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MDI Oktober Exam > Exam L1-L4 > Flashcards

Exam L1-L4 Flashcards

1
Q

Digital Technologies

Characteristics

A
  1. Homogenization & Decoupling
  2. Connectivity
  3. Reprogrammable & Smart
  4. Digital Traces
  5. Modularity
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2
Q

Homogenization & Decoupling =

+ Consequences

A

Homogenization & Decoupling = All digital information assumes the same form, therefore it can at least in principle, be processed by the same technologies.

Consequences
1. Low Marginal Costs
o digitized information can be transmitted, stored and computed in fast and low cost ways
o Moore’s Law: computing power (costs, speed) improves exponentially

  1. Convergent User Experience
    * Implications for innovation: convergence of industries; combinatorial innovation (- map + compass on iPhone)
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3
Q

Connectivity =

+ Consequences

A

Connectivity = Connections with other users / other applications / between firm and customer

Consequences
1. (direct) network externalities: when the value of a good to a user increase with the number of other users (installed base) of the same or similar good digitized information

  1. Interoperability: the ability of a product or system to work with other products or systems.
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4
Q

Reprogrammable & Smart =

+ Consequences

A

Reprogrammable & Smart =
Digital products can be edited and reprogrammed (software updates)
By supplier (connectivity) or autonomously (machine learning)

Consequences
1. Emerging functionalities:
o product versioning
o differentiation
o incompleteness
o backward & forward compatibility
o “evergreen design”?

  1. Servitization:
    o Shift towards “service” (value, experience) that products offer (“job to be done”)
    o Shift towards pay for use instead of pay for ownership (“pay per lux”, “power by hour”, “X as a Service”)
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5
Q

How do (digital) innovations evolve?

A

How do (digital) innovations evolve? - From fixed boundaries to fluidity

Digital innovation: the scope, features and value of digital offerings can continue to evolve even after the innovation has been launched or implemented. boundaries on what is or is not an innovation outcome have become more porous and fluid.

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6
Q

How should entities organize for (digital) innovation?

A

How should entities organize for (digital) innovation? - From centralised to distributed

Digital innovation: there is a shift toward less predefined and more open innovation, and network-centric innovation.

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7
Q

How does the nature of innovation and the organization of innovation interact?

A

How does the nature of innovation and the organization of innovation interact?

  • from distinction to interdependence of process and outcome
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8
Q

socio-cognitive sensemaking =

A

socio-cognitive sensemaking = that the technology is being made sense of in:
* an individual innovator’s cognition
* and the innovator’s social system of collectives of organizations and individuals.

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9
Q

Affordance =

A

Affordance = refers to the way in which innovation process tools are used.

Thus, the focus is not on what features digital tools or artifacts possess, but how actors’ goals and capabilities can be related to the inherent potential offered by the features.

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10
Q

Orchestration =

A

Orchestration = can be viewed in terms of the matching of problems and needs with potential solutions.

–> Uber

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11
Q

Pervasive digital technology =

A

Pervasive digital technology =
the incorporation of digital capabilities into objects that previously only had a physical materiality.

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12
Q

Technology affordance =

A

Technology affordance =
‘= an ACTION POTENTIAL, that is, to what an individual or organization with a particular purpose can do with a technology or information system.

Creates innovations characterised by
1) convergence and 2) generativity.

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13
Q

Innovation of Convergence =

A

Innovation of Convergence =
the act of converging
especially moving toward union or uniformity

  1. Brings previously separate user experience together: (Spotify)
  2. Integration of digital and material (smartphone, compass/maps ect.)

Convergence in industries: the initial convergence of media and products brings together previously separate industries –> Skype competes with telecommuniction

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14
Q

Innovation of Generativity =

A

Innovation of Generativity = –> Digital technologies become inherently dynamic and malleable

Resulting in: change of organisational function

  1. reprogrammable nature, ( new capabilities can be added after a product or tool has been designed and produced - smartphone apps)
  2. Wakes of Innovation (3D Technology changed the role and scope of product managers.)
  3. Digital traces as by-products is a consequence of the use of pervasive digital technology being generative
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15
Q

The role of platforms can be seen as:

A

The role of platforms can be seen as:

To harness the Convergence and Generativity made possible

Firms now innovate by creating platforms rather than single products.

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16
Q

Three traits of innovations with pervasive digital technology that are shaped by Convergence and Generativity

A
  1. Digital technology platforms
  2. Distributed innovation
  3. Combinatorial innovation
    Increasingly, firms are creating new products or services by combining existing modules with embedded digital capabilities. Modularity = crucial condition for Combinatorial Innovaiton
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17
Q

Direct network effects =

A

Direct network effects
= When the value of a good to an user increases with the number of other users (installed base) of the same or similar

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18
Q

Indirect network effects =

A

Indirect network effects = the presence of other type of actors (e.g., complementors) generates additional value.

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19
Q

Platform Builder’s Checklist (Edelman)

A

1 Amass a large user base
* Leverage existing user groups
* Use publicly available data as substitute for one user group (Amazon Marketplace)

2 Offer stand-alone value
* Service that is useful even if few others join the platform
* Service for one side initially (Google, Whatsapp)

3 Plant a seed by recruiting marquee users
* Pay them to join, or for initial creation of content (e.g., Android)
* Create ‘fake’ content (Tinder)
* Buy a marquee brand (brand that achieved a high level of public awareness)

4 Reduce users’ risks
* Offer pay-as-you-go pricing
* Subsidize early users

5 Ensure Compatibility with Legacy Systems

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20
Q

Modularity (Baldwin & Clark) =

A

a module is a unit whose elements are powerfully connected among themselves and relatively weakly connected to elements in other units.

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21
Q

Modularity can be created by…

A

Modularity can be created by… standardizing interfaces between units.

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22
Q
A

How does Modularity help?
1. Modularity helps manage complexity by breaking up a complex system into discrete components which interact through standardized interfaces and architecture.

  1. Reduces the interdependencies between modules to simple interconnectivity rules
    +
    Reduces the scope of information that designers need to design their modules – facilitates autonomous innovation within modules.
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23
Q

Layered Modular Architecture of Digital Technology:

A

Layered Modular Architecture of Digital Technology:
1. Content Layer: (scripts, recipes, programs)

  1. Service Layer (apps)
  2. Network Layer
    - Logical Transmission (WiFi)
    - Physical Transport (Router)
  3. Device Layer
    - Logical Capability (LED light bulb)
    - Physical Machinery (iPhone)
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24
Q

Platform (architecture) =

A

= a set of core components (and interfaces) with low variety and a complementary set of peripheral components with high variety

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25
Q

Platform

Advantages:

A

Advantages
- Reduced costs of production (e.g., economies of scale)
- Shared components between models
- Reduced R&D lead times
- Reduced systematic complexity
- Improved ability to update products
- Customization by (re)combining components

26
Q

Platform

Disadvantages:

A

Disadvantages:
- Decreasing distinctiveness
- Suboptimization

27
Q

Propriety System:

Advantages

A

Propriety System

Advantages =
o Appropriate Value
o Control over fragmentation
o Incentives for architectural control

28
Q

Open System:

Advantages

A

Open System

Advantages =
o Economies of Scope in production and innovation
o Ensure rapid diffusion
o Overcome industry opposition against sole-source technology.

29
Q

Three-step process for launching an advertising-supported platform:

A
  1. Collect data from public sources and organize it to create a useful service
  2. Encourage users to submit improved data directly to the platform
  3. Charge companies for preferred ad placement
30
Q

Can I offer stand-alone value? (Edelman - Platforms)

A

Can I offer stand-alone value? (Edelman - Platforms)

If a large number of users is not feasible, look for ways of providing value to individual users even when no one else is on the platform.

TWO STRATEGIES:

    • Start with an industry niche: target customers in a relative narrow market where the platform can more readily gain traction.
      2.* Find or build small social groups: identifying and serving the social needs of small groups.
31
Q

How will I build credibility with customers? (Edelman - Platforms)

A

How will I build credibility with customers?
* Attract a marquee platform contributor (e.g. game consoles pay a well-known game developer to provide a given game on the specific console)

32
Q

How should I charge users? (Edelman - Platforms)

A

How should I charge users? (Edelman - Platforms)

  • Pay-as-you-go (e.g. Groupon only charges restaurants when consumers buy a voucher): reduces the risk of a platform for some type of users – needs technology to record individual transactions automatically.
  • User subsidies (e.g. early Lyft drivers were paid to only be ‘on-call’ and users were given 5 free rides. Also: Google Maps provides free user services to obtain a large base of users making the value of the platform higher for advertisers)
33
Q

Platforms

Create value by:

A

Value is created through coordinating.

Create value by acting as conduits between two categories of consumers who would not have been able to connect or transact without the platform.

34
Q

Managing open innovation with complementors:

Implications

A
  1. The open innovation activities needed result in:
    Increasingly complex connections between platforms and complementary products
  2. Call for a hybrid approach to coordinate open innovation around platforms
  3. Connections created by complementors can span multiple platforms, leading to an ecology of platforms.
    * Connections created by independent third parties go beyond the full technical and organizational control of platform owners
35
Q

Platforms (Economic Theory)

A

o How markets mediate transactions across different customer groups and how network effects fuel platform competition:
o Platforms as a market.
o Network effects trigger a self-reinforcing feedback loop –> magnifies incumbents’ early advantages

Limitations:
1. Platforms are taken to be both exogenous and fixed – do not offer much insight into what determined how or why they would evolve
2. The nature of the relationship between platform owner and two sides is reduced to that of seller-buyer relationship – both ends defined as consumers (even the developers)

36
Q

Platforms (Engineering Design)

+ 2 limitations

A

o Platforms as technological designs –> help firms generate modular project innovation:
o Platforms as technological architectures.
o Re-use of components across different products within a product family, which allows economies of scope in production to occur.

37
Q

Sustaining Innovation (Christensen)

A

Sustaining Innovation (Christensen) =

Better products, for higher prices, to attractive customers in existing markets

38
Q
A
39
Q

Disruptive Innovation

Features:

A

Features:
o Overshooting of existing products
o Novel mix of attributes (often inferior, simpler, more convenient, cheaper products)
o For new or unattractive customers
o Asymmetric motivations
o Technology as enabler of improvement trajectory

IMPORTANT:
o Disruptive Innovation introduces a different performance package, which is initially inferior to existing mainstream technologies and dominant product attributes that mainstream customers value.

o It disturbs the business models of ecosystem incumbents who are likely to resist and counter mobilize

o A firm that offers a disruptive innovation must gain access to complementary assets lest its innovation remain confined to niche markets.

o Over time, technological advancements and improvements to the disruptive innovation increase the attractiveness of performance packages to mainstream customers. As a result, disruptive innovation alters existing market positions and value networks and displaces established market leaders and their products.

40
Q

Disruptive Innovation

Explain its feature:
Asymmetric Motivations

A

Asymmetric Motivations =

Disruptive innovations (initially) do not score well on resource allocation criteria of large incumbent firms:
o Best customers do not want disruptive innovations
o Disruptive innovations do initially not offer good profit margins
o The inital small markets does not solve growth needs of large companies
o Markets that don’t exist can’t be analyzed
o Financial investment tools are biased towards existing business

41
Q

Why New Entrants often win Disruptive Innovation?

A

New entrants often win with disruptive innovation
o Because ‘rational’ resource allocation mechanisms work against investment in disruptive innovation, until … it’s too late
o Not (only) because of managerial incompetence or lack of technological capabilities

42
Q

Characteristics of Digital Technology that enable fast improvement trajectory

A

o Low marginal costs (& low overhead)
o Moore’s law
o Network effects
o Distributed development (3rd party developers)
o Crowd-based improvement
o Machine learning

43
Q

Responses to Disruptive Innovation:

A

Responses to Disruptive Innovation

  1. Racing
    o Defensive response
    o Fleeing to higher market segments
    o ‘cramming’
    o Alternative: legal battles
  2. Transition
    o Offensive response
    o When disrupted: fight, don’t flee
    o Frame as threat in resource allocation process
    o Separate from existing business (ambidexterity)
    - Might be acquisition or external venture
    o Frame as opportunity for this separated entity
  3. Retreat
    o Defensive/offensive response
    o Retrenching in a revealed niche
    o Relocating to a different market
44
Q

Disruption dilemma =

A

Disruption dilemma:

Disruptors risk retaliation from incumbent firms potentially disrupted by the innovation, but may need support of the very incumbents to establish their innovation within existing innovation

45
Q

Industry ecosystems =

A

Industry ecosystems = are business networks of interconnected firms that depend on one another for their mutual effectiveness and survival:

  • Producers (including suppliers, competitors, and complementors)
  • Distribution channels and consumers on the demand side
  • Regulators from the institutional side
46
Q

Disruption
3 coopetitive tensions

A

How a disruptor has to gain cooperation from incumbent it disrupts with promises of benefits that might accrue only in an uncertain future. ‘chicken and egg problem’

  1. intertemporal (short term vs long term)
    Intertemporal coopetition: a situation in which a newcomer’s innovation can offer ecosystem members benefits that might materialize only in the future, whereas disruptive effects are felt immediately.
    Incumbents are uncertain over how disruptors innovation will redistribute revenues and profits across ecosystem members.
  2. dyadic (within dyadic relationship) (within two)
    Tension within dyadic lead to coopetitive tension to emerge and evolve as each party continues to pursue its interests
  3. multilateral (across relationships spanning multiple dyads or multiple ecosystem ideas).
    A firm must manage relationships across a set of interdependent stakeholders, changes to one relationship may affect another
47
Q

Intertemporal coopetition =

A

Intertemporal coopetition = a situation in which a newcomer’s innovation can offer ecosystem members benefits that might materialize only in the future, whereas disruptive effects are felt immediately.

Incumbents are uncertain over how disruptors innovation will redistribute revenues and profits across ecosystem members

48
Q

Overshooting the market =

A

Overshooting the market
= the innovators performance improvement exceeds the rate of improvement that customer can absorb

49
Q

Extendable Core =

A

Extendable Core =
a business model or underlying technology that enables new entrant to move up market and pursue more demanding customers without adding commensurate cost or without losing performance advantage (Airbnb

50
Q

Adner and Kapoor:

Modes of firm-level actions that shape pattern of substitution:

A

1) ‘Last Gasp’ Efforts:
Some firms slow the pace of substitution through ‘last gasp’ efforts to extend the value they can capture from the old technology.

2) Spillovers
Other substitutions are slowed because R&D efforts in the new technology created a “spillback” effect and helped firms to also improve the performance of the old technology.

3) “Last Resort” effort
Extendi the old technology when met with significant emergence challenges in the new technology.

51
Q

Coopetition =

A

Coopetition = The simultaneous pursuit of cooperation and competition with the intent to create joint value.
* viable strategy to help firms to respond collectively to technological change, and compete against disruptive innovation.

  • The voluntary exchange of diverse and complementary resources improves firms’ innovativeness,
  • Enables firms (or coopetitors) to pursue difficult yet highly rewarding opportunities that cannot be attained individually.
  • Cooperation drives value creation: it enables firms to overcome knowledge and resource asymmetries and instils a commitment to joint action that stimulates resource sharing and complementarity.
  • This simultaneous pursuit of contradictory goals –> creates coopetitive tensions
52
Q

Multilateral Coopetition =

A

Multilateral coopetition = coopetition between multiple horizontal and vertical competitors involves a greater number and variety of actors, which introduces, greater complexity to manage the coopetition entity.

Likely that coopetitors differ in their contributions, competencies, needs and roles –> may lead to disagreements

53
Q

Multilateral coopetition

two tensions:

A
  1. generalist–specialist contribution tension: where coopetitors contribute different sets of resources:
    * Specialists contribute a few resources in a concentrated effort often at one point in time
    * Generalists contribute a range of resources and capabilities through efforts dispersed over time.
  2. value creation-capture tension
    Coopetitors need to balance their need for joint value creation and individual value capture through a mix of cooperation- and competition-inducing mechanisms, as well as respond to redirecting external events
54
Q

Multilateral coopetition for response to disruptive innovation =

Difficuct and risky as it:

A

Difficuct and risky as it:
- Implies permanent changes to incumbents’ value networks and business models,
- High uncertainty of the development and outcomes of the disruptive innovation
- Presents a much greater risk of freeriding than dyadic coopetition.

55
Q

Industry Life Cycle

A
  1. Development - High differentiation, innovation is key
  2. Growth - High growth, low entry barriers, scaling is key
  3. Shake out - Growth slows down, some exits, managerial and financial strength key
  4. Maturity - Low growth, standard products, entry barriers, market share + cost key
  5. Decline - Many exits, consolidation, price competition, cost is key
56
Q

Why do Dominant Designs Emerge?

A

1 Package of features that find favor of markets
2 Dominant producer with much power behind
3 Powerful customer/user may mandate standard
4 Industry committee may establish durable standard
5 Group of firms forms an alliance (ex. Philips and Sony for CD)
6 Government regulations

57
Q

TECHNOLOGY LIFE CYCLE

A

Technological Discontinuity
* Breakthrough innovation
* Revolutionary technology
* Radical performance improvement

Era of ferment
* Variation
* Technical uncertainty
* Ambiguous user preferences

Dominant design
* Industry standard emerges
* Well established preferences
* Economies scale and scope

Era of Incremental Change
* Retention
* Elaboration of dominant design
* Continuous, incremental innovation
* Evolutionary technology

58
Q

The S-curve

A
  • The performance improvement in a given technology is first relatively low during the early development stages.
  • As the technology is better understood, the rate of progress increases until the stage of maturity, at which point the technology approach its limits and the performance impact of additional effort is subject to decreasing returns.
59
Q

Adner & Kapoor

Name two distinct effects on the realized performance of a technology:

A

Not the performance of the focal technology on its own but rather a function of its interaction with the other elements of the system

  1. Emergence challenge:
    Realized performance of a technology can be hindered by technical bottlenecks within the system. “a given invention, however promising, often cannot fulfill anything like its potential unless other inventions are made relaxing or by-passing constraints which would otherwise hamper its diffusion and expansion.”
  2. Extension opportunity:
    Underlying a technology’s advance are not only producers of the focal technology, but also component and complement providers from a range of interdependent industries.

For the old technology: improvements elsewhere in the system may enhance the realized performance for the old technology system – the ecosystem extension opportunity.

60
Q

ecosystem emergence challenge =

A

ecosystem emergence challenge =

Realized performance of a technology can be hindered by technical bottlenecks within the system. “a given invention, however promising, often cannot fulfill anything like its potential unless other inventions are made relaxing or by-passing constraints which would otherwise hamper its diffusion and expansion.”

61
Q

ecosystem extension opportunity =

A

ecosystem extension opportunity =

Underlying a technology’s advance are not only producers of the focal technology, but also component and complement providers from a range of interdependent industries.

For the old technology: improvements elsewhere in the system may enhance the realized performance for the old technology system – the ecosystem extension opportunity.

MDI Oktober Exam (4 decks)

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