Strategic Management (BUS M 498): Chapter 10

What are 4 behaviors of business innovators that help them generate ideas for innovative strategies?

1. Questioning 2. Observing 3. Networking 4. Experimenting

How does a company create new markets with a Blue Ocean Strategy?

A new product where there are nearly no competitors Companies can succeed by creating new demand in an uncontested market space. In other words, offering value that is very different from anything on the market (pg. 205)

How do companies create an innovative strategy by eliminating steps in the value chain?

Amazon vs Barnes&Noble The most typical pattern is to eliminate a step in the path from production to customer, such as eliminating a store, which also eliminates the need for salespeople and inventory. This allows the disruptor - the firm launching the game changing strategy - to offer lower prices for similar products and services.

What is a "high end" disruptive innovation?

Bring in a high tech product in some areas, sell a cheaper version in others High-end disruptive innovations outperform existing products when they're introduced, and they sell for a premium price (pg. 203)

What are the differences between incremental vs. radical innovations?

Incremental innovation: Minor steps, Building on a firm's established knowledge base to create minor improvements to the product or service a firm offers Ex: Adding an extra blade to the Mach razors Radical innovation: Drastic steps, Innovation that draws on a different knowledge base, technologies, or methods to deliver value in a truly unique way (pg. 198) Ex: Internet, iPhone, Uber

What is the difference between an invention and innovation?

Invention: the creation of an idea or method; a novel concept Innovation: Making an invention better, the conversion of a novel concept (an invention) into a product, process, or business model that generates revenues and profits

What is a "low end" disruptive innovation?

Low End - Harley Davidson vs. Honda Motorcycles with low price low end, then bringing in high price high end. Producing a low-cost product or service at the low-end or most price sensitive segment of the market, and then gradually moving upmarket as the product or service improves its technology and processes

How do companies use mass customization to succeed in the market?

Mass customization seems to work best in markets where customers have a variety of different needs and many want a product that is personalized to their particular needs. It also works best when the product can be broken down into modules that offer different features or performance. (pg. 205)

What does "mass customization" mean?

Think Build-a-bear workshop; Nike ID shoes When a company mass-produces the various modules of the product and then allows the customer to select which modules will be combined together (pg. 205)

What are the 9 components to a business model that can change to innovate?

1. Value propositions 2. Customer segments 3. Channels 4. Customer relationships 5. Revenue streams 6. Key resources 7. Key activities/capabilities 8. Key partnerships 9. Cost structur