Lecture 2 market dynamics Flashcards
The Four I’s?
Idea → abstracts concepts of research findings
invention → transformation of an idea into a product
innovation → commercialization of a products
imitation → copying a succeful innovation
Creativity vs invention
Creativity is usually defined as the ability to produce useful and novel work
Invention is usually defined as the outcome/result of the creative process
invention vs innovation
The first-time occurrence of an idea/concept qualifies as an invention, can be carried out anywhere
The first-time commercialization of an idea/concept is considered an innovation, occurs mostly in firms
Innovation vs Technological change
Innovations can be technological, nontechnological, or both. Innovation is a broader term than technological change – All technological changes are innovations, but all innovations are not technological changes
Linear model of innovation
Reasearch/creativity –> invention -> design -> innovation
Innovation is applied science with well defined stages of research, development, production and marketing - Research and creativity lead to innovation, in a straight line!
Passive consumer
Always seeks the familiar, does not like change
Not interested in product innovation, interested in process innovation that can help him/her to buy familiar goods at lower price
Conventianol consumer
Predetermined needs
Only interested in innovation to the extent that it reduces price or increases no of product characteristics (s)he is seeking
Active consumer
Always seeking variety and change
Keen to explore new products, even if (s)he has no previous need for them
Chain Linked Model of Innovation
Innovation is not a sequential (linear) process
Innovation is a learning process involving multiple inputs, interactions and feedbacks in the process of knowledge creation
Radical versus Incremental Innovation
The radicalness of an innovation is the degree to which it is new and different from previously existing products and processes.
Incremental innovations may involve only a minor change from (or adjustment to) existing practices.
Competence-Enhancing versus Competence-Destroying Innovation
Competence-enhancing innovations build on the firm’s existing knowledge base (playstation 4-5)
Competence-destroying innovations renders a firm’s existing competencies obsolete
Architectural versus Component Innovation
A component innovation (or modular innovation) entails changes to one or more components of a product system without significantly affecting the overall design (gell filled material to a bicycle seat)
An architectural innovation entails changing the overall design of the system or the way components interact. (high weel to safety bicycle)
Product versus Process Innovation
Product innovations are embodied in the outputs of an organization – its goods or services.
Process innovations are innovations in the way an organization conducts its business, such as in techniques of producing or marketing goods or services
Product Proliferation
It is the practice of proliferating a wide variety of slightly differentiated products across the entire characteristics space
Appropriability:
The degree to which a firm is able to capture the rents from its innovation
