Week 10 Innovation and Entrepreneurship

Question 1

Define innovation and the dilemmas it raises for strategiests

Answer 1

Innovation - conversion of new knowledge into a used product.

Dilemma - in the tension between resourcing the creation of products and how to put them to use.

Question 2

What are the 4 issues to consider in driving innovatin, at the heart of this dilemma?

Answer 2

Tech push vs market pull
Product vs process innovation
Open v closed innovation - extent it’s internal
Tech innovation vs innovation of business model

Question 3

Define innovation diffusion

Answer 3

The extent and speed by which innovation spread amongst users.

Question 4

What factors influence the pace of diffusion?

Supply side - ICCER

Demand side - MNC

Answer 4

Supply side: 
Improvement 
Compatibility with other factors 
Complexity of product 
Experimentation – ability to test
Relationship management 

Demand side:
Market awareness
Network effects – growth because others adopt
Customer innovativeness - Satisfy early adopters needs

Question 5

What is the diffusion S curve?

Answer 5

Graphical representation of slow adoption, rapid diffusion, plateau of demand

Helps managers predict direction of sales. Features:
Predict tipping points
Track the extent of diffusion – duration and time
Predict tripping points

Question 6

What are the advantages of moving first or being a late mover?

MGESSL LS

Answer 6

Advantages of ‘First Mover’ / Innovator

1. Monopoly of market
2. Gain rapid experience
3. Establish mass production / economies of scale
4. Source raw materials / contract better terms than late movers
5. Strong reputation for being innovator
6. Lock in customers / contract

Disadvantages First Mover / Advantages Later mover (imitators)

1. Lose ability to ‘free ride’ from other companies and their mistakes ,
2. Setting the path for copy cats

Question 7

What factors influence a decision to innovate or imitate?and what are the problems of incumbents?

Answer 7

3 contextual factors in this decision:

Capacity for profits
Complementary asset access
Fast moving arenas

The problems of incumbents?
Manager reluctance
Relationship dependence

Question 8

Define disruptive innovation.

Answer 8

Disruptive innovation displaces current conventions, achieves CA with first mover advantages.

2 policies to remain open to disruptive innovation:

Real options – r and d teams, keep interest in small startups.

New venture units – protect innovation from demands of core businesses by making them independent.

Question 9

List the 4 stages of entrepreneurial growth

Answer 9

Start up – sources of capital to sustain idea
Growth – moving from doing to managing. Improve management skills or import them
Maturity – retain energy, and growth. Move from entrepreneurship to intrapreneurship (growth from within).
Exit – departure by founders, inverstors or both. 3 routes - Trade sale, MBO, IPO

Question 10

How are relationships important for entrepreneurs?

CSE

Answer 10

Often entrepreneurs have worked for large orgs and continue a relationship after for mutual benefit:

Corporate venturing – create venture units to develop ideas:
Ideas in exchange for capital

Spin offs – generation of small innovative orgs from large orgs.
Stake for independence

Ecosystems – open innovation to create complimentary products.
Control in exchange for fertile creative space

Question 11

What is social entrepreneurship?

Answer 11

Individuals and groups mobilising ideas and resources to address social problems,

Flexible & dynamic

Question 12

What are the 3 key choices for social entrepreneurs?

Answer 12

3 key choices for social entrepreneurs:

Social mission - identify, goals

Organisational structure

Business model – viable business model