Management Analysis Chapter 7

Change agents innovating within existing companies. (7.2)

Intrapreneurs

A conceptual model to categorizes innovations along the market (existing/new) and technology (existing/new) dimensions. What are the four types of innovations? (7.4)

Markets-and-technology framework (1) Incremental vs. (2) Radical, (3) Architectual vs. (4) Disruptive

New ways to produce existing products or deliver existing services. usually happen after product innovations. Such as artificial intelligence, the internet, lean manufacturing, six sigma, biotechnology, nanotechnology, etc. (7.3)

process innovation

Future radical innovations are generally introduced by new entrepreneurial ventures. What at the three factors that affect this? (7.4)

1) Economic incentives (incumbents often push forwards with incrmental innovations, while new entrants focus on radical innovations) 2) Organizational inertia 3) Innovation ecosystem

Competitive benefits that accrue to the successful innovator. this can include economies of scale and experience and the learning-curve effect. Also, network effect. Includes switch cost. (7.1)

first-mover advantage.

The commercialization of any new product or process, or the modification and recombination of existing ones. In order for this term to be useful it must be continuous. (7.1)

innovation

A firm's embeddedness in a complex network of suppliers, buyers, and complementors, which requires interdepends strategic decision making. (7.4)

innovations ecosystem

The transformation of an idea into a new product or process, or the modification and recombination of existing ones. (7.1)

invention

The value of a product or service for an individual user increases with the number of total users. Such as apples iTunes, app store, etc. (7.3)

network effects

An innovation that draws on novel methods or materials, is derived either from an entirely different knowledge based or from a recombination of existing knowledge bases with a new stream of knowledge. What is the downside to this term and how is this midigated? (7.4)

radical innovation --only will give you a temporary advantage, must follow up with incremental innovation

The rate of growth declines. Firms begin to compete directly against one another for market share, rather than trying to capture a share of an increasing pie. As competitive intensity increase. The weaker firms are forced out of the industry. Remaining firms cut prices and offer more services but will erode profit. (7.3)

shakeout stage

The pursuit of innovation using tools and concepts form strategic management. addresses questions such as how to combine entrepreneurial actions, creating new opportunities or exploiting existing ones with strategic actions taken in the pursuit of competitive advantage. (7.2)

strategic entrepreneurships

A customer segment in the introductory stage of the industry life cycle. Often have an engineered mind-set and pursue new technologies proactivity, frequently seek out new products before they are officially introduced to the market. (7.3)

technology enthusiasts.

What are the four I's in the innovation process? (7.1)

1) idea 2) Invention 3) Innovation 4) Imitation

An innovation that squarely builds on an established knowledge base and steadily improves an existing product or service. (7.4)

Incremental innovation

New or recombined knowledge embodied in new products. Such as the Jet plans, electric vehicles, smartphones, and wearable watches. (7.3)

product innovations

What are examples of innovations that NETFLIX used to gain market share? (7.1)

1) allow users to queue movies allowed Netflix to predict future demand for specific movies accurately 2) personalized recommendation engine. personalized what users would watch based on rating and subscriber history and other similar customers.

The five different stages, introduction, growth shakeout, maturity, and decline that occurs in the evolution of an industry over time. (7.3)

industry life cycle

The market environment in which all players participate relative to the platform. Who are the parties involved? (7.5)

platform ecosystem. 1) Owner (controls the platform IP and controls who can participate and in what why) 2) Producer (makes or creates available product or service) 3) Provider (interfaces for the platform, enabling its accessibility online) 4) Consumer

What are the three dimensions in which a platform is defined? (7.5)

1) A platform is a business that enables value-creating interactions between external producers and consumers 2) The platform's overarching purpose is to consummate matches among user and facilitate the exchange of goods, services, or social currency, thereby enabling value creation for all participants. 3) The platform provides an infrastructure for these interactions and sets governance conditions for them

What are some examples of counters by incumbent firms to disruptive innovation? (7.4)

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 other to disrupt you.

Moving from the traditional pipeline business to a platform business model implies three important shifts in strategy focus. These are? (7.6)

1) Form resource control to resources orchestration 2) Form internal optimization to external interactions 3) Form customer value to ecosystem value

Disruptive innovations begins when a firm, frequently a startup, introduces a new product or process based on a new technology to meet existing customer needs. What are other characteristics that makes disruptive innovation? (7.4)

1) It begins as a low-cost solution to an existing problem 2) Initially, its performance is inferior to the existing technology, but its rate of technological improvement over time is faster than the rate of performance increases required by different market segments. Example: Such as digital photography replacing regular cameras. 3) stealth attack (Blue Ocean strategy) 4) incumbent firms are slow to change

What are the advantages of the platform business model? (7.5)

1) Platforms scale more efficiently than pipelines by eliminating gatekeepers 2) Platforms unlock new sources of value creations and supply 3) Platforms benefits from community feedback.

What are the different customer groups in the crossing the chasm framework? (7.3)

1) Technology enthusiasts 2) Early adopters 3) early majority 4) Late majority 5) Laggards

What are the four strategic options in the final stage of the industry life cycle? (7.3)

1) Exit 2) harvest 3) Maintain 4) Consolidate

A new product in which known components, based on existing technology, are reconfigured in a novel way to attack new markets. Think of the comparison between Xerox machines and Canon machines. (7.4)

Architectual innovation

Conceptual model that shows how each stage of the industry life cycle is dominated by a different customer group. i.e. groups such as early adopters, early majority, late majority, etc. (7.3)

crossing-the-chasm framework

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. (7.3)

laggards

Customer 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 reductions in uncertainty. Tend to buy from well-established firms with strong brand image. (7.3)

late majority.

A business model in which companies can obtain a large part of their revenue by selling a small number of units from among almost unlimited choices. (7.1)

long tail

resistance to change in the status quo. (7.4)

organizational inertia

The pursuit of social goals while creating a profitable business. Such as the triple-bottom line. (7.2)

social entrepreneurship

An agreed-upon solution about a common set of engineering features and design choices. (7.3)

standard

A form of intellectual property that gives the inventory exclusive rights to benefit from commercializing a technology for aa specific time period in exchange for public disclosure of the underlying idea. a form of IP. usually last 20 years. (7.1)

Patent

What is the innovator's core competency during the introductory stage? (7.3)

R&D which is capital intensive in which the innovators is investing in designing a unique product, trying new ideas to attract customer, and producing smaller quantities.

An innovation that was developed for emerging economies before being introduced in developed economies. Somestimes called frugal innovations. (7.4)

Reverse innovation

An enterprise that creates values 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. Such as Uber, Facebook, and Alibaba. The consumers create value for the business. (7.5)

platform business

The size of the market contracts further as demand falls, innovations efforts along both product and process cease. although there is a chance of breakthroughs that open up new industries or reset the industry life cycle. (7.3)

decline stage.

An innovation that leverages new technology to attack existing markets from the bottom up. (7.4)

disruptive innovation

Customer entering the market in the growth stage of the industry life cycle 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. (7.3)

early adopters

Customer coming into the market in the shakeout stage of the industry life cycle. Pragmatist that are mainly concerned with whether adopting the new technology innovations serves a practical purpose or not. If the product does not appeal to this segment then, it "Falls into the Chasm". (7.3)

early majority

The agents that introduce change into the competitive system. They do this not only by figuring out how to use inventions, but also by introducing new products or services, new production processes, and new forms of organization. (7.2)

entrepreneurs

Valuable proprietary that is not in the public domain and where the firm makes every effort to maintain its secrecy. it is different from a patent because is not in the public domain. (7.1)

trade secret

Markets where the market leader captures almost all of the market share and is able to extract a significant amount of the value created. (7.4)

winner-take-all markets

demand is strong, both efficient and inefficient firms thrive. Production cost goes down, standard business process is put in place and firms begin to reap economies of scale and learning. Distribution channels are expanded, and complementary assets in the form of products and services become widely available. (7.3)

Growth stage.

If an innovation is successful in the marketplace, competitors will attempt to copy it. (7.1)

Imitation

only an oligopoly remains. demand now consist of replacement or repeat purchases. The market has reached it maximum size and industry growth is likely to be zero or even negative going towards. process innovations reach its max. (7.3)

Maturity stage

The process by which people undertake economic risk to innovate--to create new products, processes, and sometimes new organizations. (7.2)

entrepreneurship

They must educate potential customer about the product's intended benefits, find distribution channels and complementary assets, and continue to perfect the fledgling products. (7.3)

first-mover disadvantage.

presented in terms of abstract concepts or as finding derived from basic research. often published in academic journals. in the long-term there maybe future application. (7.1)

idea

Captures a linear transformation with producers at one end and consumers at the other. (7.4)

pipeline