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EY Accounting - Business Acumen > Module 2 - Innovation > Flashcards

Module 2 - Innovation Flashcards

1
Q

Definition of innovation

A

The introduction of new ideas, methods or products

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2
Q

What are potential sources of new ideas?

A

Consumers

Existing companies / market

Distribution channels

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3
Q

What are some methods of generating ideas?

A

Brainstorming

Focus groups

Problem inventory analysis

Desk research

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4
Q

What is problem inventory analysis?

A

May also be conducted via a focus group

Individuals are given a list of problems in relation to a product / service and asked to discuss how they would overcome those problems

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5
Q

Second definition of innovation

A

The process of taking an idea and translating it into a good / service that a customer will pay for

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6
Q

What are some approaches to innovation

A

Identifying or creating new opportunities

New ways of serving existing markets

Growing new markets

Rethinking services

Meeting social needs

Improving operations

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7
Q

Different ways a business can innovate? (How can a business innovate) (E.g. novelty factor product)

A

Novelty factor - product

Novelty factor - process

Complexity

Timing

Legal protection of intellectual property

Changing the rules

Offering an existing product / service to a new market

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8
Q

What is the strategic advantage of a “novelty factor - product” innovation?

A

Offering a product no one else can puts you above competitors

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9
Q

What is the strategic advantage of the “Novelty Factor - Process” innovation

A

Offering a product which is produced in such a way that competitors cannot match it gives a strategic advantage - Zara with a more reactive supply chain than competitors

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10
Q

What is the strategic advantage of the “complexity” innovation?

A

Offering a product which cannot be easily copied gives a strategic advantage

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11
Q

What is the strategic advantage of the “timing” innovation?

A

Being first into the market allows a significant gain of market share

Being first isn’t always best - businesses can sometimes encounter more problems

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12
Q

What are the dimensions of innovation? (4 P’s) (ways a business can innovate)

A

The 4 Ps

Product

Process

Position

Paradigm

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13
Q

Definition of Product in the Dimensions of Innovation

A

Changes to the products / services themselves that a business offers

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14
Q

Definition of Process in the Dimensions of Innovation

A

Changes to the way that the products / services are created and delivered

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15
Q

Definition of Position in the Dimensions of Innovation

A

Changes to the market which the products / services are introduced to

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16
Q

Definition of Paradigm in the Dimensions of Innovation

A

Changes to the fundamentals of how and why a business operates in a certain way (it’s underlying business model)

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17
Q

Is the paradigm form of innovation the most extreme?

A

Yes

18
Q

What is incremental innovation

A

Where innovation is conducted one step at a time

E.g. start with normal Audi, next year add a new sound system, next year add better gadgets etc

19
Q

What is radical innovation?

A

It involves completely re-thinking an existing product or service or a complete change to an existing market

20
Q

How can innovation come about in relation to the markets needs?

A

Knowledge Push - breakthrough of new product and then drive the launch of it

Need Pull - where the market demand for a solution to a problem (or need) triggers R&D

21
Q

What are some other types of innovation? (E.g innovation due to regulation)

A

Innovation due to regulation

Recombinant innovation

Copycat innovation

Crisis-driven innovation

Mass customisation

User-led innovation

22
Q

What is innovation due to regulation

A

E.g. sugar tax - changing recipes

23
Q

What is recombinant innovation?

A

Introducing ideas that are successful in other markets into your own market - e.g. assembly lines to car manufacturers

24
Q

What is copycat innovation?

A

Observing others and copying them - Southwest Airlines reduced turnaround times mimicking formula 1

25
Q

What is crisis-driven innovation?

A

E.g. tsunami warning systems

26
Q

What is mass customisation?

A

Customers want customisation to make their products more unique

E.g. build a bear

27
Q

What is user-led innovation?

A

Innovation by users rather than manufacturers

E.g. customisable t shirts

28
Q

What is the key distinction between social enterprises and the more commercial side of things?

A

Social enterprises undertake commercial activities to fund its social objectives as opposed to a distribution of profits to owners of the business

29
Q

What is sustainability-led innovation?

A

Another type of innovation which refers to the creation of new products, services, and processes or adaptations of existing products, services and processes which are driven by social, environmental or sustainability issues

30
Q

There are four ‘search spaces’ (strategies) which a business can implement to actively search for innovation? (Finding opportunity to improve business itself)

A

Operational optimisation

Organisational transformation

Reframe

Co-evolve

31
Q

What is Operational Optimisation?

A

Innovating by improving processes

32
Q

What is Organisational Transformation? (Innovation related)

A

Finding an opportunity to innovate by transforming a company’s:

Product

Target Market

Technology

33
Q

What is Reframing?

A

Finding an opportunity by reframing problems and increasing imagination

34
Q

What is Co-evolving?

A

Finding an opportunity to innovate by analysing and understand a number of complex factors that are often not in direct control of the business

35
Q

What is a corporate spin-off (also known as a spin-out)

A

A new company which is formed out of an existing business (e.g., PayPal spun out from eBay)

36
Q

How would a large company distribute shares during a spin-off?

A

It would distribute shares in the new company to existing owners of the large company (e.g., the same shareholders would now own shares in both the small and the large company)

37
Q

What are some advantages of spin-off companies?

A

Allows the business to separate different business concepts

The leadership of the companies may be more effective if each company has its own expertise and can focus on managing its own operation

That business risk is decreased by keeping the companies separate

38
Q

What should be considered when investing in R&D?

A

Technical and business opportunities

Feasibility

Technologies

39
Q

There are many advantages for a small business in investing in R&D, such as:

A

Unique Selling Point (‘USP’) / competitive advantage

Income

Funding

Tax benefit

Reputation

40
Q

Is R&D tax deductible for businesses?

A

Generally yes

41
Q

What can help young start-up businesses in terms of R&D?

Why?

A

Technology ‘hubs’

Can give cheaper office spaces and easier networking opportunities

EY Accounting - Business Acumen (16 decks)

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