Lecture 4 Flashcards
What does sustainable competetive advantage mean?
- Sustainable in the long run
- Offshoring for example is not sustainable in the long run as it can be easily copied
- originally it is defined as a military leader
- Strategy gives the big picture
- fog of war - picture not always clear
*
- fog of war - picture not always clear
What is strategy defined for a company?
-
Streategic intent is the current is the long term future of a company that provides a strategic theme filled with emotions for the whole organization
- where do we want to be in 10, 15 and 20 years?
- What are the resources to get there?
- How do we get there? corporate & business strategy
- Streategy therefore defines the baseline for innovation and R&D
What are the main pillars of Strategy
- Capabilities
- Resources
// What assets and resources for innovation do we own?
- Technology fields
- degree of innovation
- Type of technology acquisition
//What technology do we use and how shall we acquire it?
- Organizaiton of R&D
// Can we/How do we create this value internally?
- Markets
- Type of profit appropriation
// What value do we create for whom, and how do we appropriate it?
What is the innvoation framework?
- Innovation Strategy
- Innovation capabilities
- Innovation process
- Resources for innovation
How are resources of innovatoin defined?
- Financial resources
Human resources
Technological resources: both tangible and intangible
Marketing resources: ownership and value of brands & access to lead markets
Organizational resources: routines, procedures and practices
Networking resources: partners and level of trust within them
How is innovation capabilites defined?
- Capability: organizational and managerial skills necessary to organize resources and deploy them strategically (intangible)
- Core capability: VRIN capability (see next slide)
- Innovative capabilities
- Searching: seeking and assessing market and technology opportunities. (Find new things - production - maximize efficency)
- Selecting: choosing amongst future options (Select important stuff)
- Configuring: ensuring the coordination and integration of innovation efforts (Like Smartphone, put elements together)
- Deploying: delivering internally generated and acquired innovations on time and to budget
- Learning: improving the performance of innovation processes
- Dynamic capability: capability to purposefully create, extend, modify existing resource base and capabilities. (Capability to adapt to new things)
What does VRIN mean and why is it important - explain why they might be inimitable?
Which resources and capabilities have the potential to be a source of sustainable competitive advantage?
- Valuable
- Rare
- //Give competetive advantage
- Inimitable (patents)
* Non-substitutable (invent around) //sustainable advantage
- Inimitable:
- Tactic
- Path dependent
- Socially complex
- Patents
- Secret
- Unique by their nature
Why do some companies make money while others do not?
- market perspective (like monopoly)
- Resource perspective (resource based view)
- Valuable
- Rare
- //Give competetive advantage
- Inimitable (patents)
- Non-substitutable (invent around)
- //sustainable advantage
What are core competencies?
- Example honda:
- Apples are: cars, motor cylces…
- Technology: Electronics, CAD, mechanics
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What have been the core competencies of Sony and 3M?
3M:
- applying coatings to backings
- adhesives
Sony:
- Rice boilers
- electronics
- entertainment
- design
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What is innovation strategy?
- Statements on the role of innovation in creating value and building sustainable competitive advantage
- Understanding of market trends and technological environment
- Articulation of the firm’s innovation ambitions and long-term objectives
- Recognition of gaps
- Plans for developing and mobilizing resources
What is not strategy?
- Outsourcing
- Internazionalize
- Raise R&D budget
They are only steps for a strategy.
Maybe goal is cost leader. Therefore high production volume and internationalization may be needed.
Technological Push vs. Market pull
- Problems w. Technology Push:
Focus on what can most easily be researched
Scientists might be too focused on one particular solution to a problem (“their” solution)
Possible mismatch between innovation ideas based on technology push and corporate interest
- Problems with Market Pull:
Focus on most easily identified needs (but with minor potential)
Once a technical solution to the respective need is found, one may be too focused on this particular application
Market is locked into present products and can only think of incremental improvements
What are the four level of innovation stratetgy?
- Passive
- Reactive
- Active
- Proactive
Quizz:
When is a cost reducing innovation a “radical” innovation in the sense of arrow?
- If it reduces the innovatiors marginal costs so strongyl that the innovator can set the price like a monopolist witohut any competition and still the price is below the marginal costs of other firms
