1. Introduction to Strategic Innovation Management

Question 1

Definition of an innovation

Answer 1

An innovation is the creation (invention), introduction (launch) and successful diffusion of products, systems, or processes, which are new from the perspective of the particular organization and/or user.

Question 2

Invention terminology

Answer 2

Creation of idea to do or make something (profitability not yet verified)

Question 3

Innovation terminology

Answer 3

Introducing a new product that is commercially valuable (i.e., successfully developed inventions)

Question 4

Adoption terminology

Answer 4

Consumer purchasing and using a new product

Question 5

Diffusion terminology

Answer 5

Spread of new invention/innovation throughout target population

Question 6

Technology terminology

Answer 6

Application of scientific knowledge for practical purposes

Question 7

Valley of death

Answer 7

A metaphor to describe space between research/discovery and product development

Question 8

Four levels of innovation

Answer 8

• Business model innovation: Profound changes in how a company creates value
• Process innovation: Changes in the company’s logistics and operations
• Market innovation: Targeting new market segment, meeting new needs or new purchasing/consumption situation
• Product innovation: Technological change, line extensions targeted at the same consumer situation

Question 9

Definition of a product

Answer 9

A product is an item or product or good offered for sale and consists of all tangible and intangible product facets that can result in customer benefits

Question 10

Product newness dimensions

Answer 10

• Performance capabilities of the product
• Application advise for product
• Promoted image of the product
• Availability of product
• Price of product
• Packing of prodcut

Question 11

Innovation based on exploration or exploitation of knowledge

Answer 11

• Exploration: Development of new/different technologies and finding new ways to meet customer needs
• Exploitation: Use and development of things that are already known.

Question 12

Sustainable technologies

Answer 12

Incremental innovations introduced by incumbents with focus on improving margins for best existing customers

Question 13

Disruptive technologies

Answer 13

Innovation beyond the high-volume, high-margin spotlight.
• Compete against non-consumption
• Compete against industry incumbents: target over-/under-served customers

Question 14

Incremental innovation

Answer 14

• involves modest changes to existing products
• is a linear process
• occurs frequently
• favors existing players
• seeks increasing market penetration

Question 15

Breakthrough innovation

Answer 15

• results from major breakthroughs
• is nonlinear and discontinous
• occurs rarely
• favors new market entries
• seeks to create new markets

Question 16

Schumpeter’s theory of innovation profit extraction

Answer 16

Through innovation, firms gain a temporary monopolistic position that allows them to extract abnormal rents.

Such rents can be ceased for two reasons:
• Imitation from competitors that erode focal firm’s monopolistic power
• New innovation that makes focal firm’s innovation obsolete

Question 17

Linear model of innovation

Answer 17

Science/technology push model:
RD –> Manufacturing –> Marketing –> User
Imply a strong product orientation

Market-based/demand pull model
Marketing –> RD –> Manufacturing –> User
Customer-centricity in firm to understand customer needs

Question 18

Interactive model

Answer 18

Interactive models emphasize that innovations occur as a result of interaction of marketplace, science base and firm capabilities

Question 19

Open innovation model

Answer 19

Innovation system has shifted from closed system internal to firm to new mode of open systems involving range of players
–> External sources contribute to innovation process

Question 20

Stylized innovation process

Answer 20

1. Idea generation
2. Concept definition
3. Concept evaluation and selection
4. Development
5. Market launch

Question 21

Innovation of the day: Bose

Answer 21

• Example description: Noise-canceling headphones
• What made it stand out: Headphones that actively cancel out noise and provide considerably better travel and audio listening experience