Chapter 5: Innovation and Entrepreneurship
four strategic options in the decline stage
+exit +harvest +maintain +consolidate
the four I's
+idea +invention +innovation +imitation
an invention can be patented if it is
+useful +novel +non-obvious
markets-and-technology framework
a conceptual model to categorize innovations along the market (existing/new) and technology (existing/new) dimensions
each stage of the industry life cycle is dominated by
a different customer group
absorptive capacity
a firm's ability to understand external technology developments, evaluate them, and integrate them into current products or create new ones
innovation ecosystem
a firm's embeddedness in a complex network of suppliers, buyers, and complementors, which requires interdependent strategic decision making
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
open innovation
a framework for R&D that proposes permeable firm boundaries to allow a firm to benefit not only from internal ideas and inventions, but also from external ones. The sharing goes both ways: some external ideas and inventions are insourced while others are spun out
architectural innovation
a new product in which known components, based on existing technologies, are reconfigured in a novel way to attack new markets
standard
an agreed-upon solution about a common set of engineering features and design choices
innovation process begins with
an idea
radical innovation
an innovation that draws on novel methods or materials, is derived either from an entirely different knowledge base or from a recombination of the existing knowledge bases with a new stream of knowledge
disruptive innovation
an innovation that leverages new technologies to attack existing markets from the bottom up
incremental innovation
an innovation that squarely builds on an established knowledge base and steadily improves an existing product or service
reverse innovation
an innovation that was developed for emerging economies before being introduced in developed economies (frugal innovation)
first-mover advantages
competitive benefits that accrue to the successful innovator
crossing the chasm framework
conceptual model that shows how each stage of the industry life cycle is dominated by a different customer group
innovation describes the
discovery, development, and transformation of new knowledge in a four-step process
differentiation strategy
emphasizes unique features, product functionality, and reliability
exit strategy
firms are forced to exit the industry by bankruptcy or liquidation
late majority
make up 34% of the total market potential
consolidate strategy
market size shrinks in a declining industry, or through acquisitions
in the introductory stage, the level of product innovation is at a
maximum because new features increasing perceived consumer value are critical to gaining traction in the market
product innovations
new or recombined knowledge embodied in new products
process innovation
new ways to produce existing products or deliver existing services
cost leadership strategy
offer an acceptable level of value but lower prices to cusomters
after the market accepts a new product, and a standard for the new technology has emerged,
process innovation rapidly becomes more important than product innovation
organizational intertia
resistance to changes in the status quo
entrepreneurs
the agents that introduce change into the competitive system
innovation
the commercialization of any new product or process, or the modification and recombination of existing ones
technology enthusiasts
the customer segment in the introductory stage of the industry life cycle (2.5%)
early majority
the customers coming into the market in the shakeout stage
early adopters
the customers entering the market in the growth stage (13.5%)
harvest strategy
the firm reduces investments in product support and allocates only a minimum of human and other resources
industry life cycle
the five different stages - introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time
laggards
the last customer segment to come into the market, entering the declining stage of the industry life cycle(16%)
network effects
the positive effect (externality) that one user of a product or service has on the value of that product for other users
entrepreneurship
the process by which people undertake economic risk to innovate - to create new products, processes, and sometimes new organizations
strategic entrepreneurship
the pursuit of innovation using tools and concepts from strategic management
social entrepreneurship
the pursuit of social goals while creating a profitable business
invention
the transformation of an idea into a new product or process, or the modification and recombination of existing ones
intrapreneurship
those pursuing corporate entrepreneurships
trade secret
valuable proprietary information that is not in the public domain and where the firm makes every effort to maintain its secrecy