0.2. Innovation Concepts

Question 1

Name and briefly explain three sources of product differentiation. (3)

Answer 1

Product Features:

• Unique characteristics and functionalities
• that distinguish a product.

Timing (First Mover Advantage):

• Being the first to enter a market,
• gaining customer loyalty and significant market share.

Reputation:

• The perceived quality, durability, and reliability of a product,
• as well as the firm’s reputation with customers and suppliers.

Question 2

Explain the S-curve in a few sentences using a graph.

Answer 2

The S-curve illustrates the relationship between research efforts and technical performance (limit n, n+1) over time.

1. Initially, performance improvements are slow,
   (Initial Slow Growth / Lag Phase)
2. but as research continues,
   performance increases rapidly,
   (Exponential Growth / Log Phase)
3. before eventually plateauing as the technology matures.
   (Deceleration / Maturation Phase & Plateau / Saturation or Stability Phase)

Question 3

What implications does the S-curve phenomenon have for a company’s technology strategy? (3)

Answer 3

Technological Shifts and Discontinuities

1. Decreasing R&D Productivity
   Acknowledging that additional investments in existing technology yield diminishing returns.
2. Identification of Technological Discontinuities (Unterbruch)
   Recognizing when a current technology’s performance improvements are slowing.

Strategic Investment Adjustments

3. Intensify Investments in Emerging Technologies
   Redirecting resources to new technologies as current ones plateau.
4. Decrease Investments in Existing Technologies
   Reducing investments in technologies that have reached their performance limits.

Innovation Focus Transition

5. Shift from Product to Process Innovation
   Transitioning focus from creating new products to improving production processes.

Question 4

What are the main differences between open & closed innovation? (2)

Answer 4

Reasearch projects / Boundaries of the firm / Current market

Closed Innovation:

• The firm generates, develops, and commercializes its own ideas,
• protecting them with intellectual property (IP).

Open Innovation:

• The firm commercializes both its own ideas and those from other firms and buyers,
• embracing external ideas and technologies.

Question 5

How do the models of private & collective innovation differ? (2)

Answer 5

Private Innovation:
Innovation activities and results, ..

• are controlled and owned by individual firms,
• focusing on proprietary gains.

Collective Innovation:
Innovation processes and outcomes, ..

• are shared among a group of firms or individuals,
• emphasizing collaborative development and communal benefits.

Question 6

What are the characteristics of the third model of innovation / open innovation proposed by Henry Chesbrough? (4)

Answer 6

1. Hybrid Approach:
   Combines elements of both private and collective innovation.
2. Community-Based Development:
   Involves a community of users and developers contributing to innovation.
3. Shared Knowledge and Resources:
   Encourages open sharing of knowledge and resources while still allowing for individual firm benefits.
4. Flexibility and Adaptability:
   Allows firms to adapt quickly to changes and integrate diverse inputs from various stakeholders.