Lecture 5 Flashcards
What is innovation a link between?
Innovation as a link between Technology & Competitive advantage.
New tech is a source of opportunity.
How is innovation developed?
Through research, data, information and knowledge.
Economies of scale are a barrier to entry because?
New entrants face high unit costs either because they enter at sub-optimal scale or they make a large scale entry that initially operates with substantial excess capacity
What is the difference between innovation and invention?
Invention is the creation of new products and processes through the development/application of newknowledge or fromnewcombinations of existingknowledge
Innovation is the initial commercialization of invention by producing and marketinganewgoodorserviceorbyusinganewmethodofproduction
What does research generate?
Knowledge
What is the link between research, data and knowledge?
Data is raw, information is processed data. You turn data into information through processing. What you learn from the information is knowledge (the insights from information).
Another way of developing knowledge is through practice and experience.
Basic knowledge → Invention → Innovation
Who are the opinion leaders?
Also called early adopters. The 68% of majority will start to buy only when you’ll reach the critical “X” point, the chasm. X = The tipping point - when a certain threshold is reached, joint forces become unstoppable.
What has happened with innovation throughout time?
The time between basic knowledge and commercial application has shortened.
How can we relate innovation to benefit and creating value?
- Value created
- The share of that value that the innovator is able to capture
Who Gets the Benefits from Innovation?
New drugs are protected by patents that confer monopoly power (and profits) on their inventors *Followers are either firms that create new products within the same drug class or suppliers of generics (who enter once the patent expires)
*Theothermainbeneficiariesarecustomers.
How to turn innovation into massive sales when you don’t have access to complementary resources?
Alliances (Ex. bioNtech with Pfizer: one has the core technology, one has complementary resources)
What does a successful follower strategy require?
A successful follower strategy requires “active waiting” which means to assemble resources and capabilities while it prepares for large-scale market entry.
What is the regime of appropriability?
conditions that influence the distribution of the value created by innovation.
What happenes in a strong regime of appropriability?
The innovator is able to capture a substantial share of that value: Pfizer’s Viagra, and Dyson’s dual-cyclone vacuum cleaner—like Searle’s NutraSweet—all generated huge profits for their owners. Proprietary technology synonymous with lack of competition.
What happenes in a weak regime of appropriability?
Other parties derive most of the value. E-book readers, and online brokerage services, are similar to personal computers: a lack of proprietary technology results in fierce price competition, and most of the value created goes to consumers.”
