Lecture 2 Innovation Management, and the Value Proposition Flashcards
What are the two main categorizations of innovations based on their effect?
Technological Capabilities and Market Linkages
What type of innovation creates new linkages between markets and technologies?
Architectural Innovation
What is an example of Architectural Innovation?
The transition from typewriters to personal computers
What type of innovation enhances existing technology for a specific market?
Niche Innovation
What is an example of Niche Innovation?
High-performance gaming PCs
What type of innovation disrupts existing technological capabilities while targeting existing markets?
Revolutionary Innovation
What is an example of Revolutionary Innovation?
The electric vehicle (EV) by Tesla
What type of innovation reinforces existing technologies and markets without major disruption?
Regular Innovation
What is an example of Regular Innovation?
Incremental improvements in automotive fuel efficiency
Define the term ‘Invention’.
The creation of a ‘thing’ or ‘ability’ for the first time
What is the innovation process characterized by?
Idea turning into some invention, putting the idea in value, identifying buyers
What does the exploration phase of innovation involve?
Searching for and creating new ideas, technologies, or solutions
What is the innovation funnel?
The process from ideation to practice, narrowing down many ideas to few innovations
What is the focus of the exploitation phase in innovation?
Refining, producing, and scaling an innovation for commercial use
Define ‘Diffusion’ in the context of innovation.
The spread and adoption of the innovation within and across markets
What is Closed Innovation?
Innovation developed entirely in-house, relying on internal teams and resources
What is Open Innovation?
Ideas generated outside the organization, involving cooperation with others
What are the 10 Types of Innovation?
- Business Model Innovation 2. Networks and Alliances 3. Enabling Process 4. Core Processes 5. Product Performance 6. Product System 7. Service Innovation 8. Channel Innovation 9. Brand Innovation 10. Customer Experience
What is Product Innovation?
Improving or creating new products
What does Position Innovation involve?
Changing how a product is perceived or marketed
What is Paradigm Innovation?
Changing the fundamental business model or industry approach
Define Incremental Innovation.
Small, gradual improvements to existing products, services, or processes
What is Disruptive Innovation?
Innovations that create new markets or disrupt existing ones
What is the significance of a Business Model?
It explains how an organization creates value and makes profit
What are the four levels at which innovation must match an organization’s strategy?
- Societal Level 2. Industry Level 3. Market Level 4. Firm Level
What is a value proposition?
The core reason why customers choose one product or service over others
What are the key elements of a value proposition?
- Customer Need
- Unique Benefits
- Target Audience
What does the customer need refer to in a value proposition?
What problem or need does the product/service solve for the customer?
Who are the target audience in a value proposition?
The ideal customers for this product or service.
What is the significance of a value proposition in business strategy?
It is the promise of value a business delivers to its customers.
What is a revenue model?
How the innovation actually will make money.
List some examples of revenue models.
- Direct Sales
- Usage Fee
- Subscription Fees
- Leasing
- Licensing
- Virtual Goods
- Freemium
- The Middleman
- On-Demand
- The Marketplace
What is a direct sales revenue model?
Selling products directly online or offline, either self or through a partner.
How does the usage fee revenue model work?
Revenue is generated each time a product is used or purchased repeatedly.
What is a subscription fee revenue model?
A steady revenue stream where customers pay regularly for access to a service.
What does leasing involve in terms of revenue model?
Paying a fee based on usage, similar to a subscription.
How does licensing as a revenue model operate?
A company pays for the right to use a product or brand.
What is a freemium revenue model?
A product is offered for free, but users must pay for additional features.
Define the middleman revenue model.
Generating revenue by facilitating transactions between different customer groups.
What are non-customer revenue models?
Revenue generated from advertising and selling user data.
What types of data can be monetized in advertising revenue models?
- Location-based data
- User data
- Search/Browsing data
- Ride/Travel data
What is an example of an investment-based revenue model?
Investment funds such as hedge funds or banks.
Business model innovation
This type focuses on how a company makes money. Examples include Dell, which revolutionized PC sales by collecting money before assembling and shipping, and Apple with innovations like the App Store and charging for accessories.
Networks and alliances
This refers to forming partnerships with other companies for mutual(wederzijdig) benefit. Sara Lee did this by focusing on its strengths (brand and marketing) while forming alliances for manufacturing. Apple also benefited from this with its App Store partnerships.
Enabling process
This involves supporting core company processes and workers. Starbucks innovates in this area by offering competitive compensation to employees, which supports its customer experience.
Core processess
This type focuses on internal processes that add value/How you create and add value to your offerings. Wal-Mart is known for innovating with real-time inventory systems and dynamic pricing, improving operations and customer service.
Product performance
This is about designing offerings that perform well in the market (core offerings). For example, the VW Beetle had strong product performance with its unique design. APPLE: DESIGN
Product system
This refers to linking or bundling products to create a system. Microsoft Office bundles various software (Word, Excel, etc.) into a system, while Apple bundles hardware (iPhones, iPads) with software (apps). APPLE: BUNDLING PRODUCTS: PRODUCT & APP SYSTEM
Service innovation
Providing value beyond products through exceptional services/How you provide value to customers and consumers beyond and around your products. Singapore Airlines excels with its luxurious customer service, which sets it apart from competitors. APPLE: STORES
Channel innovation
Innovating how products reach the market/How you get your offerings to market. Martha Stewart has successfully used various channels like stores, TV shows, and online platforms to promote her products. APPLE: iTUNES
Brand innovation
This involves communicating your brand in unique ways/How you communicate your offerings. Absolut Vodka achieved brand success with a creative advertising campaign and iconic bottle design. APPLE BRAND
Customer experience
This focuses on how customers feel when interacting with a company and its offerings. Harley Davidson creates a sense of identity among its customers, turning owning a motorcycle into a lifestyle choice.
