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Innovation Management Final Flashcards

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1
Q

Innovation

A

Innovation is the process of using knowledge to solve a problem

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2
Q

Technological Innovation

A

the act of apply new knowledge for commercial or practical objectives (new devices, method, material)

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3
Q

Value creation

A

Allows for the creation of products and services that meet needs that were not previously satisfied, created values for companies and can be a source of competitive advantage

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4
Q

Negative Externalities

A

include : substantiate of labor, environmental impact, competition/monopoly, privacy issues due to data collection

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5
Q

Planned Innovation

A

Companies invest in r&D with the goal of creating a new innovative product or process

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6
Q

Accidental Innovation

A

Not result of deliberate attempt to solve a particular problem

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7
Q

Radial Innovation

A

Innovation that is now and different from prior solutions

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8
Q

Incremental Innovation

A

Innovation makes a relatively minor change from existing practices

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9
Q

Product innovation

A

Output of a firm in its goods and services, technical specification and quality improvements of a existing product

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10
Q

Process Innovation

A

Innovation in the way an organization conducts its business (ex. Production techniques)

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11
Q

Schumpeter’s Waves

A

Innovation causes cyclical instability and economic growth, not isolated events and are not distributed uniformly (industrial revolution, mechanical wave, electricity, automobile, IT)

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12
Q

How can we measure innovation?

A

We measure innovation through observational data on new products/service launches, questionnaires sent to firm, asking about new products and processes, patents, and r&D

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13
Q

Observational data

A

websites, trade-fairs, industry journals, advertisements, process innovations are difficult to track

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14
Q

Questionnaires:

A

broad set of information related to innovation can be asked, costly process, high response rate needed, respondent bias

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15
Q

Patents:

A

info can be accessed easily not all inventions are patented, can be skewed with respect to economic value

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16
Q

r&D expenses

A

asily available from income statements, input factor for innovation

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17
Q

What do we actually measure (in terms of innovation)

A

Most used metric to measure innovation is R&D spending

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18
Q

What is R&D Intensity?

A

Ratio of a firm’s r&D investment to its revenue
Firms with highest r&D intensity are labeled as “high-tech”

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19
Q

Who is Mainly investing in and performing R&D?

A

Country wise: Israel and South Korea spend the most on r&D
Businesses make up most of the funding for r&D, but governments and universities also contribute

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20
Q

What is the role of entrepreneurs

A

Entrepreneurship is a important driver of innovation, but is also associated with high risk of failure

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21
Q

Planned vs accidental innovation

A

Planned innovation is when a firm intentionally invests in r&D to create a new product or process, whereas accidental innovation occurs unintentionally

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22
Q

Radical vs incremental innovation

A

Radical innovation happens when a product/process is entirely different/new whereas incremental innovation is when minor changes occur to existing products/processes

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23
Q

Product vs process innovation

A

Product innovation is when changes are made to product whereas process innovation is when changes are made to a process

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24
Q

Applied R&D

A

the effort to understand fundamental scientific and technical principles with the aim to use the knowledge for a specific application (ex research on cancer cells to improve cancer treatments)

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25
Basic R&D
effort to understand fundamental scientific principles of a natural
26
Internal r&D
Pre-conditioned for accessing external knowledge Risks: costs, timing, technological/market outcomes
27
External r&D
Universities, suppliers, users, competitors Compliment for internal rather than substitute
28
Absorptive capacity:
a firm's ability to identify, assimilate, transform, and use external knowledge, research, and practice
29
Technology pushes
When there is a new technology which occurs before anyone has figured a market need Later innovator will find or create a market
30
Market pulls
When customers are asking for a product that satisfies their needs (or firms detect customers needs) Technology determines whether it's possible
31
“Not invented here syndrome”
Decision making error where we tend to value our own ideas above those conceived by people outside of our group
32
What’s the appropriability problem?
The appropriability problem concerns the degree to which the returns from investments in R&D accrue to the innovator or to other market participants
33
Is investing in R&D a necessary and/or sufficient condition to innovate?
Yes investing in R&D is necessary for innovation without it companies would not be able to survive in the market
34
Technology s-curve
representation of the development of a new technology, New entrants shift the curve
34
Do innovations arise because technology pushes or because the market pulls?
Innovations arise because of both situations, but the more common is the technology push
35
abernathy -utterback model
Technologies evolve through periods of incremental innovation, interrupted by periods of radical innovation, Eventually dominant design emerges
36
Dominant design
When firms in a industry converge to a dominant design Leads to specific phase, marked by incremental innovation
37
Industry shakeout
Consolidation of a industry in which businesses are eliminated acquired through competition
38
Disruptive innovation
Improves on a aspect of the market that does not initially value Creates a first new market and eventually disrupts an existing market, displacing earlier technology
39
What does the s-curve represent?
The s-curve represent the flow of innovation/development of new technology
40
Which type of firms are most responsible for shifting to a new s curve?
Usually new entrants cause a shift in the s-curve. This is because incumbents in a market have no incentive to introduce new technology (usually investing in existing tech, performance of old technology can be improved, etc)
41
What are the main conclusions of the abernathy-utterback model?
Main conclusion is that the emergence of a dominant design is a major milestone in a industry evolution and changed the way firms compete in a instead and therefore the type of organization the succeeds and prevails
42
What is disruptive innovation?
Disruptive innovation is when a new market is created by a distribution within a existing market, displacing earlier technology
43
What dilemma do they pose for established firms?
Can take over market and push out a established firm that chose to invest on other things instead of new technology
44
Diffusion
Process for which a innovation gets adopted overtime
45
“The Chasm”
Making the jump from early adopters to early majority (or critical mass) Majority of firms need to reach a critical mass of customers to reach profitability (likely to go bankrupt if they do not achieve the early majority
46
“Adoption s-curve”
Shows cumulative adoption at each point in time, normal distribution of adopters translates into a s-shaped pattern of demand growth overtime There is a acceleration point at which a market takes off
47
The Bass model
Tool for forecasting the adoption of a innovation for which there is no closely competitive alternatives existing in the marketplace
48
Determinants of Diffusion
Expected advantages, costs of adoption, availability of complementary technologies, information and uncertainty, requirements of behavioral changes, simplicity of use, regulatory environment, cultural factors
49
Why is it important for a firm to distinguish between the different types of technology adaptors?
It is important because firms can tailor their marketing strategies, messaging, and product development efforts to effect reach and engage with each segment
50
Why is the chasm difficult to cross?
It is difficult to cross because consumers actually have to adopt the innovation to cross it, if they don't most companies go bankrupt and end up failing
51
Which firms is it important to cross?
It is important for high tech companies to cross the chasm
52
How can a company cross the chasm more effectively?
By identifying the right niche, shaping a compelling value proposition, and continually refining offerings
53
Technological standards
Set of specification that ensures that different components of a given system are compatible Allows for independent companies to product different components of the same product Types: interface/compatibility standards, quality/safety standards, variety reduction, information//measurement standards
54
Network externalities
As a technology becomes more value the number of users increases Demand of product is depend on the demand of other buying the product
55
Why do technological standards develop?
The development due to increasing returns to adoption (when technology becomes more valuable the more it is adopted, the more the technology is used the more it is understood and improved. As it is adopted widely complementary accept are develop
56
What are network externalities?
The demand of a product is dependent on the demand of others buying the product
57
Is the standard always the best technology?
No, not always, the standard tends to be the most convenient technology, the best usually emerges once a standard has been set up
58
What are the main determinants behind establishing a standard?
By change, given technology is superior to their alternatives, government/industry trade associations impose them
59
What is the role of complementary products in a standard battle?
As technology becomes more widely adopted complementary asserts are other developed that are specified to operate with the technology
60
Are standards good or bad?
A bit of both, standards help to insure better products but can also lead to a winner take all market or a monopoly in some situations
61
Appropriability
degree to which a firm is able to capture the rents from its innovation Determined by how easily or quickly competitors can copy the innovation
62
Patent system
A patent is a legal right that prevents others from using an invention for a specified period of time or given territory, in return for the inventors disclosure of the technical details
63
Patent Requirements:
Novelty: was not previously invented Inventive step: (non-obvious), cannot be a small logical extension Industrial applicability: (useful), must be a functional purpose
64
Infringement
Someone makes, uses, sells, or imports an invention covered by the claims of your patent
65
Utility Patents
patents can be obtained on a composition of matter, machines, methods, software
66
Copyrights
give the author of the original work the right to distribute, duplicate and provide derivations of the work and can preclude others from doing the same
67
Trademarks
meant to identify the provider of a product or service, offers less intellectual property protection than patents, copyrights, or trade secrets Word, phrase, symbol, design, or other indicator is used to distinguish the source of goods from one party to another
68
What are the advantages of patenting?
Slow imitation and protect innovation Prevents suits and use in negotiation Value chain leverage Makes markets for knowledge possible Helps new firms raise money
69
What are the disadvantages of patenting?
Not always preventing imitation (invent-around) Patents are costly (application fees, translation fees, attorney costs, renewal fees) Resources needs to detect and prosecute potential infringers Patent-related processes are slow
70
Effectiveness of patents?
Patents are effective when it is difficult to accomplice the same goal through different technical means (not possible to invent around)
71
Trade secret
Special case of all efforts to keep a new product or service secret Provide for legal remedies if someone benefits from ones trade secrets without consent
72
When can a secret be protected as a trade secret?
A secret can be protected as a trade secret if the information is known only by people in the company or people bounded by confidentiality, information has economic value only if it remains a secret, firm takes reasonable measures to keep the information secret
73
What constitutes an infringement of a trade secret?
A person can infringe on a trade secret if they signed a NDA/confidentiality agreement, acquires the information through improper means, revealed the information by chance but knows that its a secret (spy gate for F1)
74
What kind of innovations are best protected by secrecy?
Recipes is a great example
75
What type of protection does a trademark confer?
Prevents competitors to use a similar enough brand that may result in confusing the customers
76
First-movers
a company that gains a competitive advantage by being the first to bring a new product or service to the market
77
Learning curve
Learning curve advantage exists if: firms are good at learning and learning is proprietary (difficult to copy what others have learnt)
78
Scale economies
The reduction in unit costs that occurs as production volume increases By exploiting economies of scale, companies can reduce their cotst to less than those of their competitors
79
Complementary assets
the upstream and downstream assets necessary to successfully commercialize an invention
80
Late movers
a market entry strategy that is of late believed to be beneficial
81
Drivers of first-mover advantage?
Could result in higher market share and higher profits than late entrants, technological leadership positions, reputation and brand strength, securing control over key resources before competitors, creation of switching costs
82
Advantages of being a late mover? (when do they prevail)
Benefit from first movers investing in R&D, technological uncertainty resolved, uncertainty customer preferences is reduced, infrastructure and distribution channels
83
Spin-offs
New firm is backed up by parent firm which keeps minority share and provides financial support
84
Organizational characteristics (of a firm)
Centralized: decision making power at top levels of firm, reduced costs of coordination across the organization Decentralized: provides access to external information, R&D is more market oriented, diversification of investment in innovation Organic: low degree of formalization and standardization (encourages creativity and experimentation) Hierarchical: high degree of formalization of roles and responsibilities, standardized organizational routines
85
Incentives to R&D workers
Stock options, managers who perform better tend to have longer term incentives Large wages/incentive plans Good working conditions
86
Venture capital
Equity based financing that is usually an option for more mature start-ups Rigorous selection process Demand high rates of return
87
Corporate venture capital
Large, established non financial companies create corporate venture capital that invest in corporate funds in start-up companies in return for taking a equity interest
88
Crowdfunding
Collection of funds to sustain an initiative from a large pool of backers (the crowd) usually made online by means of a web platform
89
Business angels
Wealthy individuals who invest their own funds in a small set of companies for a equity stake
90
Advantages of firms in r&D collaboration
Accessing needed capabilities or resources Expanding knowledge base Reducing asset commitment and increase flexibility Sharing costs and risks Building a common standard Facilitated access to public R&D funding
91
Risks of firms in r&D collaboration
Collaboration would not add value Building and renewing capabilities Exclusivity of a technology Control the development of technology Controlling technology development and use Managing collaborations Tacit knowledge which is difficult to transmit across partners
92
Types of collaboration in r&D
Strategic alliances Joint ventures Licensing Outsourcing Research consortia

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