HC3-digital innovation (2)

Question 1

digital innovation happens at 4 levels:

Answer 1

1. basic fuctions: information storage and retrieval, control
2. Integrated processing of level 1 unctions: information processing, control loops
3. Integration of level 2 processing into systems: integrated information and control systems
4. Complex integrated systems and the ability to self-optimize and learn: platforms and integrated networks

Question 2

power of digital:

Answer 2

1. common language, so interoperability is possible
2. Digital technologies allow for easy updates to the core programs because they require only software revision
   3.Moore’s Law: the power of electronic devices increases exponentially whilst their cost falls
   which enables a continuing stream of innovation delivering expanding functionality without high cost
3. Modularization of software and the development of programming languages means that increasingly complex arrangements become possible

Question 3

techno-economic paradigm

Answer 3

Digital innovation has disruptive potential: the process towards radical impact is slow but when it
converges there can be significant waves of change flowing from it. The role of technology as a driver
of economic growth has to be matched by a complementary change in social structures and expectations.

Before mobile phones can be used, a whole network must be set up.

Question 4

productivity paradox

Answer 4

extensive invetment in new technologies does not always seems to contribute to expected rises in productivity

Question 5

rationalist strategy

Answer 5

Consists of the following steps:
- Describe, understand and analyse the environment
- Determine a course of action in light of the analysis
- Carry out the decided course of action

The equivalent of these steps is SWOT: the analysis of corporate strengths and weaknesses in relation to external opportunities and threats. The rationalist approach assumes that there is perfect knowledge of the organization and environment.

Question 6

incementalist strategy

Answer 6

Consists of the following steps:
- Make deliberate steps (or changes) towards the stated objective
- Measure and evaluate the effects of the steps (changes)
- Adjust (if necessary) the objective and decide on the next step (change)

The incrementalist approach assumes that there is imperfect knowledge of the organization and
environment. Continuous scanning of the environment is therefore necessary to be able to adapt strategies in light of new information and understanding

Question 7

innovation leadership

Answer 7

firms aim at being first to marker based on technological leaderhip.

Question 8

innovation followership

Answer 8

firms aim at being late to market based on imitating from the experiences of technological leaders

Question 9

7 advantages of being first to market

Answer 9

1. reputation as a pioneer
2. capture market share
3. early learning curve benefits
4. definition of standards
5. Establish entry barriers (patents)
6. dominate supply and distribution chains
7. earn monopoly profits

Question 10

7 disadvantages of being first to market

Answer 10

1. pioneering costs
2. Educating buyers
3. regulatory approval
4. demand uncertainty
5. chaning buyer needs
6. low-cost imitation
7. followers leapfrog technology

Question 11

the dynamic capabilities of firms

Answer 11

-shifting character of environment
-Key role of strategic maangement

Question 12

appropriating the benefits from innovation (2)

Answer 12

1. capacity to translate technological advantage into commercially viable products or processes.
2. Firms capacity to defend their advantage against imitatiors

Question 13

exploiting technological trajectories (5)

Answer 13

Differences among industrial sectors in the sources and directions of technological change:
1. Size of innovating firms
2. Basis of competition
3. Objectives of innovation
4. Sources of innovation
5. Locus of own innovation

This diversity creates two dangers:
1. Generalizing the nature, source, direction and strategic implications of innovation on the basis of experience in one firm or sector.
2. Stating that all firms and sectors are different and that no generalizations can be made

Question 14

core competencies approach (Hamel and Prahalad)

Answer 14

• The sustainable competitive advantage of firms resides not only in products but in their core
  competencies
• Core competencies feed into more than one core product, which in turn feed into more than
  one business unit
• The importance of associated organizational competencies is recognized
• Core competencies require focus
• Core competencies suggest that large and multidivisional firms should be viewed not only as
  a collection of SBUs but also as bundles of competencies that do not necessarily fit tidily in
  one business unit

core competencies should be:

• Value for the firm
• Rare
• Non-imitable
• Non-substitutable

Question 15

3 limitations core competencies approach

Answer 15

1. Not clear whether core competencies offer a basis for product diversification in every industry
2. Recommendations that firms should concentrate resources on a few fundamental technological competencies are misleading
3. Core competencies can also become core rigidities if established competencies have become too dominant

Question 16

enabling strategy making

Answer 16

Strategy making in firms is enabled through frameworks which help provide an answer to the
following key questions:

• Strategic analysis: what, realistically, could we do?
• Strategic choice: what are we going to do (and in choosing to commit our resources to that, what will we leave out)?
• Strategic monitoring: overtime reviewing to check if this is still what we want to do

Question 17

Does having a rational innovation strategy matter?

Answer 17

• General answer: yes, if market is stable, and still depending on implementation
• If environmental turbulence is sufficiently low, a rational innovation strategy can be planned
• But then it still depends on:
• The types of innovation strategy (e.g. timing to market), and
• Its implementation whether it is effective in terms of new product success and/or firm performance
• If environmental turbulence is too high, still strategic decisions concerning the dimensions of innovation strategy need to be made, reflecting an incremental (emergent) strategy

Question 18

Identifying core competences through Resource-led strategy making

Answer 18

• Resource-led strategy making aims at identifying core competences (that are valuable, non-imitable, rare, non-substitutable)
• Cultural perspective / resource-based theory of the firm
• Assumptions:
• Action determinism (but not strict)
• Resources are heterogeneous and immobile

Question 19

identifying core competences through environment-led strategy-making

Answer 19

• Environment-led strategy making aims at finding privileged market positions such as differentiation/low cost or first/second to market
• Positioning perspective / structure-conduct-performance paradigm
• Assumptions:
• Environmental determinism (but not strict)
• Resources are homogeneous and mobile