Strategy Midterm Exam

Socialization

(Formal and informal) results in newcomers understanding "how we do things here"

Customer contact

A measure of the amount of user involvement in planning, executing, and delivering a good or service

Innovation

A new idea that is brought to market

Resource stocks

Accumulate from investments over time to support competitive advantage (analogy: the level of water in the bathtub)

Mimetic behavior

Activity that follows patterns observed in the behavior of others / Why distinctive competencies that yield advantage must be expected to erode over time

Mass customization

Allows a large number of customers to personalize product characteristics

Corporate entrepreneurship

An effort by enterprises with large, established businesses to discover new opportunities

Strategic risk

An estimate of the uncertainty about outcomes associated with every activity

Intangible resources

Are not directly visible--examples are knowledge and reputation

Champions

Argue for an innovation's support in an organizational setting, stimulating allocation of capital and required cooperation

Socially complex activities

Arise from the interaction of individuals and other resources; they are difficult to understand, but result in more than the apparent sum of their parts / Hard for competitors to imitate

Resources

Assets used to create and support offerings to customers or clients

Positive models of human behavior

Assume that most people are intrinsically well-meaning in their interactions with others

Dual strategy

Attempts to optimize current performance while simultaneously preparing for strategic changes that are expected to be necessary in the future

Product innovations

Changes in the product or service offered to an existing or new market

Capabilities

Combinations of resources that create value / When tangible resources combine with intangible skills and knowledge

Incremental innovations

Contribute to the improvement of existing product or service offerings / Make up to 85-90% of a firm's product development portfolio

Entrepreneurial orientation

Describes an organization's ability to promote autonomy, innovativeness, pro activeness, competitive aggressiveness, and risk taking / Describes an organization's ability to recognize and respond to new opportunities

Coproduction

Directly involves customers in the creation of the goods, services, or experiences they consume / A subtle form of cost-sharing

Process innovations

Do not change the offering itself, but change the way in which the organization operates

Synergy

Enables one resource to increase the impact of others

Feasibility analysis

Evaluates the human and financial resources available for launching a new venture

Early majority users

Fall in the first half of the total set of an innovation's users; compared to innovators, they tend to be less responsive to technological or innovative content and more responsive to practical features and credibility

Customer-based strategy

Focuses on identifying and serving customer needs and desires / Assumption that satisfying customers will also maximize success in reaching more traditional performance goals, including returns to stockholders

Entrepreneurial teams

Groups of individuals who bring their collective and often complementary skills and resources to a new venture

Tangible resources

Have a physical reality--examples are buildings, machinery, and supplies

Second movers

Have the potential advantage of learning from and improving on the efforts of first movers

Competence-enhancing changes

Increase the value of resource stocks

Skunkworks

Independent units in larger organizations that are temporarily given autonomy to develop new ideas

Customer perception map

Indicates market distinction made by a significant number of customers or potential customers / Intended to trace how customers think about the competitive space and to give manufacturers information to position, or reposition, product offerings

First movers

Introducing a new product or service ahead of other firms / In a new product or service category can potentially define an innovation's characteristics in the minds of buyers, gaining valuable name recognition and brand loyalty / Head start on becoming the market leader

Venture capitalists

Investors who search for and provide capital to entrepreneurs / Likely to invest in early stages of development, taking risks that bankers or the general public would not consider / Once a venture capitalist is involved, initial partners are no longer free to do whatever they please

Competence-destroying innovations

Make existing product or service offerings obsolete

Instrumental resources

Not directly required to produce a good or service, but are helpful for acquiring needed resources (i.e. financial capital used to acquire opportunity-specific inputs, including technological resources)

Franchising

Opportunity to obtain exclusive rights to a brand and business model in a specific locality in return for a royalty

Ambidextrous

Organizations manage the inconsistent demands of supporting current businesses while developing new entrepreneurial opportunities

Angel investors

Private individuals who provide seed capital to early-stage ventures / Also typically offer expertise, experience, and contacts

Entrepreneurs

Recognize opportunities, asses fit between market and their company, find and combine resources, develop innovative solutions, take risks, and strive to make a profit / Tend to have a stronger need for achievement, higher risk-taking propensity, greater perseverance, more commitment to a task, bigger vision, higher creativity, and more tolerance for ambiguity

Liability of newness

Recognizes the vulnerability that comes from lack of experience, industry recognition, and customer familiarity / Explains the low survival rates of new ventures

Competence-destroying change

Reduces or extinguishes the value of past asset stocks / Often involves new technology, significant regulation or deregulation, or the emergence of new competitors

Casual ambiguity

Refers to the lack of readily apparent connection between a firm's activities and its competitive success

Routines

Regular and predictable patterns in organizational behavior that persist over time even though the individuals involved change

Initial public offerings (IPOs)

Sell stock in a new venture to individual and institutional investors

Radical innovations

Significant departure from currently available product or service offerings / May completely transform a company or an industry

Lead users

Similar to the majority of an innovation's users and are willing to help the producers improve their product, service, or experience

Core rigidities

Sources of current success that make new-venture development difficult

Serial entrepreneurs

Start a number of entrepreneurial efforts over time

Cost-sharing

Strategies allocate costs between members of an alliance, including alliances between customers and producers (i.e. customer self-service)

Customer experience map

Summarizes contact with a product or service from a customer's perspective (example on pg. 76)

Service climates

Support and reinforce satisfying customers / Creates the expectation that customers will be respected and served

Experience-oriented strategies

Support the process of consuming an organization's offerings (i.e. a bookstore that provides coffee, easy chairs, and other products that might appeal to literary clientele)

Innovators

The first few percent of a new offering's users, who try the product or service because of its innovative qualities

Resource flows

The flow of investments needed to create resources / Support current activity (analogy: the gush of water as it fills the tub)

Intellectual capital

The knowledge, skills, and capabilities used by an organization to produce goods and services

Late majority users

The large, conservative group in a community slower than all except the laggards

Early adopters

The larger group of users who are drawn to an offering's innovative qualities but end to be more evaluative than innovators / They do not adopt unless the benefits of a new offering are clear

Distinctive competencies

The organization's unique resources, capabilities, and routines / Source of competitive advantage

Social captial

The resource pool available from relationships with others

Inertia

The tendency to continue in a current state / Used in the text to describe why large organizations have difficulty moving beyond past success

Synchronicity

The time-sensitive match between the entrepreneur's recognition of opportunity and occurrence of market need

Laggards

The users in a community who are slowest to adopt a new product

Bootstrapping

Use of an entrepreneurial individual's personal resources to finance a new business

Utilitarian resources

Used in the operation of the venture / are required to produce a good or service