Key terminology weeks 1-5

Question 1

Technology

Answer 1

Refers to the use of tools, systems, and knowledge to enhance operational processes, productivity, and competitiveness.
- encompasses not only physical tools and machinery but also the know-how and organizational methods that contribute to the efficient allocation of resources and the creation of value.

Question 2

Creativity

Answer 2

The ability to generate new and useful ideas.

Question 3

Invention

Answer 3

The creation of a new product, process, system, or concept that has not existed before. It is the act of conceiving and developing something entirely new or original

Question 4

Innovation

Answer 4

The act of introducing a new device, method, or material for application to commercial or practical objectives.

Question 5

Solow Residual (or “total factor productivity (TFP)”

Answer 5

measures how much technological innovation affects producitivity growth.

It reflects the part of economic output that cannot be explained by increases in labor and capital alone.

e.g. If A increases = means economy is experiencing positive technological advancements/ efficiency gains - allowing it to produce more outouts with the same amount of inputs (such as labour and capital)

Question 6

Externality (or “external effect”)

Answer 6

Costs (or benefits) that are borne (or reaped) by individuals other than those responsible for creating them. Thus, if a business emits pollutants in a community, it imposes a negative externality on the community members; if a business builds a park in a community, it creates a positive externality for community members.

Question 7

The innovation funnel

Answer 7

A structured process that organizations use to transform initial ideas intosuccessful innovations, involving stages such as** idea generation, evaluation, development, testing, and implementation. **

The concept of the innovation funnel illustrates that numerous potential newproduct ideas enter at the wide end of the funnel, but only a select few successfully navigate the
rigorous development process to become market-ready innovations

Question 8

“ Displacement” and “Reinstatement” effects

Answer 8

• The** “displacement effect”** is the phenomenon where the adoption of new technologies or automation leads to the replacement of workers from their jobs.
• This displacement occurs when the technology in question performs tasks that were previously done
  by humans, which has a negative effect on employment.
• The **“reinstatement effect” ** is the opposite of
  the “displacement effect”. It refers to the fact that automation can create new tasks where humans have an advantage over capital, which has a positive effect on employment.

Question 9

Productivity Effect

Answer 9

The phenomenon where technological adoption changes productivity level, which has an effect on employment and the demand for workers

E.G: Automation in manufacturing - Adoption: manufacturing company may introduce robots into the production line to streamline the process. –> prod. effect: higher effieciency; produces more goods in less time –> employment impact: demand for certain manual labour roles might decrease, and displacing workers

Question 10

Competitive advantage

Answer 10

A firm’s ability to outperform its rivals OR a firm’s superiority in creating value for its stakeholders.

Question 11

internal- comp adv

Resource-based view

Answer 11

• basically, it is the internal strengths of a company (and resources it possesses) that is has to gain a compeitive advanatge.

in short, the Resource-Based View theory says: “Hey, having special stuff inside your company, things that others can’t easily copy, is a big deal for staying successful in the long run.”

Question 12

Resources and capabilities/competencies

Answer 12

Resources are the productive assets owned by the firm;

capabilities are what the firm can do.

On their own, individual resources do not confer competitive advantage; they must work together to create organizational capability.

Organizational capability, when applied through an appropriate strategy, creates competitive advantage

Question 13

Core competencies

Answer 13

The unique and distinctive set of capabilities, knowledge, and resources that a company possesses and leverages to excel in its specific market, providing a competitive advantage and contributing significantly to its overall success and value creation.

Question 14

Dynamic capabilities

Answer 14

a set of abilities that enable a firm to quickly reconfigure its organizational structure and routines in response to new opportunities, rather than focusing on specific tech/products.

• useful for a firm to have a set of core competencies in response change, esp in fast-changing industries

Question 15

Routine

Answer 15

Patterns of coordinated activity through which an organization is able to perform tasks regularly and predictably.

Question 16

Innovation trajectory

Answer 16

• the path a firm follows in introducing and evolving new technologies over time
• E.g. company might start with creating smartphones –> introduce new models with better camera or battery life –> go into smartwatches

Question 17

Tacit

Answer 17

A capability or knowledge is said to be tacit when it is difficult to formalize, express, or transfer through written or verbal means, as it is deeply rooted in an ** individual’s personal experiences, insights, intuition, and skills, often acquired through practical, hands-on experience.**

Question 18

Socially Complex

Answer 18

These types of competencies/ capabilities involve a blend of not just technical or individual expertise, but also the ability of an organization to effectively manage and leverage its social and interpersonal dynamics, such as collaboration, teamwork, leadership, and communication,
to achieve its strategic objectives.

It’s about how well a group of people, like a team or a whole company, can work together. These skills involve things like collaborating with others, being a good team player, leading effectively, and communicating well. So, when we say something is socially complex, we mean it requires not just individual talents but also the ability of the whole group to work together smoothly to reach its goals.

Question 19

Causally ambiguous

Answer 19

The difficulty of diagnosing the sources of a firm’s competitive advantage. It means that potential rivals face the problem of uncertain imitability.

• unclear how the resource gives rise to value
• E.G: XYZ Innovations, a successful tech company, attributes its success to a unique organizational culture that fosters creativity and risk-taking. However, the cause-and-effect relationship between specific cultural aspects and innovation success is not easily identified.- The organizational culture is considered causally ambiguous because the direct connection between specific cultural elements and the company’s success is not straightforward, making it challenging for competitors to imitate and achieve the same level of success.

Question 20

Creative Destruction

Answer 20

A concept introduced by economist Joseph Schumpeter, which refers to the process by which old technologies and the firms that do not adapt are swept away by the new, because they cannot compete in the market. In his view, the failure of unprofitable firms is creative because it releases labour and capital goods for use in new combinations.

• Creative destruction involves the simultaneous creation and destruction of economic value, as new ideas and businesses displace older ones, leading to progress and economic growth.

Question 21

Radical Innovation

Answer 21

Products/services or processes that are extremely different from exisiting ones

Question 22

Incremental Innovation

Answer 22

Improvements to existing products and processes that bring about marginal improvements in functionality or performance.

E.g: Apple
- 2015: iPhone 6 –> 6S = introduced 3D touch and improved camera
- 2018: iphone X –> XS = faster processor (A12 Bionic) and durable glass design
- 2020: 5G capability

Question 23

obsolete

Competence-Destroying Innovation

Answer 23

Radical innovations that render obsolete the technical expertise
required in a product class

• renders exisiting knowledge/ skills/ capabiltiies obsolete
• It often comes down to the ability of a company to identify opportunities, pivot their strategies, and acquire or develop the necessary skills in response to the changing technological landscape.

e.g.: digital photography from film photography

Question 24

Competence-Enhancing Innovation

Answer 24

Innovations that build on exisiting knowledge

• E.g. each gen of ipone builds on the knowledge/ capabilties of the previous one

Question 25

new

Disruptive Innovation

Answer 25

Innovations which undermine incumbents by requiring changes in business models and markets and thus in the **organizational processes **that transform technical competencies into products.

create an entirely new market through the introduction of a new kind of product/service, one that’s actually worse, initially, as judged by the performance metrics that mainstream customers value.
Early personal computers were a disruptive innovation relative to mainframes and minicomputers. PCs were not powerful enough to run the computing applications that existed at the time they were introduced. These innovations were disruptive in that they didn’t address the next-generation needs of leading customers in existing markets.

Question 26

reinforcing

Sustaining Innovation

Answer 26

Innovations which reinforce incumbents’ positions by building on the same core competencies.

innovations that make a product/service performs better in ways that customers in the mainstream market already value.

Question 27

companies + unis + govts

Triple Helix

Answer 27

A collaborative framework involving government, academia, and industry working together to foster innovation and economic development.

Question 28

Lead users

Answer 28

Individuals or entities within a target market who, due to their unique needs, experiences, or early recognition of emerging trends, are at the forefront of innovation and are likely to adopt and adapt new products or technologies ahead of the broader market.

Question 29

sourcesof innovation

Pavitt’s Taxonomy

Answer 29

A categorization of industries according to their main sources of innovation.

• This taxonomy categorizes industries based on:
• the nature of innovation
• the source of technological knowledge
• the level of collaboration among firms.

Question 30

What are the 5 categories mentioned in Pavitt’s Taxonomy?

Answer 30

1)** Supplier dominated **- suppliers of key components (in the industry) drive innovation. E.G: automobile industry relies on suppliers of engines, tyres etc.

2) **Scale Intensive **- inno led by econs of scale; cost reduction; efficiency improvements. E.G. Automotive indsutry - mass production techniques.

3)** Science Based **- R&D, basic research; apply scientific knowledge to practical problems. E.G. Pharma industry and biotech based on advances in chemical sciences.

4) Information Intensive - innovation is driven by the creation, processing, and application of information and knowledge. Industries that heabily rely on IT, software, data analytics. May involve collb with ‘science-based’ or ‘specialised supplier’ industries.

5) Specialised Suppliers - innovation influenced by specialised suppliers, though they may not dominate the industry. Innos are designed for specific components or subsystems. E.G. Aircraft - contribute to avionics or engines.

Question 31

Open innovation

Answer 31

an innovation strategy that involves the active collaboration or engaging with external partners (e.g., customers, suppliers, research institutions, startups, etc.) to share and leverage knowledge, resources, and capabilities. It contrasts with traditional closed approaches to innovation.

E.G:Procter & Gamble’s “Connect + Develop” program: faced w challenge to develop innovation in product development => collabed w individuals, small companies, research insitutions => P&G collaborated with Clariant, a specialty chemicals company, to develop a technology used in Tide Pods.
–> it’s a strategic appraoch for companies

Question 32

Strategic Alliance

Answer 32

A formal or informal agreement between two or more organizations (or other entities) to cooperate in some way.

Temporary relationships that can take many forms, formalised in contract or informal agreement; can range from highly structured (e.g. joint venture) to informal.

Question 33

Joint Ventures

Answer 33

• A particular type of strategic alliance that entails significant equity investment and often establishes a new separate legal entity.
• Usually designed to enable partners to share the costs and risks of a project
• Have great potential for pooling or transferring capabilities between firms

Question 34

Licensing

Answer 34

A contractual arrangement that gives an organization (or individual) the rights to use another’s intellectual property, typically in exchange for royalties.

• A fast way of accessing or leveraging a technology
• BUT offers little opportunity for the development of new capabilities

Question 35

Outsourcing

Answer 35

When an organization (or individual) procures services or products from another rather than producing them in-house.

• Enables a firm to rapidly access another firm’s expertise, scale or other advantages to perform all the value-chain activities for the new innovation effectively.
• contract manufacturing => economies of scale, faster response time; reducing costs and increasing organisational responsiveness to the environment

BUT, over reliance on outsourcing can make firm hollow
Also can have significant transaction costs for a firm

Question 36

Collective Research Organisations

Answer 36

Organizations formed to facilitate collaboration among a group of firms.

• forms: trade associations, university-based centres, private research corporations
• many are formed through govt or industry association initiatives

Question 37

Absorptive Capacity

Answer 37

The ability of an organization to recognise, assimilate and utilise new knowledge.