CH 7

Question 1

Innovation can _____ and ______ value.

Answer 1

create
destroy

Question 2

Initial innovations are foundational for other rapid innovations.

Answer 2

TRUE

Question 3

What is the 4 step process that describes the discovery, development, and transformation of new knowledge of innovation?

Answer 3

(1) Idea
(2) Invention
(3) Innovation
(4) Imitation

Question 4

What is Idea?

Answer 4

abstract concepts or research findings

Question 5

What is Invention?

Answer 5

transformation of an idea into a product; modification & recombination of products

Question 6

What is Innovation?

Answer 6

commercialization of an invention

Question 7

What is Imitation?

Answer 7

copying a successful innovation

Question 8

What must a company do to sustain a competitive advantage?

Answer 8

Innovate continuously

Question 9

What are first-mover advantages?

Answer 9

competitive benefits that accrue to the successful innovator
(e.g. economies of scale, experience, learning-curve effects)

Question 10

Innovation needs to be ____, _____, and successfully _______ to help firms gain and sustain a competitive advantage.

Answer 10

novel; useful; implemented

Question 11

What are the 4 industrial revolutions?

Answer 11

1st - steam power
2nd - assembly line
3rd - computers, automation
4th - Artificial Intelligence

Question 12

What are entreprenuers?

Answer 12

create new products
create value for society
commercialize ideas and inventions

Question 13

What is STRATEGIC entrepreneurship?

Answer 13

pursuit of innovation using STRATEGIC tools and concepts

Question 14

What is SOCIAL entrepreneurship?

Answer 14

pursuit of SOCIAL GOALS while creating profitable businesses
Triple bottom line approach (financial, ecological, social)

Question 15

What are the stages of the industry life cycle?

Answer 15

(1) Introduction
(2) Growth
(3) Shakeout
(4) Maturity
(5) Decline

Question 16

Introduction Stage

Answer 16

• R&D
• barriers to entry are HIGH
• objective: market acceptances & FUTURE growth

Question 17

Growth Stage

Answer 17

• demand increases RAPIDLY
• product/service standard emerge
• Product & Process innovation

Question 18

Shakeout Stage

Answer 18

• rate of growth DECLINES
• firms begin to INTENSELY compete
• industry consolidation
• PRICE is an important competitive weapon

Question 19

Decline Stage

Answer 19

• demand FALLS rapidly
• innovations efforts cease
• have to choose one of 4 strategic options to pursue

Question 20

What are the 4 strategic options to pursue in the decline stage?

Answer 20

(1) Exit: bankruptcy
(2) Harvest: reduce further investments
(3) Maintain: support at a given level
(4) Consolidate: buy rivals

Question 21

What is the crossing the chasm framework?

Answer 21

conceptual model that shows how each stage of the industry life cycle is dominated by a different customer group

Question 22

What are the 5 types of customer segments found within the Crossing the Chasm framework?

Answer 22

(1) technology enthusiasts
(2) early adopters
(3) early majority
(4) late majority
(5) laggards

Question 23

Technology Enthusiasts

Answer 23

• first to enter the market
• smallest market segment
• engineering mind
• enjoy using beta versions
• provide free feedback

Question 24

Early Adopters

Answer 24

• enter market during GROWTH stage
• driven by imagination & creativity
• “What can this NEW PRODUCT do for me or my business?
• must directly communicate with this segment

Question 25

Early Majority

Answer 25

- enter the market during the SHAKEOUT stage - "what can this DO FOR ME?" - weigh the benefits and costs carefully - this group is KEY to catching the growth wave

Question 26

Late Majority

Answer 26

- enter the market during the MATURITY stage - wait until standards have emerged - do NOT like uncertainty - buy from WELL-ESTABLISHED firms with strong brand image

Question 27

Laggards

Answer 27

- enter market during DECLINE stage - adopt a new product ONLY IF necessary - typically NOT pursued as future customers

Question 28

What is CLOSED innovation?

Answer 28

- products developed INTERNALLY - costly and time consuming

Question 29

What is OPEN innovation?

Answer 29

- arise from EXTERNAL sources - leverage licensing agreements, strategic alliances, joint ventures, acquisitions

Question 30

What are the 4 types of innovation?

Answer 30

(1) Architectural (2) Radical (3) Incremental (4) Disruptive

Question 31

Incremental Innovation

Answer 31

- builds on ESTABLISHED knowledge - results form STEADY improvement - EXISTING tech; EXISTING markets

Question 32

Radical Innovation

Answer 32

- novel methods and materials - NEW tech; NEW markets

Question 33

Architectural Innovation

Answer 33

- known components, existing tech, used in a novel way - EXISTING tech, NEW markets

Question 34

Disruptive Innovation

Answer 34

- NEW tech; EXISTING markets - Ex: netflix

Question 35

Why do incumbent firms tend to focus on incremental innovation?

Answer 35

- economic incentives (defend position) - organizational inertia (formalized processes) - innovation ecosystem (rely on certain suppliers, buyers)

Question 36

What are some ways that you can respond to disruptive innovation?

Answer 36

- continue to innovate - guard against disruptive innovation by protecting the low end of the market - disrupt yourself first

Question 37

What is platform business?

Answer 37

- enables interaction between producers and consumers - enable matches among users

Question 38

What is pipeline business?

Answer 38

- LINEAR transformation through the value chain - R&D --> design --> manufacture --> sell

Question 39

What are some of the advantages of the platform business model?

Answer 39

- scale more EFFICIENTLY by eliminating gatekeepers - unlock new sources of value creation and supply - benefit from community feedback