CH 7 Innovation and Entrepreneurship

disruptive innovation

new technology, existing market

radical innovation

new technology, new market

Architectural Innovation

- reconfigure KNOWN components to create NEW markets Ex. Canon user-friendly copiers, GPS to handheld consumer devices

Disruptive Innovation

-Novel technologies serving existing markets Ex. ditigal photos, data storage media, japanese autos -Stealth Attack --captures current customers typically with initially lower cost and performance

growth stage

-early majority buyers increase growth rapidly -dominant design is set

decline

-laggards are buyers and market size shrinks -four strategic options

Shakeout

-more limited market growth --increased competitive rivalry -cost leadership firms tend to drive industry --weaker firms will exist

Maturity

-most excess capacity was removed during the shakeout phase -oligopoly is dominant industry structure in this stage

Radical Innovation

-novel methods or materials serving new markets -often from new firms Ex. Mass production Ford, Airplanes

introduction

-only a few innovators in the market --differentiated -strategy here --market acceptance and seeds for growth --network effects helpful --positive effects ONE user has for other users

incremental innovation

-steady improvement of a product or service -often from incumbent firms --higher entry barriers --organized inertia --reinforce supplier/buyer networks Ex. gillette razors

incremental innovation

existing technology, existing market

architectural innovation

existing technology, new market

four strategic options

exit-get out of the industry harvest-stay with limited investments maintain-stay and continue marketing consolidate-buy rivals, near monolopy

Types of Innovation

Incremental Radical Architectural Disruptive