Chapter 1 - Introduction

Question 1

Define innovation according to Michael Porter

Answer 1

Innovation is the new way of doing things and new technology, it helps businesses or organizations achieve competitive advantage.

Question 2

Define innovation according to Peter Drucker

Answer 2

Innovation is an entrepreneur’s tool or weapon to take advantage of changes, then transform them into opportunities for new businesses or service ideas.

In this sense, innovation is represented as a field, being able to be learned by others and being implemented.

Question 3

What are the DIMENSIONS of innovation space?

Answer 3

1. PRODUCT - When the goods or services that a business offers experience changes
2. PROCESS - When the methods of production and delivery experience changes
3. POSITION - When the status or position of the products experiences changes
4. PARADIGM - When the organization’s mental and business model experience changes

Question 4

What does Keith Pavitt say about the 4Cs of innovation?

Answer 4

Innovation sometimes fail not because of the lack of knowledge on techonology, but because of ORGANIZATION.

The four mechanisms that determine the stability of innovation are: Competition, Cognition, Co-ordination & Control.

Question 5

Explain on Mature Perception of managers.

Answer 5

The business industry is stable. Its demand growth is slow, and there are gradual changes in technology.

Profitability can be gained through improved processes and product differentiation (making the product stand out from the rest).

Profitability is also dependant on the industry and is limited.

The market share is critical (VERY important), and when there is dominance, there will be a demand for extra resources.

Question 6

Explain on Dynamic Perception of managers.

Answer 6

There are always opportunities for change (new ways to operate and new strategies).

Position and Paradigm innovations CREATE value.

Profitability is dependant on the organization, and the industries offer many possibilities.

The market share acts as a reward for the value created.

Focuses on effectiveness, instead of extension of resources.

Question 7

What are the advantages of Position and Paradigm innovation?

Answer 7

1 - Companies achieve a ‘pioneer’ reputation (leading company or role model)

2 - Early learning experiences or learning processes that help the company improve

3 - Entitled to protect their designs, patents, benchmarks from being copied

4 - Dominates incoming and new supplies, and channels of distribution

HOWEVER - Companies must also be wary of the uncertainty in demand and rule changes.