resolution

Describe Loosely coupled organizational Structures

* Stakeholder analysis = used for strategic and normative purposes: a) Strategic: Stakeholder management issues, that can impact the firm's financial performance b) Normative: stakeholder management issues the firm should attend to due to their ethical or moral implications 2) Process: a) Identity all the stakeholders (all who are affected by firm's actions) Eg. Employees, customers, stockholders, suppliers, lenders, local community, government, rivals b) Identify their interests, resources, and likely claims the stakeholders have of the firm

Describe a Stakeholder analysis (its use and the 2 steps)

Modular.. Refers to the degree which a system's components may be separated and recombined By standardizing manufacturing components/platforms...which can be mixed and matched in a modular production system....you can balance efficiency and flexibility --> efficiency and reliability at the component level --> AND variety and flexibility at end product level Pros of modular products: 1) can exponentially increase the number of possible configurations achievable from a given set of inputs Eg. IKEA 2) *Standardizing the nr of common components and **using flexible manufacturing technologies that can ***quickly shift from one assembly configuration to another... --> variety of product models...while still achieving economies of scale ....and efficiency in the individual components... 2) (keeps NPD costs low?) 3)Enables distribution to be fast and streamlined, and better penetration 4) A Cost effective way to meet heterogenous demands (most effective here) 5) Enables firms and customers to upgrade products without replacing entire system 6) Modular components enables production system to be more modular: less coordination needed between component developers who are now freer and more flexible ... associated with less centralization and "loosely coupled organizational structures"

Describe modularity

Strategic intent = long-term goal, with foreward-looking orientation, that builds and stretches the core competencies By: * questioning assumptions --> leads to developing products that extend beyond current market requirements and instead mold market's expectations for future * AND by Articulating strategic intent to identify which resources/capabilities are required to close the gap --> --> allows firm to focus its development efforts and choose investments necessary to develop the strategic technologies and incorporate them into the company's new products

Describe strategic intent (ch6) and what aim it has

Licensing 1) IS: A contractual arrangement where an organization/individual/licensee obtains the rights to use the proprietary technology/trademark/copyright of an other organization/individual/licensor 2) USE: Licensing enables a) Firms to rapidly acquire a technology/resource/capability b) Licensor can penetrate a wider range of markets than it could on its own c) Licensee saves money on not conducting the in-house development... Still obtaining already technically and commercially proven technology "open innovation" approach, (eg sourcing external ideas and technologies that it can then add value to in its labs) d) Licencee may be restricted by licensor BUT can gain valuable knowledge from working with the tech to later develop their own proprietary technologies e)Licensing prevents monopoly rents but also prevents competitors from developing their own f)Licensing is a good way of steady royalties rather than big gain/loss gamble in competing for market dominance

Licensing: * what is it *What use does it have

Multinational market Characteristics: 1) Diverse sources of information and other resources 2) Diverse product needs and different operating norms NOTES 1)The question of centralization vs decentralization becomes amplified in a multinational organization. 2) IF Decentralized R&D: Pros a) --> Enables you to take advantage of local information an tailor the innovation activities to the local market: (Information about customer bases might be local) b) the opportunity to leverage technological innovation (and other core competencies) into multiple markets (but innovation activities can't be completely autonomous and disconnected either) Cons b) BUT this customization might never be diffused to other divisions serving different markets (due to the decentralization B)The different divisions might be reluctant to share their knowledge c) The different divisions might be reluctant to adopt the innovations of other divisions "not-invented-here" syndrome

Multinational Innovation (across boarders) * multinational market characteristics? * name 4 things to think about when choosing your organizational-(multinationl)structure

1) The attractiveness of the industry * Eg. profitable, growing, alluring 2) The height of entry barriers *Eg. Large startup costs, brand loyalty, difficulty gaining access to suppliers/buyers, government regulation, threat of retaliation by existing competitors etc * NOTE: Partnerships can help a new entrant by easing startup-costs:

Name 2 factors that influence Porter's " Threat of entry"

1) The number and relative size of competitiors 2) the degree to whick competitors are differentiated (and appeal to different segments 3) Demand conditions: (more demand, more revenue to go areound, less competitive pressure *(also exit barriers:: fixed capital investments, emotional attatchments to the industry, can intensify rivals' abandonment of the industry

Name 3 factors that influence 3 Porter's " existing rivalry"

Substitutes = products/srvices that are not considered by competitors but fulfil a strategically equivalent role for the customer 1) The more substitutes and the closer they are in function, the higher the threat to the firm 2) Relative price can also have an effect NOTE: definition of competitor vs substitute depends on how industry is defined

Name 3 factors that influence 3 Porter's " threat of substitutes"

= The degree to which the firm is reliant on a few customers (and vice versa) 1) Highly Differentiated products will give buyers less bargaining power 2) Switching costs for firm/buyer 3) Threat of backwards integration from buyers

Name 3 factors that influence Porter's " Bargaining powers of Buyers"

1) R&D Expenses *The first one to introduce a technology typically bears the brunt of this expense (and often cost of developing production processes and complementary goods) * Development costs can entail exploring paths with and without dead ends (risky) * Later entrants can save development expense and produce a product that achieves a closer fit with market preferences 2) Undeveloped supply and Distribution Channels: * In the beginning there are typically few appropriate suppliers/distributors, They might have to bear the task of developing this 2) Immature Enabling-Technologies and Complements * Firms often rely on enabling technologies (= component technologies that are necessary for the performance or desirability of a given innovation) ... being reliant on third parties to make a project feasible * Often times complementary goods are useful and valuable but aren't always fully developed .... ...hindering adoption of the innovation * Lack of complementary technologies and infrastructure can pose obstacles 4) Uncertainty of Customer Requirements * Customers have little idea of the value the tech and/or its role in their lives --> the firm might have to revise early product offerings many times before market reveals customer preferences

Name 4 First-mover Disadvantages (RSIU)

1) The number of / differentiation of suppliers 2) the amount purchased.. how reliant they are on eachother 3) Switching costs: eg. Investments in specialized assets to work with a particular supplier 4) risk of foreward integration

Name 4 factors that influence Porter's " Bargaining powers of suppliers"

1) Brand Loyalty and technological Leadership * They could earn a reputation a leader in that technology domain..Which could sustain... even after competitors introduce comparable products... Applicable even if the product itself is imitatable * Brand image * Brand loyalty * Market share * They can shape customer expectations: Form Features Pricing Eg . Establish aspects which are difficult to imitate ... due to protection by patent, copyrings, unique capabilities * Sustained monopoly rents (= the additional returns, either higher revenues or lower costs, which a firm can make from being a monopolist... as the ability to set high prices/lower costs through greater bargaining poer over suppliers) 2) Pre-emption of Scarce Assets ... eg: * Key locations, * government permints * Patents * Access to distribution channels * Relationships with suppliers 3) Exploiting Buyer Switching Costs... eg. * The initial cost of the good itself can be a .. * or The cost of any complements you bought can be switching costs * or A complex product that has taken time to manouver... this time investment can be a switching cost ... * .....if buyers face switching costs-... the firm who captures them first can keep them even if technologies with superior Value propositions come along 4) Reaping increasing-Returns-advantages * for industries who have increasing returns to adoption: ...The technology might rise in market power through self-reinforcing positive feedback mechanisms... culminating its entrenchment as a dominant design

Name 4 first mover advantages (and two subpoints of each) (LSSR)

1) Acquiring Capabilities and resources Quicly a) Companies often lack some complementary assets for transforming technological-knowledge into commercial procuct b) you can shorten your cycle time by gaining access rapitdy to such complementary assets via eg. strategic alliances, licensing agreements 2) Increasing flexibility a) Obtaining capabil/resourc from a partner can reduce your asset comittment and enhance your flexibility, (since many fixed assets become obsolete) b) ... important in markets with rapid technological change where innovation is the primary driver of competition c) the firm can then choose to become more narrowly specialized (and use linkages with other specialized firms to access complementary resources) 3) Learning from Partners: a) collaboration = a source of learning b) close contact with other firms can facilitiate: transfer of knowledge and creation of knowledge c) pooling resources(capabilities --> firms can expand their knowledge bases more and quicker 4) Resource and risk pooling a) sharing costs/risks (particularly important when project is very expensive or outcome is uncertain 5) Building a Coalition around a Shared standard a) eg The more car brands who give electric options the more electric outputs will be supplied on the road for all electric cars

Name 5 Advantages of collaborating

1) Center-for-global strategy: a) = when all innovation activates are contacted at a central hub and innovations are then diffused throughout the company Pros: *Can coordinate R&D across functions and projects * Achieve specialization and economies of scale while avoiding duplication *Develop and protect core competencies Cons: *Tends to not be so responsive to very diverse demands of different markets *May not fit foreign markets, or be deployed quickly/effectively 2) Local-for-local strategy a) = when each division or subsidiary of the firm conducts its own R&D activities tailored for the needs of the local market pros: *Customizes innovation for needs and tastes of local market *Autonomous divisions and differentiated markets 3)Locally leveraged strategy a)= When each division or subsidiary of the firm conducts its own R&D activities but the firm attempts to leverage resulting innovation throughout the company 4) Globally Linked Strategy a) =innovation activities are decentralized but also centrally coordinated for the global needs of the corporation ....Attempts to enable learning accrued through innovation activities to be diffused throughout firm Pros: *Tap into and integrate global resources... Cons: *expensive in time and money as it requires extensive coordination

Name the 4 primary strategies in conducting multinational innovation

1) How certain customer preferences are: *less uncertainty --> go for earlier entry *Customers may not understand the role of the technology in their life * customers /producers can value features differently 2) How much improvement does the innovation provide (compared to previous solutions) *if dramatic improvement --> more customer acceptance --> less ambiguity about its value and more early adoptions 3) Does the innovation require enabling-technologies (and are they mature enough) * less mature the enabling-technologies, favours waiting for them to develop 4) Do complementary goods infleunce the value of the innovation (and are they sufficiently available) * is the good dependent on complements? some firms can develop both but those who cant should not enter early 5) How high is the threat of competitive entry * significanr barriers to entry? few potential competitors with resources/capabilities? * Low barriers: highly competitive/challenging, margins can be low already, and competitors efficient, and distribution channels taken * high barriers: enter quickly to establish brand image and capture market share and secure distribution channels 6) Is the industry likely to experience increasing returns to adoption? * In industries with increasing returns to adoption due to strong learning curve effects or network externalities: *...It is very risky to allow competitors a head start, Because a significant base and subsequent cycle of self-reinforcement makes it difficult to catch up *...Also especially if there is a signle dominant design *...If protection mechanisms like patents... then the firm may be locked out 7)Can the firm withstand eary losses *First mover must be able to withstand a significant period with little sales revenue (slow adoption in the beginning... s-curve) * Either need significant capital internally (large firms) *Or capital accessed externally (debt or equity markets) * BUT with agressive development, advertising, leveraging relationships... a late entrant can steal market share 8) does the firm have resources to accelerate market acceptance? eg: *Invest agressively in education (of market)... * in supplier/distrib development, *In complement develoment *Can shape its apoption curve slightly? 9) is the firms Reputation likely to reduce the uncertainty of customers/suppliers/distributors: * Reputation is a strong signal of likelihood of success * Customers, suppliers, distributors use firm's track record to assess its technological expertise, market prowess, and quality,

Name the 9 factors that influence the optimal timing of entry

WHAT: Contract manufacturing = when a firm hires another firm (often a specialized manufacturer) to manufacture its products.... * Firms that develop new tech don't always posses the competencies, facilities or scale to perform all the value-chain activities for the new innovation effectively or efficiently PROS: a) Allows firms to meet the scale of market demand without committing to long-term capital investments or an increase in labour force... thus giving the firm greater flexibility b)Allows firm to specialize in the activities central to their competitive advantage while other firms provide necessary support and specialized resources which the firm doesn't possess c) Allows firm to tap greater economies of scale and faster response time of dedicated manufacturer, thereby reducing costs and increasing organizational responsiveness to the environment d) (Product design, process design, marketing, information technology or distribution can also be outsourced BUT: a) Reliance on outsourcing may cause the firm to forfeit important learning opportunities, potentially putting it at a disadvantage in the long run b) By not investing in development of in-house capabilities, a firm might not develop many of the skills/resources related to its product that enable development of future platforms... risks being hollow c) Can impose transaction costs (requires a well specified contract: product design, cost, quantity requirements must be clearly communicated d) A contracting firm may have to protect itself from others stealing their technology, like the contract manufacturer e) Contract manufacturer may bear significant costs if changing production, if not specified in contract

Outsourcing: * what *Uses *what to think about

1) Primary activites eg. a) Inbound logistics: to receive, store disseminate inputs b) Operations: transformation of inputs to outputs c) Outbound logistics: to collect, store distribute outputs d) Marketing and sales: to inform buyers about products/services to induce purchses e) Service: after-sales activities to keep product/service working effectively 2) Support activities a) Procurement: acquisition of inputs but not physical transfer as inbound logistics b) Humaan resource management: recruiting, hiring ,training, personell c) Technology development: developing/managing equipment/hardware/software/procedures/knowledge to transform inputs to outputs d) Infrastructure: eg. Accounting, legal counsel, finance, planning, public affairs, government relations, quality assurance, etc for a smooth functioning firm

Porter's value chain divides activities into 2 categories (name 3 of each)

The 2 Factors that can significantly influence the likelihood of: innovating, effectiveness of innovation progress, and speed of its NPD projects a) The structure of an organization b) The Degree to which it uses formalized and standardized procedures and controls of innovating eg. Pros of being small: *Flexible, minimum of rules and procedures --> encourage creativity, experimentation... leading to more innovative ideas *BUT: well developed procedures and standards can ensure that the organization makes better development investment decisions.. *And is able to implement projects quickly and efficiently

Quickly summarize organizing for innovation

1) Pros of LARGE firms: a) Imperfect Capital markets... aka large firms are better able to obtain financing for R&D projects b) economies of scale... aka Firms with larger sales volume over which to spread fixed costs of R&D would experience higher returns c) Better-developed complementary activities: marketing, financial planning, greater global reach to obtain info/ resources d) Learning effects: large R&D spending's --> economies of scale and learning curve advantages as they get better/more efficient over time e)The firm develops competencies in NPD process and may improve it (accumulate research equipment and personnel) f) Make better selections of projects that fit the firm's capabilities (higher likelihood of success thereby) g) in a better position on risky innovation projects (than small firms) h) A single large firm can exert hierarchical authority over all of the development activities to ensure cooperation and coordination Note: Large firms typically outperform small firms in innovation But a coalition of small firms could outperform a large one, but such coordination is difficult 2) Cons of LARGE firms: a) A the firm grows, its R&D efficiency might decrease because of a loss of managerial control b) It becomes increasingly difficult for individual scientists or entrepreneurs to appropriate the returns of their efforts --> incentives diminish --> as a result the effectiveness of its governance systems may decrease c) Large firms may be less innovative because their size makes them less nimble and responsive to change *Bueraucratic inertia, due to layers of authority and well-developed policies and procedures, *Unnecessarily long NPD cycles * High nr of employees, large fixed-asset base, base of existing customers/supplier contracts... sources of inertia preventing quick changes (and they don't want to gamle) d) Large nr of employees --> coordination and communication difficulties and decision-making delays e) Strategic commitments to customers/suppliers can tie the firm to existing business/tech ... less responsive to technological change 3)Pros of SMALL Firms a) More flexible, less administration, fixed-asset bases and strategic commitments to large nrs of employees/customers/supplirs b) Monitoring employees and rewarding them is easier c) resources are less abundant --> they may be motivated to choose projects more carefully, leading to higher rates of New product success d) Small firms often outperform large firms in innovation: *more careful/efficient R&D spending, receiving more patents per R&D dollar e) Smaller firms have significantly shorter development cycles than large firms

Size and structural dimensisons of the Firm: * name 3 pros of a large firm *name 3 cons of a large firm *name 3 cons of a small firm

Strategic alliances: 1) ARE: a temporary relationship, a flexible way of combining efforts and resources... Can be formalized in contract, or an informal agreement 2) USE a) Access critical capability not possessed in-house b) To more fully exploit their own capabilities by leveraging them in another firm's development efforts c) ..Firms with different capabilities : *alliance for developing a new tech or penetrating a new market *by Pooling resources to develop/market the product.. Faster and/or less expensive d) Similar firms: *Collab to take a limited stake in smaller firm's development efforts *And the smaller firm taps into the capital resources, distribution and marketing capabilities or credibility, of the large firm e) This can allow gaining footing early in something you want to commit to later f)Can enable a firm to rapidly adjust the type/scale of capabilities they access, in a rapidly changing market 3) Think about: a) Partners can learn from each other, an develop new competencies * Transferring knowledge or creating new * HOWEVER, such alliances often lack shared language, routines and coordination to facilitate such knowledge transfers, particularly complex and tacit knowledge that could lead to sustainable competitive advantages --> *You need active procedures for internalizing what has been learned, and people who are willing to travel *There is also a risk of them taking your IP b) Building an allliance portfolio..Think about: a) competitive vs complementing effects b) Network structure effects c) Multiple allliances serving same strategic needs --> redundant resource investment or competitive conflict d)Cost vs benefits e) Positioning within a web of relationships that connects their firm to their partners and their partners' partners... for diffusion of knowledge f)There might be limited levels of mutual commitment g) monitoring

Strategic alliances: * what are they *What use do they have *what to think about

1) Mechanistic = AN organization characterizes by a high degree of formalization & standardization, causing operations to be almost automatic or mechanical a) associated with greater Operational efficiency , particularly in large-volume production settings b) Operating at great consistency and reliability c)Often centralized... but can be decentralized with formalization instead d) Often deemed unsuitable for fostering innovation Because they achieve efficiency by ensuring rigid adherence to standards, minimizing variation... 2) Organic = a organization structure characterized by a low degree of formalization and standardization... Employees may not have well-defined job responsibilities and operations may be characterized by a high degree of variation a) Often considered better for innovation and dynamic environments b) Employees are given latitude in responsibilities and operating procedures b) Experimentation and improvisation --> innovation... But possible detriment to efficiency NOTE: *The culture you create within a company plays a large role...Creating an environment where people understand the firm's way of operating...Internalizing principles... trusting the company...Fostering creativity

WHat is a Mechanistic vs a Organic structure

External analysis 1) Porter's 5 forces: to ...identifies threats and opportunities & assess an industry's attractiveness 2) Stakeholder Analysis: to make a strategic and normative analysis Internal Analysis: 3) Porter's Value chain: to identify strengths and weaknesses by examining its value chain activities 4) Identifying core competencies: which differentiates the firm stragtegically 5) identifying any core rigidities or Dynamic capabilities: to watch out for or leverage 6) defining your strategic intent: to identify the resources/capabilities to close the gap (between current and desired future position)

What 6 tools can you use to define the organization's strategic direction (2 external 3 internal)

1) centralization 2) formalization 3) standardization ...can influence the: amount, type and effectiveness of the innovation

What are 3 structural dimensions and what can they influence

Valuable resources are: 1) tacit (aka can not be readily codified in written form 2) Path dependent : dependent on a particular historical sequence of events 3) Socially complex (aka they arise through the complex interaction of multiple people) 4) Causally ambiguous (aka it is unclear how the resource give rise to value Eg. Talent is hard to imitate and train up ( tacit and ambiguous) First mover advantage is path dependent

What are 4 characteristics of INimitatable Resources

Disaggregated firms = Breaking the overall firm into several subunits to encourage entrepreneurial culture within these subunits Good for: a) Industries characterized by high-speed technological change... many large and hierarchical firms disaggregate into networks of smaller, more specialized, autonomous divisions (or independent firms)

What are Disaggregated firms

* Dynamic capabilities = set of abilities that make a firm more agile and responsive to change. (a type of core competency) Having: "Responding to change" as a core competency is very useful in fast-changing markets i.e: Quickly reconfiguring its organizational structure/routines in response to new opportunities --> Enables firms to: Quickly adapt to emerging markets and discontinuous technology

What are dynamic capabilities (and why are they good)

1) Degree of existing rivalry (competition) 2) Threat of potential entrants (threat of entry) 3) Bargaining powers of suppliers 4) Bargaining powers of buyers 5) Threat of substitutes

What are porter's 5 forces

1) Sometimes, the things a firm excels at can make it overly commited to inappropriate skills/resources (make it rigid) 2) Organization culture may favour employees who work with the core competencies (with resources and status) --> while it might reinforce the existing core competencies this can inhibit the development of new core competencies *It can discourage employees from pursuing exploratory activites 3) Knowledge accumulation is often very path dependent --> firms with such well-paved knowledge-finding-paths may struggle to assimilate/utilize other/new knowledge outside its regular path, limiting its flexibility

What are three risks with core Rigidities

USE: Identifying Strengths and weaknesses of the firm , by examining activities of the value chain..

What is Porter's Value chain used for

Large firms...Often make great use of formalization and standardization (as activities are harder to oversee by a single manager) *Formalization & standardization ease coordination cost at expense of making the firm more mechanic small firms = opposite? (A possible middleway: Some firms decentralize authority enabling divisions to act like small companies --> accessing a large corporations resources and reach, while retaining a small company's simplicity and flexibility)

What is a connection between size and structure

1) A company's core competencies differentiate it strategically 2) It arises from: a) A firm's ability to combine/harmonize multiple primary abilities which evolve into a few specialized expertices (and this is difficult to imitate)

What is a core competence and what does it come from

Ambidextrous organization = The ability of an organization to behave almost as two different kinds of companies at once. (eg. Different divisions of the firm may have different structures and control systems, enabling them to have different cultures and patterns of operations) --> ie a) Managing existing product lines with efficiency consistency and incremental innovation... b) ...while still encouraging development of new product lines and responding to technological change through more radical innovation An ambidexterous organization 1) Has multiple internally inconsistent architectures that collectively achieve both short-term efficiency and long-term innovation 2) has A mix of mechanic and organic structure *Eg. Setting R&D that is highly distinct (geographically or structurally) from the rest of the organization **Using high formalization and standardization in manufacturing and distribution divisions *** But still almost no formalization and standardization in its R&D division 3) Incentives in each division can be designed around different objectives... encouraging diff behaviour in diff employees *Exploring new alternatives, unfettered by demands of rest of organization 4)BUT Diffusing information across firm for cross-fertilization of ideas across NPD efforts is useful.... Summary: *A single organization can have multiple: cultures, structures, processes.. Within it *Entrepreneurial units may be capable of developing discontinuous innovations within the large efficiency-driven organization, that otherwise tends to foster incremental innovation *NOTE:You can also alternate though different structures over time... frequent reorganization also shows flexibility

What is an ambidextrous organization

Centralization = the degree to which decision-making authority is kept at top levels of management. *(decentralization is the degree to which decision-making authority is pushed down to lower levels of the firm) Pros of centralization: (geographically or power-wise) 1) may maximize economies of scale in R&D --> Enabling greater division of labour among the specialists -->maximizing the potential for learning-curve effects through the development of multiple projects 2) Improved coherence of the NPD project efforts and avoiding possibility of underutilizing the technology in the organization 3) could allow better circumstances for bold changes in its overall direction because of tight command-and-control Pros of decentralization 1) Decentralizing R&D activities to the divisions of the firm... enables those divisions to develop new products/processes that closely meet their particular division's need. 2) The solutions developed are more likely to fit well within the operating structure of the division AND be closely matched to the customer requirements served by that division 3) Enables firm to take advantage of the diversity of knowledge and market contracts (in the different divisions) 4) May be better able to respond to some technological/environmental change because decision making is more autonomous (no need to be passed up to the top management) BUT (cons of decentralization) 1) There is a risk of reinventing the wheel, there may be redundant activities, (or the full potential of the technology to create value in other parts of the firm may not be realized) 2) May struggle to get cooperation necessary to undergo a significant change

What is centralization? and pros and cons

1) Formalization = the degree to which the firm utilizes rules, procedures and written documentation to structure the behaviour of individuals or groups within the organization 2) Standardization = the degree to which activities are performed in a uniform manner Pros: 1) formalization/Rules can facilitate the standardization of firm activities and help regulate employee behaviour in providing clear expectations of behaviour/decision-making-criteria 2) Formalization can substitute for some degree of managerial oversight, (allows for having fewer managers) 3) Standardization can ensure that activities run smoothly 4) Ensure quality levels are met And that consumers/suppliers are responded to consistently and equitable Cons : 1)Can make a firm rigid 2) Codifying all activities with detailed procedures may stifle employee creativity 3)Employees may not feel empowered/ motivated to implement new solutions -->Morale and motivation problems 4) Standardization can stifle creativity... limiting experimentation that leads to innovative ideas

What is formalization and standardization? pros and cons

Incumbent inertia (= the tendency for incumbents to be slow to respond to changes in the industry environment due to their large size, established routines, prior strategic commitments to existing suppliers/buyers.

What is incumbent inertia

1) Is it a significant competitive differentiation? * Is it a unique signature to the firm that contributes significant value to end product 2) Does it transcend a single business? Can the competence be used by the business across/ in many businesses eg engines in cars to lawn mowers 3) Is it hard for competitors to imitate? * In general, competencies that arise form complex harmonization of multiple technologies will be difficult to imitate (may have taked years to develop) * It is hard to imitate/ acquire this combo of resources and embedded skills

What three questions identify core competencies

Partner with: *Suppliers *custoemrs *competitors *complementors *organizations that offer similar products in different markets *Organizations that offer different products in similar markets *Non-profit organizations *government organizations *universities *etc... Collaborations can be used for *manufacturing *services *marketing *technology-based objectives

Who can you collaborate with and what for?

1) impact on opportunities/threats in external environment ...how would collab change a) the bargaining power of suppleirs/buyers b) threat of entry. new competitors c) the firm's position towards rivals d) the availability of complementary goods/ threat of substitutes 2) Impact on internal strengths and weaknesses ....how would the collab a) leverage or enhance the fimr's strengths/weaknesses (or risk them) b) overcome weaknesses? c) yield a competitive advantage that is difficut to imitate (is it acheivable with out the collaborator) d) leverage/ enhance the firm's core competencies e) impact the firm's financial strength or weakness 3) impact on strategic direction ..how would a collab a) fit with the firm's statement of strategic intent b) help the firm close any resrouce/technology gap (of current vs desired position) c) is it likely for the objectives of the collab change over time (to be more or less compatible?)

how would collaboration with a partner: 1) impact opportunities/threats in external environment? 2) Impact internal strengths and weaknesses? 3) impact strategic direction?

1) Having a clear advantage to customers (then entering early can give huge advantage) 2) Enter (late) at a lower cost (by capitalizing on the R&D of the earlier firm) .. but it must have a fast cycle development process 3) a Fast DEVELOPMENT AND DEPLOYMENT process can allow firm to reap first AND second mover advantages * Such NPD cycle time can be shortened by: * Strategic alliances * Cross-functional NPD teams * Parallel Development Process: (= when multiple stages of the NPD process occurs simultaneously)

name 3 strategies to improve your timing-options