Lecture 3 Flashcards
What are the key components of an innovative organization?
The components are similar to traditional organizations:
structure
processes
reward systems
people.
However, the task differs because it focuses on new ideas.
Why is sustained innovation a paradox?
It requires both stability and change, as well as efficiency and the ability to take risks.
Example: Tesla needs structured production for electric cars (stability) but also invests in self-driving technology (change).
Why is high efficiency not enough for success?
When industries mature, external factors like globalization, regulation, and market shifts require firms to adapt, not just optimize.
Example: Nokia focused too much on improving old phone models and missed the smartphone revolution.
What is the key dilemma in managing innovation?
Organizations need processes and policies for efficiency but must also allow flexibility and innovation.
Finding the right balance is challenging.
Example: Google allows employees to spend 20% of their time on personal innovation projects while maintaining structured workflows.
What are the innovation challenges for small firms?
Entrepreneurial, fast, high-risk, customer-driven.
What are the innovation challenges for medium firms?
Focus on scalability, efficiency, and quality.
What are the innovation challenges for large firms?
Process-driven, focused on stock market performance, and need to regain agility
When is an ambidextrous strategy valuable?
When the business environment is uncertain, competition is high, or the firm has resources to invest in both exploration and exploitation.
Example: A large car company invests in both fuel-efficient cars and autonomous vehicles.
Why is experimentation important?
It allows firms to test, verify, and learn, balancing creativity and structured decision-making.
Example: Netflix experimented with streaming before fully committing to it.
Why is incremental innovation easier than radical innovation?
Incremental innovation has clear KPIs and predictable returns, while radical innovation is uncertain and hard to measure.
Example: Improving a phone camera (incremental) is easier to justify than developing a completely new AI assistant (radical).
How should mature firms handle continuous change?
By balancing efficiency (exploitation) with new knowledge (exploration) to remain competitive.
Example: IBM transitioned from hardware sales to cloud computing and AI.
