CH 7 - Business Strategy: Innovation, Entrepreneurship and Platforms

S Curve Steps

1. Introduction 2. Growth 3. Shakeout 4. Maturity 5. Decline

The primary objective of firms during the introductory stage of the industry life cycle is to _____________.

Establish themselves as a market participant and position themselves for future growth

The type of innovation that focuses on improving an existing product by using existing technology and targeting existing markets is a(n) _______________ innovation.

Incremental

Stages of the Industry Life Cycle

Introduction Growth Shakeout Maturity Decline

In order to succeed at the introductory stage of the industry life cycle, it is important to have competency in ___________.

Marketing

Which of the following are ways in which standards can emerge?

- By being imposed by government or other agencies - Through market competition

Innovation can _______________.

- Provide firms with a competitive advantage - Make existing products or business obsolete

Innovation

- Successful introduction of a new product, process or business model - Powerful driver in the competitive process - Allows firms to redefine the marketplace in their favor and achieve a competitive advantage

What can incumbent firms do to counter disruptive innovations?

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

An incumbent firm in a winner-take-all market will typically seek to extend the time it can extract profits through ______________.

A focus on incremental innovations

Architectural innovation

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

Types of Innovation

Architectural Radical Incremental/Innovation Disruptive

A disruptive innovation typically requires a(n) ____________ approach to capturing the market.

Bottom-up

A disruptive innovation is more likely to be successful if it ______________.

Captures the low end of the market first

During the growth stage of the industry life cycle, ______________ increases rapidly.

Demand

Educational organizations, such as Coursera, offer massive open online courses on the web as an alternative to traditional universities. This is an example of a(n) ____________ innovation.

Disruptive innovation - Leverages new technologies to attack existing markets

S-curve development of most industries in order

1. Demand for a new product is slow to take off 2. Demand accelerates 3. Demand decelerates 4. Demand turns to zero 5. Demand becomes negative as a market contracts

At which stage of the industry life cycle does the size of the market expand rapidly?

Growth

After a firm has gained market acceptance with a radical innovation, it will typically follow up with _____________.

Incremental innovations

The second step of the four-step innovation process involves the transformation of an idea into a new product or process and is known as _____________________.

Invention

Four steps to an innovation process

Idea Invention Innovation Imitation

A company that resists change and sticks to formalized business processes and structures is likely experiencing ____________.

Organizational inertia

A form of intellectual property that grants an inventor a temporary monopoly on a new product or process in exchange for disclosing the details of how the product or process is made is called a(n) _________________.

Patent

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 that the platform manages is a(n) _________________.

Platform business

Business model innovations that use technology to interactively connect organizations, information, resources, and people in value-generating transactions are _________________.

Platforms

A firm that successfully leverages network effects can _______________.

Push its industry into the growth stage

Innovations that target NEW markets and represent a major break from existing technologies or ways of thinking, such as digital camera, the touch-screen smart phone, or the decoding of the human genome, are examples of __________________ innovations.

Radical

Incumbent firms that are part of an innovation ecosystem are less likely t produce radical innovations because ______________.

Radical innovations disrupt established relationships within the ecosystem

Innovation helps firms achieve a competitive advantage by __________.

Redefining the market in their favor

During the introductory stage of the industry life cycle, an innovator will likely devote most of his time, money and effort to ___________.

Research and development

Standard

Signals the market's agreement on a common set of engineering features and design choices. - Standards can emerge from the bottom up through competition in the marketplace - Or imposed from the top down by government

The primary reason incumbent firms are vulnerable to disruptive innovations is that ________________.

They are too committed to existing products to make rapid changes in the face of disruptive innovations

Which of the following statements about platform businesses is true?

They can grow faster than pipeline businesses.

T/F: Platform businesses often outperform pipeline businesses

True

The _________ determined whether an invention can be patented.

U.S. Patent and Trademark Office