Ba 449

Front 1

Invention

Back 1

Creating new technical solutions by developing new
knowledge or combining existing knowledge in new
ways

Front 2

Innovation

Back 2

Commercialization of invention by producing and
marketing a new good or service or by using a new
method of production (or …) … in general, unleashing
the potential value of inventions for society

Front 3

Producing technology that creates most value

Back 3

– Being innovative  Any innovation has potential rivals
– To win, create value for customers (real or perceived)

Front 4

Ability to capture value from innovation

Back 4

Technology embodies knowledge, which is inherently hard
to “own”
– Firms can capture value from both their own technology
and that created by others

Front 5

Profits
from
Innovation

Back 5

–Value
generated by
innovation
–Ability to
capture value
from innovation

Front 6

Ability to
capture value
from innovation

Back 6

• Legal (property rights)
• Secrecy
• Complementary resources
• Lead time (first mover
advantage)

Front 7

Value
generated by
innovation

Back 7

• Commercialization
strategies
• Standards Strategy
• Organizing for Innovation

Front 8

Alternative Strategies for Commercializing Innovation

Back 8

-Licensing
-Outsourcing certain functions
-Strategic Alliance
-Joint Venture
-Internal Commercialization

Front 9

Dominant Design

Back 9

A generally adopted configuration
that defines the look, functionality, and production criteria
for a product.

Hint 9

– Internal-combustion steel-framed car
– Tubular-fuselage fixed-wing airplane
– QWERTY typewriter
– IBM PC mini computer
– CMOS semiconductors

Front 10

Interface Standard

Back 10

A generally adopted specification
that defines the way in which different components interact
with each other.

Hint 10

VHS, TCP-IP, MP3, USB, DVD, Bluetooth, Flash video

Front 11

Standards can be set by...

Back 11

(1) Government (2) Non-governmental voluntary groups
(3) Companies competing in the market place

Front 12

Network Externalities: Value to user depends on how
many other users adopt that product

Back 12

Linkages between users (e.g. telephone, file swapping,
online gaming)

Availability of complementary products (e.g. BlueRay
movies, I-tunes music, games, software)
– User lock-in is also important: limits buyer power and poaching
by rival standards

Front 13

Open standards decrease profit appropriation

Back 13

– Rivals imitate easily
– Increases buyer power and supplier power due to
lower switching costs
– Possible loss of control (Java-Microsoft … Android?)

Front 14

Open standards increase market acceptance
(value generation)

Back 14

– Low switching costs for buyers increases demand
– Less uncertainty for suppliers regarding design
elements leads to more suppliers and lower costs
– Can encourage innovation in your standards as
opposed to rivals
– More network externalities (builds critical mass)

Front 15

Patents -

Copyrights -
Trademarks -
Trade Secrets -

Back 15

Patents —exclusive rights to a new product,
process, substance or design.

Copyrights —exclusive rights to artistic, dramatic,
and musical works.

Trademarks — exclusive rights to words, symbols
or other marks to distinguish goods
and services; trademarks are
registered with the Patent Office.

Trade Secrets — protection of chemical formulae,
recipes, and industrial processes.

Front 16

Lead Time

Back 16

If rivals can imitate-- time lag is the major
advantage of the innovator.

But maintaining lead-time advantage requires
continuous innovation

Lead time is reinforced by learning effects

Front 17

First mover (dis)advantage

Back 17

Advantages---
– Above-average
returns until other
competitors respond

Disadvantages---

Uncertainty about
demand / technology

High development costs

Risk adopting a losing
standard (Betamax /
VHS)

Competitor with strong
complimentary resources
may be watching
effectively
– Start down the
learning curve earlier
– Build brand and gain
customer loyalty
– Build complimentary
resources
– Opportunity to set
standards

Front 18

Profiting from Innovation

Back 18

– Companies must pay close attention to how they will
appropriate value from innovation

Often others will appropriate the returns
– Innovative companies must also consider how they
can compete effectively against entrenched industry
incumbents

Front 19

Generating value from Innovation

Back 19

Generating value from Innovation
– Pay close attention to commercialization strategies
– Open innovation can be a powerful force
– Competing on standards is common and important