Exam L5-L7

Question 1

Role of portfolios:

Answer 1

EVALUATE current innovation activities
Guide resource allocation DECISIONS
Identify areas for IMPROVEMENTS

Question 2

Goal-oriented control through prediction =

Answer 2

Goal-oriented control through prediction
= “To the extent we can predict the future, we can control it”

Question 3

Means-based control =

Answer 3

Means-based control
= “To the extent we can control the future, we do not need to predict it”

Question 4

SCALING FOR DIGITAL VENTURES

When is there a need for scaling?

Answer 4

When is there a need for scaling?

• Low Margins
• Network effects

Question 5

SCALING FOR DIGITAL VENTURES

To enable Scaling:

Answer 5

To Enable Scaling:
- Building upon digital infrastructure
- limited human involvement and material use

Question 6

Versatile resources =

Answer 6

Versatile resource: (In contrast to RB-view)
* The more versatile the venture’s resources are …
* …the lower adjustment cost firms face, as versatile resources invite for reuse, recombination, and removal of barriers of learning

= assets that can be changed for different purposes, they increase a firm’s combinative possibilities and thus expand its productive opportunity set.

Question 7

Versatility of the digital core of digital ventures

.. can be traced to two aspects of digital technology.

Two aspects of digital technology that allow for Low adjustment cost

Answer 7

Versatility of the digital core of digital ventures
Two aspects of digital technology that allow for Low adjustment cost

1. Design Flexibility
   The stored program concept: programmability offers significant design flexibility as the product can be repurposed with as little as a new set of instructions
2. Design Scalability:
   Digital content such as data and instructions are reproducible at zero marginal cost (scope for scaling)

Question 8

Digital Ventures =

Answer 8

Digital Ventures = enterprises with a digital artefact at the core of their market offering.

Digital core = digital artefact.
- It can be a platform, algorithms, voice recognition technology, or any other pieces of technology.
- For instance, Uber: driver-rider matching algorithm

Question 9

Resource-based view:

Answer 9

Resource-based view: Isolate the competitive advantage of resources at the expense of flexibility required for future resources reconfiguration

Question 10

The Extension Process
Based on two main entrepreneurial processes:

Answer 10

The Extension Process
Based on two main entrepreneurial processes:

1. Productive Opportunity Creation
   = the development of business opportunities in unserved market segments through entrepreneurial imagination
2. Opportunity Actualization
   = to the realization of productive opportunities through managerial action.

Question 11

Productive Opportunity Creation + Opportunity Actualization

Possible implications:

Answer 11

Productive Opportunity Creation + Opportunity Actualization

Possible Implications:
1. Digital ventures can create a multitude of entrepreneurial opportunity with a low adjustment cost at a short time (related to design flexibility of core).
* Digital core can develop one line of business, while developing another.

2. Digital core promises to facilitate opportunity actualization, as it allows effective re-use of prior versions in the new market.
   * The combination of effortless re-production and design flexibility promises quicker and speediar actualization of productive opportunities

Question 12

The Process of Concepting =

Answer 12

Concepting = the deployment of the digital core in designing and experimenting business concepts for a new venture

Question 13

Process of Porting

Answer 13

Porting = the specialization of a venture’s digital templates to actualize productive opportunities with minimal adjustment cost.

Question 14

Process of Generalizing

Answer 14

Generalizing = the creation of general solutions for specific sub-problems that can be reused and adapted in the development of derivative digital products.

Question 15

Crowdsourcing for Innovation:

Problems:

Answer 15

Crowdsourcing for Innovation:

Problems:
1. Too many ‘good’ ideas?
* Attention is limited. Organizations can only pay attention to a subset of suggestions
* Organizations with inadequate techniques for handling suggestions may: Miss out on key ideas

2. NOT paying attention to more distant (further) solutions
3. Ideas may not fit organizational goal

Question 16

When are crowds collectively smart?

Answer 16

When are crowds collectively smart?

When 3 criteria are met:

1) diversity of opinion,
2) independence
3) decentralization

Question 17

User’s’ Motivation to Innovate

Answer 17

1. Often solving their own problems
2. Strong intrinsic motivation
3. Sensitive to ‘sense of community’

Question 18

KEY ELEMENTS OF COMMUNITY DESIGN

Answer 18

1. Shared interest:
   Resource commons or common goals.
2. Collaborative values:
   Willingness to share knowledge, contribute to the success of fellow community members, and seek fairness in community contributions and the distribution of rewards
3. Community-oriented leadership:
   A focus on facilitating community growth and sustainability, member collaboration, and promotion of collaborative values and practices
4. Expandable commons:
   Knowledge and other resource pools that all members can contribute to and draw from
5. Protocols and infrastructure that support member collaboration:
   Systems, processes, and norms that support both direct and pooled collaborative relationships among members

Question 19

Crowdsourcing for Innovation

What manufacturers can do:

Answer 19

What manufacturers can do:
* Produce user-developed innovations for general sale
* Offer user innovation kits/ product design tools / platforms
* Sell complementary products or services

Question 20

Why difficult to protect Intellectual Property for crowdsourcing?

Answer 20

• Patenting typically not applicable
• Copyright also problematic
  o Who has contributed what?
  o Even if that is clear, how to enforce?
• Often spanning geographical and jurisdictional boundaries

Question 21

Law based Intellectual Property =

Answer 21

punishment= civil law penalty

1. Patents = no one else may use invention without license of owner)
2. Copyright = applies to writing and images, e.g., proprietary software vs. copyleft software that aims to preserve the openness of the software
3. Right to protect trade secrets (e.g. employees legally bound by contract not to reveal firm’s trade secrets)

Question 22

Norm-based Intellectual Property =

Answer 22

Norm-based Intellectual Property = operate entirely on basis of implicit social norms that are held in common by community members - e.g. protection of recipe
* Punishment: loss of status, shaming, denial of community benefits

Question 23

Communities are useful when:

Answer 23

Innovation problem involved cumulative knowledge, continuously building on past advances.

Question 24

Closed Innovation

Characteristics:

Answer 24

The smart people in the field work for us

To profit from R&D we must discover it, develop it, and ship it ourselves

If we discover it ourselves, we will get it to the market first

the company that gets an innovation to the market first will win

If we create the most and the best ideas in the industry we will win

We should control our IP, so that our competitors don’t profit from our ideas

Question 25

Open Innovation

Characteristics:

Answer 25

Not all the smart people in the field work for us. We need to work with smart people inside and ourside the company

External R&D can create significant value: internal R&D is needed to claim some portion of that externally created value

We don’t have to originate the research to profit from it

Building a better business model is better than getting to the market first

If we make the best use of internal and external ideas we will win

We should profit from other’s use of our IP, and we should also buy others’ IP whenever it advances our business model

Question 26

Collaborate communities =

Answer 26

Collaborate communities = open-source software efforts that are governed loosely by social norms, and soft rules to encourage open access to information, transparency, joint development, and sharing of intellectual property. Members are often willing to work for free.

Question 27

Business model of the platform:

Types of Platform

Answer 27

Integrator platform (AppStore)
1. Platform is wedged between external innovators and customers.
2. Company has a high level of control.

Product platform (Cloud computing)
1. External innovators build on top of foundation technology and then sell the resulting products to customers
2. External innovators directly transact with end-users. External innovator thus has more control. (over prices for instance)
3. Companies have less control

Two-sided (Ebay, videogames console)
1. External innovators and customers are free to transact directly with one another as long as they also affiliate with the platform owner
2. Platform facilitates the transaction, and interactors,
3. Platform owner can impose some degree of control by issuing various rules and regulations as a conditions.

Question 28

Dahlander (2021) - How Open is Innovation?

Important changes in the past decades:

Answer 28

1. Technological Development Trends

1 Technologies that generate and handle troves of data
2 Technologies that mediate interactions
3 Technologies that automate decision making
4 Technologies that expand search
–> New questions:
- Data management issues
- Ethical and legal dilemmas grounded in data ownership
- Data strategy questions

2. Organisational Development Trends
3. Platforms as creators and mediators
4. Practices to reveal internal Ideas
5. Legal devices that expand and narrow search
6. The drive for corporatization of commons
7. Accelerators to obtain ideas from the outside
8. Realizing the potential in the fringes
9. Societal Developments
10. Adjusting to global developments
11. Relying on open innovation in times of crisis
12. The need to address wicked problems
13. Big science and citizen science

Question 29

Diffusion =

Answer 29

Diffusion =
Process by which an innovation is communicated through certain channels over time among the members of a social system.

Question 30

Innovation adoption

Implications:

Answer 30

• People gain something by adopting an innovation, but they will also need to give up/ loose something
• What they give up has a bigger weight then what they gain
• Innovations need to deliver high gains in order to be adopted

Question 31

Endowment Effect =

Answer 31

Endowment Effect = people ask for 2-4 times more for giving up what they have than for obtaining these items

–> This means for innovation, people have to gain something from adopting, as they also loose something

Question 32

Innovation

Characteristics:

Answer 32

1. Relative Advantage = Degree to which the innovation is perceived to be superior to current practice
2. Complexity = degree to which the innovation is difficult to use or understand
3. Trialability = degree to which the innovation can be experienced on a limited basis
4. Observability = degree to which the results of an innovation are visable to potential adopters
5. Compatibility = perceived consistency with socio-cultural values, previous ideas, and; or perceived needs
6. Perceived risk = the degree to which the innovation is expected to perform inadequately or involves e.g., physical risk

Question 33

Data Driven Operation

Answer 33

Identification of new opportunities from analyzing significant values of data
* User Profiling:
Build on user interactions with a digital innovation

• Fine-grained monitoring:
  Can be used to continously monitor user behavior
• Decision Hedging
  Source to learn about new opportunities and inform features that foster adoption

Question 34

Swift Transformation =

Answer 34

Swift Transformation = Deploying core technology for a new purpose

• Leverage the versatility of digital resources
• Firms can quickly enter new industries, or redefine who they are and what they do
• Example: Glitch (gaming) into Slack (enterprise collaboration tool)

Question 35

Envelopment =

Answer 35

Envelopment
= Process through which platform owners enter a new market by coupling their own functionality with the target’s

• Leverages overlap in users and capitalizes on network effects
• Incumbents thereby can no longer access users as their first point of contact will be the platform owner
• A new path for entering a new market that differs from schumpeterian innovation
• Example: MS Teams vs Slack

Question 36

The Adoption Life Cycle

Categories

Answer 36

1) Innovators

2) Early Adopters

3) Early Majority

4) Late Majority

5) Laggards

Question 37

The Innovation Mechanism =

Answer 37

The Innovation Mechanism =
A self-reinforcing process by which new products and services are created as infrastructure malleablity spawns recombination of resources

Digital Infrastructure
->
Technical malleability
->
Recombination
->
New Services
->
Digital Infrastructure

Question 38

The Adoption Mechanism =

Answer 38

The Adoption Mechanism =
A self-reinforcing process by which more users adopt the infrastructure as more resources invested increase the usefulness of the infrastructure

Digital Infrastructure
->
More services offered
->
More users adopt
->
More resources invested
->
Digital Infrastructure

Question 39

The Scaling Mechanism =

Answer 39

The Scaling Mechanism =
A self-reinforcing process by which an infrastructure expands its reach as it attracts new partners by offering incentives for collaboration

Digital Infrastructure
->
Partners attracted
->
Partner solutions added
->
Reach expanded
->
Digital Infrastructure

Question 40

SCALING

3 Mechanisms:

Answer 40

1. Data-Driven Operations.
   * 1) user profiling
   * 2) decision hedging
   * 3) fine-grained monitoring of the user base data
2. Instant Release
   * 1) Launching
   * 2) Concurrent Trialing
   * 3) Reactive Modification
3. Swift Transformation
   * 1) Contextualizing Core Digital Technology
   * 2) Projecting novel value-in-use
   * 3) (re)defining identity

Question 41

Data-Driven Operations (1. Scaling) =

Answer 41

Data-Driven Operations. = Identification of new opportunities from analyzing significant values of data

• User Profiling:
  Utilization of user data to identify and explore uncharted areas such as new user segments.
• Fine-grained monitoring:
  Includes growth/decline rates, usage patterns, new applications, cash flow, and systems performance
• Decision Hedging
  Source to learn about new opportunities and inform features that foster adoption

Question 42

Instant Release (2. Scaling) =

Answer 42

Instant Release = the ability by which digital ventures minimizes the time gap between service idea and deployment by concurrently running user-responsive service trialing and modification

• 1) Launching:
  Depicts the activities that digital ventures undertake to consolidate and channel internal resources and prioritize data-driven operations toward fueling the launch of innovations.
• 2) Concurrent Trialing:
  Involves activities of testing different services and service versions in parallel to enable multidimensional user feedback.
• 3) Reactive Modification:
  Involves the immediate changes undertaken by a digital venture to an established service in view of users’ reactions and feedback.

Question 43

Swift Transformation (3. Scaling) =

Answer 43

Swift Transformation = Deploying core technology for a new purpose

• Leverage the versatility of digital resources
• Firms can quickly enter new industries, or redefine who they are and what they do

–> occurs less frequently then other two
Triggered only when a distinct effort to generate a new wave of rapid scaling of the user base is initiated by the digital venture.

3. Swift Transformation
   * 1) Contextualizing Core Digital Technology
   * 2) Projecting novel value-in-use
   * 3) (re)defining identity