Lecture 2: Types and Patterns of Innovation

Question 1

Product vs Process Innovation

Answer 1

Product Innovation
= outputs of an organization

Process Innovation
= how an organization conducts its business

=> Product innovation can enable process innovation and vice versa
=> A product innovation might be a process innovation for another company

Question 2

Radical vs Incremental Innovations

Answer 2

Radical Innovation
= Degree to which the innovation is new and different
= Radicalness is relative, and may change over time

Incremental Innovations
= may involve only a minor change

Question 3

Competence-enhancing vs Competence-destroying innovations

Answer 3

Competence-Enhancing
= Build on the firm’s existing knowledge base

Competence-Destroying
= renders a firm’s competencies absolute

= Wether an innovation is enhancing or destroying depends on the perspective of a particular firm

Question 4

Architectural vs Component Innovations

Answer 4

Architectural Innovation
= entails changing the overall design of the system or the way components interact

Component Innovation/ Modular Innovation
= entails changes to one or more complements of a product system without significantly affecting the overall design

=> Most architectural innovations also require changes of the components

Question 5

Technology S-Curve

Answer 5

= The rate of technology’s improvement and its rate of diffusion to the market follow a s-curve

Question 6

S-Curve in improvement

Answer 6

= Technology improves slowly at first bc it is poorly understood
= Then accelerates as understanding increases
= Then tapers off as it approaches the limit

=> Technologies do not always get to reach their limit
-> May be displaced by new, discontinuous technologies before
-> Discontiniuinty may initially have lower performance than incumbent innovation

Question 7

S-Curve in diffusion

Answer 7

= Adoption is initially slow because the technology is unfamiliar
= Adoption accelerates
= Eventually, the market is saturated, and rate of adoption declines

= Technology diffusion tends to take a lot longer that information diffusion due to complexity and complementary resources needed

Question 8

S-Curve as a prescriptive tool

Answer 8

= Mapping the technology using the s-curve based on data, can be useful
= BUT: use as a prescriptive tool is limited

-> true limits of technology might be unknown
-> The shape of the s-curve can be influenced by changes in the market or other factors
-> Firms that follow curve too closely might switch technologies too soon or too late

Question 9

Technology Cycle

Answer 9

= Technological change tends to be cyclical
->Each new s-curve ushers in an initial period of turbulence, followed by rapid improvement, then diminishing returns, and ultimately it’s displaced by a new technology

Question 10

The two phases of technology cycles

Answer 10

1. Fluid phase
2. Specific Phase

Question 11

Fluid phase

Answer 11

= When there is considerable uncertainty about the technology and its market, firms experiment with different product designs in this phase

Question 12

Specific phase

Answer 12

= = begins after a dominant design emerges
= When firms focus on incremental improvements to the design and manufacturing efficiency