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MIM Sem 2 > Technology and Innovation Management > Flashcards

Technology and Innovation Management Flashcards

1
Q

Why is innovation important?

Topic:intro

A
  • Innovation is what drives growth for modern economies.
  • Improves labour productivity growth
  • Creates jobs.
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2
Q

What is meant by “Innovation Is Creative destruction?”

Topic:intro

A

Innovation Is Creative destruction; which often causes resistance - J. A. Schumpeter (1942),

William Baumol (2002). innovation creates winners and losers and may destroy existing firms altogether.

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3
Q

What is innovation according to Hauschildt?

Topic:intro

A

Innovations are qualitatively new products or processes that differ significantly from what existed before.

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4
Q

What is innovation according to Porter?

Topic:intro

A

A new way of doing things that is commercialised.

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5
Q

What is innovation according to Afuah?

Topic:intro

A

The adoption of ideas that are new to the adopting organisation

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6
Q

What is innovation management?

Topic:intro

A

Creation of processes that are aimed at creating and exploiting new things.

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7
Q

What are the steps in the innovation process (in order)?

Topic:intro

A
  1. Idea
  2. discovery
  3. research
  4. development
  5. invention
  6. market launch
  7. exploitation
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8
Q

What is the difference between invention and innovation

Topic:intro

A

Innovation is an invention that is sold or used in the market.

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9
Q

What are the steps in the invention process (in order)?

Topic:intro

A
  1. Idea
  2. discovery
  3. research
  4. development
  5. invention
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10
Q

What are the 3 types of innovation?

Topic:intro

A
  • Product or service innovation
  • Process innovation
  • Business model innovation
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11
Q

How can we solve a low newness of solutions with a high newness of market?

Topic:intro

A

marketing

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12
Q

How can we solve a high newness of solutions with a low newness of market?

Topic:intro

A

R&D

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13
Q

What are characteristics of Product or service innovation?

Topic:intro

A
  • It’s goal is to generate or increase sales
  • the service/product Must be sold on the market
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14
Q

What are characteristics of Process innovation?

Topic:intro

A
  • main goal is To enable/improve the production of goods and services.
  • Must happen inside an organisation
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15
Q

What is Business model innovation?

Topic:intro

A

New ways to generate revenue and define value propositions for customers, suppliers and partners.

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16
Q

What is the main driver of innovation?

Topic:intro

A

R&D

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17
Q

What are the different types of research? (based on the Frascati Manual (OECD))

Topic:intro

A
  • Basic Research
  • Applied Research
  • Experimental development research
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18
Q

What is basic research?

Topic:intro

A

Is Experimental or theoretical work undertaken to acquire new knowledge of the underlying foundations of phenomena and observable facts. Without any particular application or use in view.

Most basic research is funded by the government (via research funding). Accounts for 5 -20% of R&D expenditure.

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19
Q

What is Applied Research?

Topic:intro

A

Is Original investigations undertaken to acquire new knowledge, primarily directed towards a specific practical aim or objective.

Accounts for around 15 - 25% of R&D expenditure.

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20
Q

What is Experimental development research?

Topic:intro

A

Systematic work, drawing on existing knowledge gained from research and practical experience directed to producing, improving and installing new materials, products and services.

Most experimental development is funded by industry. Accounts for most r&d expenditure. (if we get everything spent on r&d 65 - 85%)

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21
Q

What patterns are exhbited in innovation activity at Market Level?

Topic:PatternsIninnovativeActivity

A
  • patterns at the economic level
  • patterns in technological evolution
  • Patterns at the product level
  • Patterns in the adoption of innovation
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22
Q

During innovation: What patterns do we see at the economic level?

A
  • Technological change is cumulative and evolutionary
  • Most innovations combine other existing innovations to create something new
  • Tech innovation is not a smooth straight-line process, there are ups, downs, accelerations and slowdowns
  • Revolutionary technologies - are changes that lead to tidal waves of changes. The tidal waves (above) are called technological revolutions or new ‘techno-economic paradigms
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23
Q

What are Revolutionary technologies?

A

are changes that lead to tidal waves of changes

The tidal waves (above) are called technological revolutions or new ‘techno-economic paradigms

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24
Q

What economic and social changes where experienced with the introduction of the spining jenny?

A
  • 10x productivity improvement in spinning
  • Mass production
  • Industrialization
  • Social upheaval: fear of unemployment
  • Industrial revolution: factories: mass production, new social class: factory workers, urbanization, capitalism, Marx, communism
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25
Q

What are some consequences tech revolutions?

A
  • There are winners and losers - Nations and Firms
  • Regulations change
  • New skills need to be acquired by the labour force
  • Change in capital stock structure - How we look at ownership changes
  • changes in Industrial relations - Industries relate differently, e.g relationship btn car mfgs and the fuel industry. Or cars with software engineering firms
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26
Q

In the face of new techno-economic paradigms, what determines competitiveness?

A
  • knowledge, creativity & learning
  • innovation & R&D
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27
Q

During innovation: What patterns do we see in technological evolution?

hint: stages of technological evolution.

A

We see patterns in the evolution stages:
- Emergence
- Rapid improvement
- Declining improvement
- Maturity

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28
Q

What is an S-curve?

A

Tool used for studying patterns in technological evolution. The scurve maps out the various stages in the evolution of technology.
the S-curve has the following stages
- Emergence
- Rapid improvement
- Declining improvement
- Maturity

Axes: Ouput Variable (i.e performance of technology) vs Input variable (e.g aggregate R&D spending or time)

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29
Q

What are the uses of the S-curve

A
  • It is commonly used to represent the adoption of new technologies, the growth of industries, or the life cycle of products
  • the S-Curve concept can help in determining when to switch to a new technology.
  • it is very useful to think about how a dominant technology may be replaced by a new, initially inferior substitute
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30
Q

What is “The sailing ship phenomenon”

A

It refers to a situation where the introduction of a new technology leads to a temporary resurgence of an older technology.

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31
Q

What problems can the S-Curve help established companies avoid?

A
  • Avoid over-estimating currently used technology
  • Avoid lack of flexibility in organisational structure and culture
  • Avoid misinterpretation of market signals due to biased attitude
  • R&D budgets are linked to revenues. They should be linked to urgency of R&D efforts.
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32
Q

During innovation: What patterns do we see at product level?

A
  • Industry evolution
  • and dominant design
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33
Q

What are the 3 phases of the product life cycle (PLC)?

A
  • Fluid Phase
  • Transitional Phase
  • Specific Phase
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34
Q

PLC: Describe the Fluid phase

A

This is the initial stage of technology development, similar to the introduction stage in the product life cycle. The technology is new and still being developed, and there may be a lot of experimentation and uncertainty. There may be many competing designs or approaches, and it’s not yet clear which will become dominant. Innovations tend to be radical and non-standardized, and the market for the technology is usually small and undeveloped.

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35
Q

PLC: Describe the Transitional Phase

A

In this phase, the technology starts to stabilize as a dominant design emerges. The focus shifts from radical innovation to incremental innovation, improving and refining the dominant design. The market for the technology grows as it becomes more widely adopted.

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36
Q

PLC: Describe the Specific Phase:

A

This is the mature stage of the technology. The technology is now fully developed and widely adopted, and the focus is on incremental innovation and efficiency. The market is well-developed and the technology is standardized.

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37
Q

PLC: Compare the relationship between Product innovations and Process innovations at each phase of the PLC.

A

Fluid phase: The technology is new and still being developed, there may be a lot of experimentation and uncertainty and competing designs or approaches. There is high investment in r&d. so Product innovation is increases, process innovation doesn’t exist yet. Competion is based on Functional product

Transitional phase: technology starts to stabilize as a* dominant design* emerges. The focus shifts from radical innovation to incremental innovation, improving efficiency and refining the dominant design . Product innovation rapidly declines while process innovation rapidly rises. Competition is based on Product variation

Specific Phase: The technology is now fully developed and widely adopted, and the focus is on incremental innovation and efficiency. The market is well-developed and the technology is standardized. competion is based on Price

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38
Q

What patterns do we see in adoption (i.e from users?)

A
  • varried level of adoption from different groups of people
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39
Q

What are the different categories of adopters according to ROGER’S INNOVATION ADOPTION CURVE?

A
  • Innovators
  • Early adopters
  • Early Majority
  • Late majority
  • Laggards
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40
Q

What are xtics of the “Innovators” from the ROGER’S INNOVATION ADOPTION CURVE?

A
  • “venturesome”
  • active information seekers
  • cosmopolite social relationships
  • able to cope with a high degree of uncertainty
  • gatekeeping role in the flow of new ideas into a system
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41
Q

What are xtics of the “Early adopters” from the ROGER’S INNOVATION ADOPTION CURVE?

A
  • often opinion leaders
  • are more integrated into local social system compared to innovators
  • sought by change agents as a “local missionary”
  • decreases uncertainty about a new idea by adopting it (put “stamp of approval” on the new idea)
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42
Q

What are xtics of the “Early majority” from the ROGER’S INNOVATION ADOPTION CURVE?

A
  • interact frequently with their peers
  • seldom hold positions of opinion leadership
  • make up about one-third of all members
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43
Q

What are xtics of the “late majority” from the ROGER’S INNOVATION ADOPTION CURVE?

A
  • Adoption may be an economic necessity
  • or the result of increasing peer pressures
  • system norms must favour the innovation
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44
Q

What are xtics of the “Laggards” from the ROGER’S INNOVATION ADOPTION CURVE?

A
  • near isolates in social network
  • the past is their point of reference
  • May have limited resources
  • Last ones to adopt technology
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45
Q

According to Rogers’ Diffusion of Innovations Model, adoption is influenced by …

A
  • innovation’s relative advantage
  • compatibility
  • complexity
  • trialability
  • observability

It also considers the role of communication channels, time, and the social system in the diffusion process.

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46
Q

What is diffusion?

A

Diffusion is the process through which an innovation, idea, or technology spreads within a social system over time. It involves the adoption of the innovation by individuals or groups, who then influence others to adopt it as well. Diffusion can occur through various channels, such as interpersonal communication, mass media, or social networks.

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47
Q

What is A diffusion model?

A

A diffusion model is a theoretical framework or a mathematical representation that seeks to explain and predict the diffusion process. These models help researchers and practitioners understand how innovations spread, how long it takes for them to become widely adopted, and what factors influence their adoption rate.

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48
Q

What is Rogers’ Diffusion Model of Innovations ?

A

Rogers’ Diffusion of Innovations Model: This model, developed by Everett Rogers, is based on the premise that the rate of adoption of an innovation is influenced by factors such as the innovation’s relative advantage, compatibility, complexity, trialability, and observability. It also considers the role of communication channels, time, and the social system in the diffusion process.

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49
Q

Who innovates and Why

A
  • Whoever stands to gain most from an innovation
  • Whoever has the lowest cost of doing an innovation
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50
Q

How do we measure innovative activity in a firm?

A
  • R&D expenditure
  • Patents
  • Sales - not as good as patents and R&D
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51
Q

According to Schumpeter 1 , Who drives innovation?

A

Entrepreneurs and NEW FIRMS drive innovation there for fragmented markets are conducive for innovation

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52
Q

According to Schumpeter 2 , Who drives innovation?

A

LARGE FIRMS with market with some monopoly power

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53
Q

How can large firms and entrepreneurs combine together to drive innovation?

A
  • Corporate venturing
  • Client venturing
  • Supplier venturing
  • Joint ventures
  • Technology acquisitions
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54
Q

From the large firm perspective, how do we= Mathematically determine who is more likely to innovate?

A

We can use Arrow’s model for a simplistic view of the market

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55
Q

What assumptions are made by Arrows model?

A
  • Linear demand curve
  • The constant marginal cost of c
  • Radical innovation reduces cost to c1
  • Only the innovator benefits (no information spill-overs)
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56
Q

Which cases are compared by Arrow?

A
  • Ex-ante monopoly => ex-post monopoly
  • Ex-ante perfect competition => ex-post monopoly
  • Ex-ante social planer => ex-post social planer
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57
Q

Describe what happens in the Ex-ante monopoly => ex-post monopoly

A

Before innovation there is a monopoly , and after innovation monopoly remains

  • They risk cannibalising their existing products
  • Thus, Less incentive to innovate against the competition
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58
Q

Describe what happens in the Ex-ante perfect competition => ex-post monopoly

A

Perfect competition before innovation and monopoly arises after innovation
- prices go down, monopoly has resources to undercut on price, thus driving other players out of the market
- drives down prices and benefits consumers
- greatly reduces the profits that the innovating firm can earn from its invention
- Thus reducing the incentive for firms to innovate in the first place.

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59
Q

Describe what happens in the Ex-ante social planer => ex-post social planer

A

Social planner controls the market before innovation, social planner still controls the market after innovation
- Social planner is the government
- They partially experience cannibalisation
- They don’t care about money but more about welfare.
- Welfare is both companies and consumer
- They come out on top

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60
Q

What is the Efficiency effect ?

A

if the innovation is only slightly better than existing products, it is more attractive to remain the only player in a monopolistic market than to become the second player in a duopoly.

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61
Q

What is the Cannibalization effect ?

A

if the innovation is radical, or drastic, and supplants existing products: by innovating, an existing firm – but not a new firm – would lose profits from an existing product.

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62
Q

What are some key questions that policymakers are asking when trying to incentivise innovation?

A
  • Support small or large firms?
  • Support entrepreneurs?
  • Support networking? Between firms, or with universities?
  • Support or inform about patenting?
  • Support internationalization? EU policy!
  • How to harmonize regional, national, and EU-wide policies?
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63
Q

What are the Advantages of NEWNES?

A
  • no path-dependence; can create a business from scratch, thus more willing to pursue completely new approaches
  • less “inertia“; company structure more flexible
  • more open and flexible culture
  • can hire people that exactly match the task at hand; no need for re-training
  • will have, on average, more flexible employees (younger, more entrepreneurial)
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64
Q

What are the Disadvantages of NEWNESS?

A
  • roles and tasks have to be assigned (takes time, creates inefficiencies and conflicts). Org doesn’t have a headcount, to take on all tasks
  • new organizations lack reputation and experience
  • exchange relationships with various actors have to be established
  • new firms have to rely on interactions among “strangers”
65
Q

What are the Advantages of SMALLNESS?

A
  • more flexible processes
  • company structure easier to identify, clearly laid out
  • short ways for communication, direct communication
  • fast decision-making
  • job satisfaction is typically higher
66
Q

What are the Disadvantages of SMALLNESS?

A
  • limited resources (financial, personnel, …)
  • low variety of skills in the firm; some critical skills may be lacking
  • no buffer to survive times of crisis
  • disadvantage on the job market (as an employer)
  • low market power
  • little “organizational slack” available for innovation, training etc.
67
Q

What are xtics of Disruptive Innovation ?

A
  • technologically straightforward. Simpler than existing solutions
  • Initially, they do not satisfy customers in established markets; instead, they are sold to niche or new markets. Underestimated by Established Companies
  • Over time, however, the performance of both established and new technology grows faster than the market needs.
  • Eventually, the new technology supplants the old one even in the
    established, main market
68
Q

What are the struggles for incumbents when it comes to disruptive innovation?

A
  • They sometimes disrupt but also often fail at the most simple things.
  • Clayton Christensen calls this “” The entrepreneurs’ dilemma”
69
Q

What is strategy?

A

‘Strategy’ is the determination of long-term goals of a business as well as suitable steps and the allocation of resources to attain them. ‘Strategy’ intends to establish long-term competitive advantage.

Strategy is costly to change and not possible in the short run
The strategy should take into account the reactions of other players and competitors

The steps we take, e.g. to internationalise and reduce cost, are not a strategy; instead, the strategy is what allows us to be unique, giving us the edge at the end of the day

70
Q

What examples of questions should we be asking when thinking about our strategy?

A
  • What is our competitive advantage, and how can we sustain it?
  • What products and services do we want to sell in five years
  • Do we want to be a technological pioneers or a follower?
  • How much money do we want to invest in r&d?
71
Q

What are the two perspectives (views) of strategy?

A

1. Market-based view
This takes an external perspective. I.e. success is dependent on the environment around them.
We think about how to position ourselves relative to the market environment

2. Resource-based view
We look at what resources and capabilities do we have that could give us a sustainable competitive advantage.

72
Q

What do we we consider when we look at the market based view of strategy?

A
  • bargaining power of suppliers
  • Bargaining power of customers
  • The threat of new entrants
  • The threat of substitute products
  • The competitive rivalry within the market
73
Q

How can we achieve a competitive advantage in the market based view?

A
  • Cost leadership
  • Quality leadership (differentiation). (e.g. technology-related advantages)
  • Focus
74
Q

How can we achieve a Sustainable advantage in the resource based view?

A

For competitive advantage, the resource needs to be
- Be valuable
- Be rare
- Be Inimitable
- Non-substitutable

75
Q

What are the bare minimim xtics of resources required to achieve a competitive advantage in the resource based view?

A

For competitive advantage, resource needs to be.

  • Be valuable
  • Be rare
76
Q

What qualities make resources difficult to immitate?

A

Resources are difficult to imitate if they are:
- Tacit - knowledge that is not written down. I.e. not easily transferable. E.g you would have to steal the person who knows it to get it.
- Path dependent - Knowledge attained from team experience working on a product and cannot simply be replicated elsewhere.
- Socially complex
- Casually ambiguous - you don’t exactly know where it comes from
- Protected by IP
- Secrecy
- Unique by nature

77
Q

Which view should we use when defining our corporate strategy?

A

We need to combine both
Internally
- resource-based
- looking at our Strength and weaknesses

Externally
- market-based
- In search for Opportunities and threats

78
Q

What is strategic intent?

A

Strategic intent is the current point of view of a long-term future that the company wants to create that provides a strategic theme filled with emotion for the whole organisation.

in simple terms, it is a long-term vision for the future, which typically encapsulates its aspirations and the competitive course it sets for itself. This is the driving force that guides all decision-making, operations, and the allocation of resources within an organization.

79
Q

How does strategic intent affect innovation and R&D?

A

It helps us answer:

  • Based on our strategic direction, what are our R&D goals? Thus we get a (Broad) strategic vision for innovation activities
  • What kinds of projects do we need to complete to fulfil the vision? With this we achieve what Products, processes, services we should focus on
  • How do we choose between alternative projects? We can evaluate easily since Projects have different costs, revenue structures, + different dynamic implications for future development.
80
Q

What are the 4 main pillars of innovation strategy?

A

1) What resources for innovation do you own? I.e
- What Capabilities do we have,
- What Resources do we have

2) What technology do we use and how do we acquire it?
- Technology fields
- Degree of innovation
- Type of technology acquisition

3) Can we/How do we create this value internally?
- How do Organisation of rd&d (centralised or decentralised).

4) What value do we create for whom, and how do we appropriate it?
- What Markets do we want to contribute to?
- Type of appropriation (own use, licencing )

81
Q

What are resources that are needed for innovation?

A
  • Financial resources
  • Human resources
  • Technological resources
  • Marketing resources
  • Organisations resources - routines, procedures etc
  • networking resources - partners etc
82
Q

Define innovation capabilities and give examples

A

Capabilities are organisational and managerial skills necessary to organize the resources and deploy them strategically (intangible). They need to satisfy the VRIN criteria

83
Q

What are VRIN criteria?

A
  • Valueble
  • Rare
  • Inimitable
  • Non substitutable
84
Q

Name 5 examples of Innovative capabilities

A
  • Searching – seeking and assessing market and technology opportunities
  • Selecting – choosing amongst future options
  • Configuring – ensuring the coordination and integration of innovation efforts
  • Deploying – delivering internally generated and acquired innovations on time and to budget
  • On a meta-level: Learning – improving the performance of innovation processes
85
Q

What are dynamic capabilities?

A

Dynamic capabilities refer to a firm’s ability to integrate, build, and reconfigure internal and external competencies to address rapidly changing environments. They are about the firm’s capacity to create, extend, or modify its resource base. These capabilities help the firm to continuously align its resources with the changes in the external environment, thus ensuring competitive advantage.

86
Q

What is a vision statement and why is it important?

A
  • It Provides guidance and inspiration as to what an organisation is focused on achieving
  • It explains the “why” behind the organisation
87
Q

What is a mission statement, and why is it important?

A
  • Mission Statement gives Guidance on how to achieve the vision
  • It takes us from the present to the desired goal
88
Q

What is a Market Pull?

A
  • is Identifying a need and developing a solution/technology
  • is Triggered by market (understanding customers, market trends)
  • Attempts to solve a given problem
89
Q

What is a Technology Push?

A

Technology Push: first, develop technology and then seek ways to market it
- it Should create new demand
- is the Result of basic research

90
Q

What problems are associated with the technology push?

A
  • Focus on what can most easily be researched.
  • Scientists might be too focused on one particular solution to a problem (“their” solution)
  • Possible mismatch between innovation ideas based on technology push and corporate interest
91
Q

What problems are associated with the Market pull?

A
  • Focus on most easily identified needs (but with minor potential)
  • Once a technical solution to the respective need is found, one may be too focused on this particular application
  • Market is locked into present products and can only think of incremental improvements
92
Q

What are the four levels of innovation strategy?

A
  • Passive
  • Reactive
  • Active
  • Proactive
93
Q

What are xtics of proactive innovation strategies?

A
  • objective: Technological and market leadership
  • type of innovation: Radical and incremental
  • Risk acceptance: High-risk project portfolio, take big bets
  • Knowledge sources: Science, R&D, collaborations, ead users
  • Examples: DuPont, Apple
94
Q

What are xtics of active innovation strategies?

A
  • objective: Not first to innovate but prepared to follow
  • type of innovation: Mainly incremental
  • Risk acceptance: Medium & low risk projects, hedge bets
  • Knowledge sources: In-house R&D, collaborations
  • Examples: Microsoft, Dell
95
Q

What are xtics of reactive innovation strategies?

A
  • objective: Wait and see, follow a long way behind
  • type of innovation: Entirely incremental
  • Risk acceptance: Only low risk projects
  • Knowledge sources: Competitors, customers
  • Examples: Ryanair
96
Q

What are xtics of Passive innovation strategies?

A
  • objective: Do what is demanded by customers
  • type of innovation: Occasionally incremental
  • Risk acceptance: No risks taken, no bets
  • Knowledge sources: Competitors, customers
  • Examples: Ratiopharm
97
Q

Who can benefit from an innovation?

A
  • The innovator - benefits by selling the innovative product.
  • Customers - they benefit when their valuation of the new products exceeds its price
  • Suppliers and complementors - benefit by selling larger quantities
  • immitators - benefit by marketing the imitation while saving on R&D cost.
98
Q

What are some reasons why innovators may lose to imitators? (according to DJ Teece)

A
  • Lack of resources to turn innovation into something profitable
  • Inability to hide details of innovation ()
99
Q

What are the conditions for an innovation to have the possibility to become profitable?

A
  • Appropriability regime - how easy is it to copy?
  • Life cycle phase - there is a period of experimentation before the curve level out (pre-paradigmatic design phase); this phase is expensive and not very profitable.
  • Complementary assets - you need supporting structures to get your innovation out there and ahead of others. E.g. distribution channels, Competitive manufacturing,
100
Q

What are “appropriability conditions”?

A

these are all factors that influence the possibility of profitable imitation of an innovation.

Correction: it actually how well an innovator can protect their invention.

101
Q

Name 3 appropriability conditions

A
  • availability and strength of legal protection
  • viability of secrecy- i.e. is there the option to keep things secret?
  • characteristics of the underlying technology (complexity!)
102
Q

Name 5 appropriability conditions that result from the nature of product/market

A
  • network effects -
  • switching costs - how easy is it to jump to another product?
  • scale effects -
  • ease of market entry
103
Q

How does the Life cycle phase influence an innovator’s success?

A

in the Pre-paradigmatic design phase, Dominant design has not been established yet Innovators‘ success depends on their ability to make their technology the dominant design

while in the
Paradigmatic design phase where Dominant design has been established, Innovators‘ success depends on the control of complementary assets

104
Q

In what ways can Complementary assets and innovations depend on each other?

A

1) Specialized
they have unilateral dependence of asset on the innovation. It is a one-way relationship, the innovation (the container) is designed in a specific way, but the lorry that carries it is not designed specifically for the container, on offloading, it can be used to carry something else.
- Trucks (convert from containers to flat beds at low cost)

2) co-specialized
Bilateral dependence. E.g. i.e you cannot have the innovation without the asset, and the asset cannot exist without the innovation
- Mazda rotary engine (innovation) needs special repair facilities (complementary assets).
- Containerization needs co-specialized assets in ocean shipping and terminals

3) Generic
No dependence of innovation on asset or vice versa. they are general purpose assets which do not need to be tailored to the innovation
- Electric energy for a computer

105
Q

What are Specialized Complementary assets?

A

they have unilateral dependence of asset on the innovation. It is a one-way relationship, the innovation (the container) is designed in a specific way, but the lorry that carries it is not designed specifically for the container, on offloading, it can be used to carry something else.
- Trucks (convert from containers to flat beds at low cost)

106
Q

What are co-Specialized Complementary assets?

A

Bilateral dependence. E.g. i.e you cannot have the innovation without the asset, and the asset cannot exist without the innovation
- Mazda rotary engine (innovation) needs special repair facilities (complementary assets).
- Containerization needs co-specialized assets in ocean shipping and terminals

107
Q

How can we acquire complementary assets if we need then for our innovation?

A
  • Contract - hire or buy a specialist firm to do this for us, or
  • Integrate - Build it ourselves
108
Q

What are advantages of Contracting as a way to acquire complementary assets?

A
  • Lower capital needs
  • Reputational gain for “smaller” partner
109
Q

What are advantages of Integration as a way to acquire complementary assets?

A
  • Makes imitation more difficult
110
Q

What are drawbacks of Integration as a way to acquire complementary assets?

A
  • Time-consuming
  • Capital-intensive
  • Difficult to reverse
111
Q

What are drawbacks of Contracting as a way to acquire complementary assets?

A
  • Difficult for specialized complementary assets
  • Dependence on contract partner
112
Q

What are some problems that may occur when Contracting for specialized complementary assets?

A
  • Incomplete contracts - Both parties may suffer transaction costs. e.g if one of the parties wants to get out
  • Hold-up - the hold-up problem arises when one party in an agreement invests significantly in assets that are specific to a relationship or transaction, which subsequently makes them vulnerable to opportunistic behaviour by the other party. The fear of being ‘held up’ after making the investment could result in under-investment, which can impede efficient operations and innovation.
113
Q

What factors should the entrepreneur think about when making this choice to compete or cooperate?

A

Go through the markets for products
- Compete with existing products
- Complement existing products

Go through the markets for ideas
- Sell ideas
- Sell your company
- Make alliances

114
Q

What do firms need to profit from innovation via product markets?

A
  • You need the ability to acquire complementary assets to ensure that innovation offers novel customer value proposition
  • Be aggressive, quick and paranoid
  • Manage many factors – marketing, manufacturing, sales and service
  • Establish a market presence
  • Persuade customers of the novelty of offering
  • Avoiding detection by incumbents - be secretive
  • Gaining access to enforceable IPR
115
Q

What do firms need to profit from innovation via markets for ideas?

A
  • License technology to one or more buyers
  • Sell firm to incumbents
  • Joint ventures or strategic alliances
116
Q

What are the Benefits of cooperation (the market for ideas)?

A
  • potential benefits are shared with others – less competition for Schumpeterian rents
  • Allows new firms to build on other firms’ existing competencies
  • Avoids costs of catching-up
117
Q

What are the Risks and costs of cooperation (market for ideas)?

A
  • Paradox of disclosure – willingness to pay depends on their knowledge of the idea, yet the knowledge of the idea brings the risk of stealing the idea
  • Without IPR, buyer firm can claim they knew it already
  • Bargaining power of your firms – do you have the leverage to negotiate for the price you want?
  • Finding partners and negotiating with them can be expensive and time-consuming
118
Q

What is an Appropriability Regime?

A

refers to how easy it easy for companies to copy your idea

119
Q

Why we care about Intellectual Property Rights (IPRs)?

A
  • IPRs can increase incentives to innovate
  • IPRs can help to appropriate profits from innovation
  • The IPRs of others (competitors, suppliers, customers, …) can make a firm’s life and innovative activity difficult
  • The IPRs of others contain valuable information
120
Q

What are the formal ways to protect your ideas?

A
  • Patents
  • Registered Designs
  • Trademarks
  • Copyrights
  • Confidentiality Agreement
121
Q

What are the informal ways to protect your ideas?

A
  • Secrecy
  • Lead time, first mover advantage
  • Complexity of design
  • Switching cost??? -
  • Network externalities??
122
Q

What are PATENTS?

A

A patent is a right of ownership over an invention, granted to an inventor by a government for a specified period of time.

123
Q

What are typical xtics of patents?

A
  • A patent allows the patent owner, or patentee, to prevent others from making, using or selling the invention. In other words it is the right to forbid
  • The owner may sell or license a patent.
  • Patents are territorial rights; so a German patent relates only to Germany. Exception is unitary patents that is being discussed in EU.
  • Patents have limited lifetime. After the end of the patent term, or if the patent should lapse, the invention becomes freely available.
  • Patents cover inventions of products or processes that possess or contain new functional or technical aspects (i.e., the functional aspects of tangible technologies: how things work, what they do, how they do it, what they are made of)
124
Q

What is patentable?

A

To be patentable, an invention must:

  • Be new – prior public disclosure can invalidate an application.
  • Contain an ‘inventive step’ - i.e., compared with what is already know, it should contain something that would not be obvious to someone with a good knowledge and experience of the subject.
  • Be capable of industrial application – i.e., be capable of being made or used in “industry” (broadly defined). i.e., that the invention must take the practical form of an apparatus or device, a product such as some new material or substance or an industrial process or method of operation.
125
Q

What is not patentable?

A
  • A ‘scientific’ discovery – without an industrial application. E.g discovering a new element
  • A scientific method or mathematical method. Although, if you put it into a machine and becomes some kind of algorithm driven product it could be patented.
  • An aesthetic creation (e.g., literature, art, music, etc.). This could be more copy right or design right.
  • A device contrary to the accepted physical laws (e.g., a perpetual motion machines, or a time machine).
126
Q

What are the special cases of what is not patented in Germany and Europe?

A

[In Germany & Europe]
– Computer program (except if technically novel)
– A business method (except if technically novel)
– Invention of a new animal or plant variety
– A method of treatment of the human or animal body by surgery or therapy; or a method of diagnosis

127
Q

How does one obtain a patent?

A
  • submit a patent application to the patent office
  • The application should
    —- describes the technical invention
    —- defines the desired area of protection
  • The application is examined and approved (or rejected) by the patent office
  • In any case, the application is made public after 18 months
  • Avg. time from application to decision at EPO: about 4 years!
  • Granted patents can be renewed for up to 20 ys with exception to pharmaceuticals which can go up to 25 years
128
Q

From what date does patent expiry start counting?

A

20 years starts counting from date of filing the application. Not date of granting.

129
Q

What are the benefits of patents?

A
  • You can use in own production without risk that a competitor receives the patent
  • Profit from Licensing with a payment
  • You could profit from Licensing in exchange for other patents (cross-licensing)
  • Add barriers to rivals. I.e Creates costs for rivals (for invent-around) and potentially entry barriers.
  • It boosts Image and makes ideas more appealing to investors. signaling (esp. for young firms seeking venture capital). Some people may also see the number of patents as a sign of innovativeness of a company.
130
Q

What are the cons of patents

A
  • It can be a costly process. I.e attorney, research, patent office application fee, renewal fees, translation cost
  • You give up secrecy because your application will be public in around 18 months. Giving up secrecy
  • Infringement is not enforced so you have to do it yourself.
  • Detection of infringement can be costly.
  • Assertion of patent in case of infringement can also be expensive. I.e lawyers and settlements.
131
Q

Why do firms file patents?

A
  • Protection from imitation
  • Defensive blockade
  • Offensive blockade
  • Reputations / technical image
  • International market extension
  • Internal performance indicator
  • Motivation
  • Exchange potential - sometimes companies will just exchange patents and pay the difference
  • Negotiating mass - Sometimes companies will have lots of patents to be able to counter sue others when they get sued
  • Licensing revenues
  • Make own invention the standard
  • Capital market
  • Forced to patent bcause of patent Practice of others
132
Q

Why do some firms choose not to apply for patents?

A
  • Demonstration of novelty - Companies may just find it difficult to make their case that the tech is new
  • Information disclosure - Some companies are happier staying in secrecy
  • Ease of inventing around - Some inventions are just too easy to invent around that it is not worth to spend the resources to patent
133
Q

What information can we learn from patents filed?

A
  • Analysis of competitors technology (benchmarking). E.g Patenting profile, patent positions, R&D direction, entry/exit pattern in different technologies
  • Technology breakthroughs, shifts trends and forecasting. E.g Absolute and relative growth trends, weighing technological importance, determining age of technology base
  • International market analysis. Ie Country codes, country coverage of patent families of competitors
  • Valuation of technology assets. E.g Patent volume and patent shares, patent citations
  • Tracking and monitoring of key inventors/actors. E.g Inventor/actor name, patent class codes, invention history. Can be useful for poaching personnel
  • Navigation, monitoring possibilities for inventions and infringements including creation of new in regular R&D work, ideas and inventions or invention principle. E.g Patent claims, invention description
134
Q

What is a Registered Designs?

A

is the two-dimensional or three-dimensional appearance of the whole or a part of a product. The design of a flat surface - for example, a textile or wallpaper - or the appearance of a three-dimensional object is protected by a registered design.” (German Patent office)

135
Q

What is required for a registered design to qualify?

A

To Qualify, A Design Must:
- Be New – i.e., not the same as another design in the public domain
- AND Have Individual Character – i.e., “its overall impression must differ from that of already existing designs.” Relevant is “the overall impression produced by the design on the so-called ‘informed user’”

136
Q

What xtics of registred designs?

A
  • They Takes about 3-4 months (can be as little as 6 weeks)
  • Costs a minimum of €70 (online: €60)
  • Renewal fees payable every 5 years (start at €90)
  • Can be registered up to 12 months after market introduction
  • Unlike patents, does not need to be kept secret
  • Lasts for 25 years provided you pay renewal fees every 5 years
  • Registered Designs are cheap relative to patents
  • They are Available only for product innovations (not process)
  • Protection relates to the country of registration, with exception of : “Registered Community Design”, EU
  • There is No central policing - Design Owner must identify infringements just like patents
  • Probably difficult to enforce except for direct copies. - - So Disputes about ‘similar designs’ likely to involve legal action
137
Q

What is a Trademark?

A

A trade mark is any sign which can distinguish the goods and services of one trader from those of another. A sign includes, for example, words, logos, pictures, or a combination of these

138
Q

What are some advantages and disavdvantages of trademarks?

A
  • Must be used in order to maintain protection!
  • Relatively cheap form of protection – especially as applies to one or more classes of goods and services
  • Infringement is ‘self policed’ – up to firm to identify infringement
  • Legal disputes can arise with ‘similar marks’. It is easier to prove a mark is the same rather than similar
139
Q

What is a Copyright?

A

Is a right against copying – i.e protects expression of ideas, not the idea.

140
Q

Name Other (strategic) forms of protection

A
  • Confidentiality agreements. Usually Between two or more parties
  • Non-compete clauses
  • Complexity of designs
  • Lead-time advantages. i.e., being ahead of competitors and introducing new products to remain ahead
  • Secrecy
  • Revealing (i.e., publicly disclosing your IP and making it accessible to others, usually for free)
141
Q

What are the phases in the The innovation funnel?

A
  • Capabilities assessment and forecasting - we look at what we have, in terms of capabilities and products, what plans etc. Mostly inward looking
  • Market Assessment and forecasting - what are my competitors doing, where is the industry going? Mostly outward looking
  • Development goals and objectives - What are our goals for the future, what are dates, etc
  • Project portfolio planning - prevents Project constipation a situation where there are more projects than resources
  • Project mgt and execution -
  • Post-project learning and improvement -
142
Q

What are the xtics of poorly managed process

A
  • The source of ideas is uncertain -
  • “Product A filter” disadvantages radical PSI - some ideas may get filtered out due to bias because of expertise or selfish interests
  • Pet projects of senior management - You filter things out but then senior mgt slips there own favourites past the process
  • Products get jammed up and recirculate - a lot of back and forth discussions means things don’t move along
  • A lot of hot air at the end, but only a few products “drip” into the market
143
Q

Name the stage-gate stages

A
  • Discovery - Ideas enter and they are screened at gate 1
  • Stage 1 - Scoping -
  • Stage 2 - Build business case -
  • Stage 3 - Development - develop a prototype
  • Stage 4 - Testing and validation -
  • Stage 5 - Launch -
  • Post-launch review -
144
Q

What is the Key homework stage in stage process and why?

A

Stage 2 is the “Key homework stage” because it the last stage before serious money is spent i.e r&d

145
Q

Name the stage-gate gates

A
  • idea screen
  • Second screen
  • Go to development
  • Go to Testing
  • Go to Launch
146
Q

What happens during the discovery phase of a stage gate process?

A
  • Idea capture & handling system
  • Strategic – disruptions in customer‘s industry
  • Scenario generation – “official“ & “alternate scenarios
  • Voice-of-customer research
  • Working with lead users (innovative customers)
  • Technology development (fundamental science) with direction
147
Q

What happens during the scoping phase of a stage gate process?

A
  • Preliminary market assessment
  • Preliminary technical assessment
  • Preliminary business & financial assessment
  • Recommendations & plans for Step 2
148
Q

What happens during the Build Business Case phase of a stage gate process?

A
  • User needs-and-wants study (voice-of-customer research)
  • Competitive analysis
  • Market analysis
  • Detailed technical assessment Manufacturing assessment Concept testing
  • Detailed business & financial analysis
  • Develop Business Case: with
    —– productdefinition
    —– projectjustification
    —– Project plans
149
Q

In stage gate process with multiple projects, Why do we need to rank and prioritise?

A
  • To maximise limited resources
  • To prioritise complementary products that fit into the strategy
150
Q

What are Pros of stage gate process?

A
  • Popular, widely-used tool that clearly sharpens decision-making on many levels (project, portfolio, etc.)
  • Reduce escalation of commitment in New Product Development (NPD). i.,e prevents us from digging deeper and deeper into something that is not working out (think something like the fallacy of sunken costs)
151
Q

What are cons of stage gate process?

A
  • R&D is often political, the process can be “hijacked”
  • Choice of criteria determines throughput, requires hard work. (the question you ask at the gates determines what goes through, but how legit are they?).
  • “More haste, less speed”: the goal should always be a successful product introduction. Translation: if you try to do things in a hurry, you will make mistakes and be slow instead.
  • Tyranny of the process: the process should not become an end in itself (use the process as a guideline rather than a “rule book”).
  • Incremental improvements or routine developments likely need a different stage-gate process than radical innovation.????
  • The right incentives are critical: the reward systems need to support the behaviour needed to make the process work (next slide!)
152
Q

What is “Tyranny of the process”?

A

“Tyranny of the process” refers to a situation where adherence to a process, procedure, or system becomes more important than the actual outcomes or objectives the process is supposed to facilitate. It is when the process itself becomes the primary focus, and the end goal or outcome is neglected.

153
Q

What criteria matters the most in stage-gate process?

A

It depends on the time horizon:

in Early phase
- Is there a market
- How can we solve tech challenges
- Does it fit strategically

154
Q

What is OPEN INNOVATION?

A

Open innovation is the use of purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively.” (Chesbrough, Vanhaverbeke, West, 2006)

155
Q

Why do we do open innovation?

A

We do open innovation because good ideas can come from outside our organisation. “You cannot hire everyone.” so you should leave a window open for ideas to come from outside.

156
Q

What are the technology sourcing strategies in r&d (tech acquisition)?

A
  • Internal R&D
  • Acquisition of innovative firms (units)
  • Joint ventures
  • Technology purchasing (contract R&D, licensing, etc..)
  • Technology scanning
157
Q

What are the technology exploiting strategies in r&d?

A
  • Internal exploitation (direct investment in production and or marketing)
  • Creation of innovative firms (units)
  • Joint ventures
  • Divestment
  • Technology selling (contract R&D, licensing, etc…)
  • Storage, loss and leakages
158
Q

What is the NIH syndrome’ (not invented here)

A
  • Defined as a persistent social, corporate, or institutional culture that avoids using already existing products, research, standards, or knowledge because of their external origins
  • Unwillingness to adopt an idea or product because it originates from another culture
  • Opposite culture is sometimes denoted Proudly Found Elsewhere (PFE)
159
Q

What are Possible failures in the PSI process?

A
  • Do not meet user needs
  • Not sufficiently differentiated from products of competitors
  • Do not meet technical specifications
  • Too highly-priced for perceived value
  • Too late to market
  • Do not comply with regulatory requirements
  • Compete with the company’s other products and services
  • Lack strategic alignment with the business portfolio

MIM Sem 2 (7 decks)

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