MI - Week 1 Flashcards
What are the 4 types of innovation?
- Breakthrough
- Basic Research
- Sustaining
- Disruptive
Breakthrough innovation
Focus: Solving incredibly difficult, well-defined problems with new approaches.
Goal: Create new value and applications from existing technologies.
Example: Cancer treatement
Matrix: Not well defined domain, well defined problem
Sustaining innovation
Focus: Improving existing products or services within established markets.
Goal: Enhance current offerings to increase profitability and market share.
Example: New apple phone model has new camera
Matrix: Well defined domain, well defined problem
Disruptive Innovation
Focus: Creating new products or services that disrupt the status quo.
Goal: Enter new or underserved markets with simpler, more affordable solutions.
Example: Netflix, Uber, Airbnb
Matrix: Well defined domain, not well defined problem
Basic research
Focus: Exploring new phenomena to build foundational knowledge.
Goal: Understand and develop new theories, concepts, or technologies.
Example: Discovering new elements or particles
Matrix: Not well defined domain, not well defined problem
What is innovation?
New ideas that generate value and improve existing resources
How does Drucker describe/define innovation?
Innovation is the specific function of entrepreneurship, aimed at creating purposeful and focused change in an enterprise’s economic or social potential. It is a systematic practice that enhances or creates new wealth-producing resources.
According to Drucker, what are the key sources of innovation? INTERNAL
- Unexpected occurences
- Incongruities
- Process needs
- Industry and market changes
According to Drucker, what are the key sources of innovation? EXTERNAL
- Demographic changes
- Changes in perception
- New knowledge
Unexpected occurences
Internal source of innovation: failures or successes
Incongruities
Internal source of innovation: discrepancies between reality and expectations
Process needs
Internal source of innovation: driven by improving existing processes
Industry and market changes
Internal source of innovation: industry structure and markets
Demographic changes
External sourced of innovation: shifts in population and workforce
Changes in perception
External source of innovation: how people view themselves and their needs
New knowledge
External source of innovation: scientific, technical, or social advancements
Describe the approach small, young companies use to beat larger, more established firms
Small, young companies (new entrants) often beat larger, more established firms (incumbents) by leveraging disruptive innovation. These smaller firms focus on underserved markets or niches where they can provide a more affordable, accessible, or simpler solution. Over time, their innovation improves, allowing them to challenge incumbents in the mainstream market
How can more established firms respond to newer companies and their innovations?
Established firms can respond to newer companies by embracing both disruptive and sustaining innovations. They must balance improving existing products while also investing in disruptive innovations that may challenge their current offerings. Partnering with or acquiring smaller innovative companies is another effective response
What are some barriers to entry that protect incumbents and make it more difficult for new entrants to compete?
- Economies of scale: allow larger firms to produce at lower costs.
- Brand loyalty: customers are accustomed to established brands.
- Access to resources: such as capital or distribution channels, which are harder for new entrants to secure.
What levels should a firm assess in its environment in the context of innovation?
- Macro trends impacting industry
- Industry dynamics and the threat of new entrants
- Competitors within the industry
