What is Innovation Strategy?
The overall firm-level coordination of an organisation’s efforts to create value to its customers and appropriate that value as profits
What are the Three types of market entrants
1) First Movers (pioneers)
2) Fast Followers
3) Late followers
What are the advantages of being a first mover?
1) Brand Loyalty
2) Technological Leadership
3) Establishing a new industry standard
4) Securing exclusive control of scare assets before competitors
What are first mover disadvantages?
1) Heavy R&D costs
2) Uncertainty of Customer needs
3) Underdeveloped infrastructure/technologies
What should first movers pay attention to?
A) Product development: Good enough to be adapted by customers and not be replaced
B) Market Infrastructure: Supply and Distribution channels/Enabling technologies
C) The Firm’s capabilities: Having/Developing the needed production, distribution and marketing channels
How do Fast followers succeed?
Learn from the first movers then invest heavily in R&D to catch up technologically
How do Late followers succeed?
Can’t rely on timing, thus they should rely on superior resources, capabilities and strategic positioning
Why is being the first mover insufficient to be a market leader?
Firms have to take time ensure the product fits the market, that there is appropriate market infrastructure and adequate capabilities within the firm
What is closed innovation?
Innovation developed internally within the firm. Usually done when you have limited external knowledge
Examples of closed innovation
1) Development Process: Dedicated in-house teams of R&D units
2) Basis for technological improvements: Innovate internal expertise rather than trial-and error evolution
3) Management of technology: Control development process yourself
4) Exploiting innovations: Bring it to the market yourself NOT with collaborators
What is an open innovation?
Innovation that leverages external ideas, collaborators and partners. OUTSIDE THE FIRM.
Value is appropriated through complimentary resources and capabilities
Examples of Open innovation
1) Development process: Cross firm collaboration
2) Management of Technology: Create a network of firms around the technology
3) How is innovation exploited? Collaboration, Licensing, Spin-offs
What is exploitation?
Refining EXISTING competencies to improve efficiency and short term returns through INCREMENTAL INNOVATION
What is exploration?
RADICAL not incremental innovation
Developing new capabilities, searching for new opportunities, being malleable for the future
What is organisational ambidexterity?
When a firm can explore and exploit at the same time
