chapter 7 - wpc 470

Advantages of the Platform Business Model

1. platforms scale more efficiently than pipelines by eliminating gatekeepers 2. platforms unlock new sources of value creation and supply 3. platforms benefit from community feedback

markets-and-technology framework

A conceptual model to categorize innovations along the market (existing/new) and technology (existing/new) dimensions.

Technology Enthusiasts

A customer segment in the introductory stage of the industry life cycle. Often have an engineering mind-set and pursue new technology proactively, frequently seeking out new products before they are officially introduced to the market.

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.

reverse innovation

An innovation that was developed for emerging economies before being introduced in developed economies. Sometimes also called frugal innovation.

early majority

Customers coming into the market in the shakeout stage of the industry life cycle. Pragmatists that are mainly concerned with whether adopting a new technological innovation serves a practical purpose or not.

Laggards

Customers entering the market in the declining stage of the industry life cycle. Will adopt a new product only if absolutely necessary, generally don't want new technology, and are generally not a customer segment worth pursuing.

early adopters

Customers entering the market in the growth stage of the industry life cycle that are eager to buy early into a new technology or product concept. Their demand is driven by recognizing and appreciating the possibilities the new technology can afford them in their professional and personal lives.

late majority

Customers entering the market in the maturity stage of the industry life cycle that are less confident about their ability to master new technology. Will wait until standards have emerged and become firmly entrenched so as to ensure reduction in uncertainty. Tend to buy from well-established firms with strong brand image.

Shakeout Stage

Firms begin to compete more intensely. Weaker firms forced out The industry consolidates Only the strongest competitors survive. Biggest competitive weapon: low price

decline stage of product life cycle

Long-run drop in sales Large inventories of unsold items Elimination of all nonessential marketing expenses "Organized abandonment"

growth stage of product life cycle

Second stage during which sales/use are increasing.

Entrepreneurship

The process by which people undertake economic risk to innovate—to create new products, processes, and sometimes new organizations.

maturity stage of product life cycle

Total industry sales slow, and marginal competitors begin to leave the market. Sales increase at a decreasing rate, and most consumers who would buy the product are either repeat purchasers of the item or have tried and abandoned it. Fewer new buyers enter the market. Marketing actions are focused on maintaining market share through product differentiation and finding new buyers. -Examples: Soft drinks and DVD players.

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

Architectural Innovation

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

revolve group is a mobile platform that matches independent fashion designers with consumers who want a personalized wardrobe. Which of the following initiatives would best allow Revolve group to fine-tune its offerings to better meet the needs of its consumers?

allowing users to provide feedback to producers on the style and fit of clothing

standard

an agreed-upon solution about a common set of engineering features and design choices

Platform Business

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 or platform that the enterprise manages

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

long-tail

business model in which companies can obtain a large part of their revenues by selling a small number of units from among almost unlimited choices

first-mover advantage

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

the leading producer of cell phone backup batteries, progyny, has achieved great success because they produce high-quality battery backups that are not too expensive. even so, another company that produces lower-quality batteries at the same price has also achieved some success, but not as much as progyny. also, in general, the price of backup batteries has declined because of economies of scale and learning. In addition, progyny has added complementary assets, such as a carrying case. considering all of these factors, the backup battery industry is most likely in the _____ stage.

growth

Fulcrum Feet is a manufacturer of athletic shoes. It has released an improved version of its premier running shoe in markets in which the company already operates. Which of the following types of innovations does this scenario best illustrate? A) radical innovation B) incremental innovation C) architectural innovation D) disruptive innovation

incremental innovation

winner take all markets

markets where the market leader captures almost all of the market share and is able to extract a significant amount of the value created

product innovation

new or recombined knowledge embodied in new products

process innovation

new ways to produce existing products or deliver existing services

a disruptive innovation leverages _____ technologies, while architectural innovations are based on _______ technologies

new, existing

incumbent firms prefer to focus on incremental innovations which reinforce their established organizational structure and power distribution and avoid radical innovation that could disrupt their existing power distribution. this is known as

organizational inertia

organizational inertia

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

Industry Life Cycle

the five different stages - introduction, growth, shakeout, maturity, and decline - that occur in the evolution of an industry over time

platform ecosystem

the market environment in which all players participate relative to the platform

network effects

the positive effect (externality) that one user of a product or service has on the value of that product for other users

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

trade secret

valuable proprietary information that is not in the public domain and where the firm makes every effort to maintain its secrecy

introduction stage of product life cycle

when an individual inventor or company launches a successful innovation, a new industry may emerge