Chapter 11 Flashcards
Product innovation
relates to the final product (or service) to be sold, especially with regards to its features
Process innovation
relates to the way in which the product is produced and distributed, especially with regard to improvements in cost or reliability. For example Henry Fords moving assembly line introduced in 1913. Zara focus on process innovation in its supply chain and manufacturing, has allowed them to swiftly respond to new market demands and get new products into store within a few weeks.
Intrapreneurship
When you search for growth and new and innovative products and services.
Entrepreneurial life cycle
Entrepreneurial ventures are often seen as going through four growth stages:
- Start up, often difficulties with sourcing capital. Might look for funding through Venture capitalists.
- Growth, A big challenge in this stage is management. Entrepreneurs must be ready to move from doing to managing.
- Maturity, challenge to retain commitment, may diversify, goes from entrepreneurship to intrapreneurship.
4.* Exit*, refers to departure from the venture, either by the found entrepreneurs, or by the original investors, or both. Might exit through IPO or trade sale to another company.
Social entrepreneurship
Social entrepreneurs are individuals and groups who create independent organisations to mobilise ideas and resources to adress social problems, typically earning revenues but on a not-for-profit basis.
Technology push
The technology push view says that it is the new knowledge created by technologists or scientists that pushes the innovation process.
Market pull
Market pull emphasises the importance of actual usefulness and therefore looks to users as an important source of new ideas.
Lead users can be the principal source of innovation. Often leading sports people in snowboarding makes improvement necessary for greater performance.
Frugal innovation: The market pull exerted by ordinary users, particularly the poor in emergent markets. Trying to do more with less.
Technology push vs market pull
Market pull emphasises that innovation do not just come from scientific research, but can be pulled by users in the external market.
To much market pull might restrict organisations from looking beyond the current market. Apple with new iphone for example. While to much technology push can be unnecessary if no needs are met.
Product innovation vs. Process innovation
New developing industries typically favour product innovation, as competition is still around defining the basic features of the product or service.
Maturing industries typically favours process innovation, as competition shifts towards efficient production of a dominant design of product or service.
Small new entrants typically have the greatest opportunity when dominant designs are either not yet established or beginning to collapse. Challenge to petrol based dominant design provided opportunities to entrepreneurial companies like tesla.
Large incumbent firms typically have the advantage during periods of dominant design stability, when scale economies and the ability to roll out process innovation matters most.
Open innovation vs. Closed innovation
Open innovation involves the deliberate import and export of knowledge by an organisation in order to accelerate and enhance its innovation. The motivating idea of open innovation is that exchanging ideas openly is likely to produce better products more quickly than the internal, closed approach. Might use crowdsourcing, which is a form of open innovation and means that a company or organisation broadscasts a specific problem to a crowd of indiviudals or teams, often in tournaments with prizes awarded to the best solution.
Diffusion
Diffusion is the process by which innovations spread among users.
What influences the pace of diffusion
The pace of diffusion is influenced by a combination of supply-side and demand-side factor. On the supply side, pace is determined by product features such as degree of improvement in performance above current products. Compatability wiht other factors, smartphones becomes more attractive with more apps. Complexity might discourage consumer adoption. Experimentation, free trial period are often used to encourage diffusion. Relationship management, how easy it is to get information, place orders and receive support. On the demand side, simple affordability is of course important. Market awareness. Network effects refer to the way that demand growth for some products accelerates as more people adopt the product or service. Customer propensity, innovations are often targeted initially at early adopter groups - typically young and wealthy - in ordet to build critical mass that will encourage more laggardly groups - the poorer and the old.
The diffusion S-curve
S-curve reflects a process of initial slow adoption of innovation, followed by rapid acceleration in diffusion, leading to a plateau representing the limit to demand.
First mover advantage
A first mover advantage exists where an organisation is better off than its competitors as a result of being first to market with a new product, process or service
Disruptive innovation
A distruptive innovation creates substantial growth by offering a new performance trajectory that, even if initially inferior to the performance of existing technologies, has the potential to become markedly superior.
