Topic 1: Disruption

Question 1

How has technology changed business?

Answer 1

Technology has allowed companies to compete between countries. 5B internet users. It has never been so cheap or easy to move information around the world.

Question 2

Competes

Answer 2

A business factor which give a competitive edge

Question 3

Qualifiers

Answer 3

Basic qualifications or necessities needed to start a business in the market

Question 4

Christensen’s Classic Disruption

Answer 4

Have to actively defend against disruption by investing in innovation. You may eat your own sales but worry about that when you get there. Eventually new entrants get better and your core customers shift away.

Question 5

Case: Netflix vs Blockbuster

Answer 5

This is an example of classics disruption because Netflix went for the under reserved clients (those who liked weird movies). They then improved their offering and eventually replaced Blockbuster. Blockbuster was too scared of going into mail movies because they didn’t want to cannibalize sales.

Question 6

Forms of disruption

Answer 6

Classic, platform, architectural

Question 7

Classic Disruption

Answer 7

Big player focuses on main customers, new player comes in at the bottom of the market and works their way up.

Question 8

How to combat classic disruption

Answer 8

Only way is for companies to launch their own disruptive innovations and invest in innovation. This could damage sales of the main product but better get 50cent rather than nothing. Innovation branch must be treated as a separate business unit not influenced by current sales or customers. Can also involve investment into new ventures.

Question 9

Platform Disruption

Answer 9

When a company creates value to a customer through their ability to connect. Not really creating a direct product to compete, it is more in the connections that creates the competitor.

Question 10

Rules of Digital Business Strategy

Answer 10

1: Network effect grows at an increasing rate
2: platforms win not by being better, but by being broader and more convenient
3: Platforms have incentive to envelop more platforms in order to grow and become broader.
4: when entering a new sector, platforms can usually subsidize and offer very low rates at first, funded through their other more profitable businesses

Question 11

Platform Envelopment

Answer 11

When one platform takes over another to become broader. Usually done when the user bases are similar. To prevent being enveloped, convince users that your platform is better

Question 12

Platforms: Winner takes all

Answer 12

happens when multi-homing costs are high, big network effect. Eventually only one platform can win

Question 13

Architectural Disruption

Answer 13

When changes in technology require a rethink in business strategy. Often comes in four forms: incremental, architectural, radical, modular

Question 14

Incremental innovation

Answer 14

Small changes to existing technology. Low cost and slightly improved performance. Common with established firms

Question 15

Architectural Innovation

Answer 15

Changes in how components of your product fit together, leads to change in structure and strategy. Destroys the architectural knowledge of established firms. Difficult to recognize and hard to correct.

Question 16

Radical Innovation

Answer 16

Major change, often a brand new technology and involves major performance improvement. Major threat to established firms.

Question 17

Modular Innovation

Answer 17

Changes the functional concept within components but not how they fit together

Question 18

Dominant Design

Answer 18

Wins the allegiance of the marketplace, competitors must adhere if they want to command a significant following. Dominant design acts as a constraint that limit innovation.

Question 19

Case: GE

Answer 19

GE had a new analytics software with three ways to distribute: selling the boxes with the hardware, selling hardware and software separately, creating a new business division which consulted for companies and only made money if companies realized benefits

Question 20

Innovative Strategy: Established firms

Answer 20

Incremental innovation is good for efficiency improvement, makes it harder for new entrants. Radical innovation is both a friend an enemy, keep an eye out. Leaders should be aware of the need to innovate. With architectural innovation, have to acknowledge that old knowledge is useless.

Question 21

Innovative Strategy: Startup

Answer 21

Take full advantage of being new, no need to stick to old norms/knowledge. Try to push for architectural or radical innovation, not a lot of resources for incremental. Avoid direct competition. Try to be a first mover and establish dominant design.

Question 22

Six Sigma

Answer 22

Focused on controlled processes. Limited variance in production.

Question 23

Digital innovation principles (two)

Answer 23

1: use digital technology to make things cheap and rapid. Do digital experiments.
2: Enlarge the group of people who can participate in your innovation: customers, users, the crowd.

Question 24

Shape of innovation

Answer 24

Innovation must be cheap and cheap if you get it wrong. Innovation feeds of variation. Accidents can lead to innovation.

Question 25

Industrial Processes

Answer 25

Seek valuable consistency and reliability

Question 26

Innovative Processes

Answer 26

Seek valuable inconsistency, avoid predictability