Technology, Innovation, Timing

Types of Innovation Types of Innovation Incremental Innovation Architectural Innovation Modular Innovation Radical/Disruptive Innovation

Technology Life Cycle

time

PerformPotential

emergent growth mature declineFirst Mover / Follower

Characteristics in Life Cycle

Characteristics Emergent Growing MatureRevenue Growth Fast (?) Moderate SlowStability Low Moderate HighUncertainty High Moderate LowIndustry Rules ?? Fluid FixedCompetitiveness Low Moderate High

Type of Industry

First-Mover Advantages Disadvantages

First-Mover Advantages

Create the standard Low-cost position Intellectual property Tie up resources Increase switching

costs for producer Increase switching

costs for customer

First-Mover Advantages

Create the standard Low-cost position Intellectual property Tie up resources Increase switching

costs for producer Increase switching

costs for customer

Disadvantages

First-Mover Advantages

Create the standard Low-cost position Intellectual property Tie up resources Increase switching

costs for producer Increase switching

costs for customer

Disadvantages Advantages can be

short-lived Higher development

costs Competitors violate

intellectual property Greater uncertainty Consumer reluctance

First Mover vs Follower Pioneers gain significant sales advantages

but incur larger cost disadvantages relative to a fast follower entrant

ROI pioneers < ROI fast followers First mover more likely to attain strategic

resource (Starbucks busy corner strategy)

First-Mover vs Follower With insufficient information early entrance

can lead to large costs Too long, firm may lose the first-mover

advantage

First-Mover vs FollowerC

ash

Flow

Innovation No Competition Low Competition Strong Competition

Window of Opportunity

First MoverFollower

First Mover vs Follower Beta vs VHS Prodigy, CompuServe, AOL When is a first mover strategy called for ?

Tom PetersInnovation EasyMarkets Underserved

Class Exercise What issues would you like to see solved? Break in groups of 3 or 4

Value Net and Alliances Complements to a product

Hot dogs & mustard Starbucks and Barnes & Noble

Partnerships Calyx & Corolla partners FedEx (floral delivery) MicroSoft & Mac – spreadsheet & graphical apps

(allowed MicroSoft to exploit Apple’s graphical interface & create windows)

Technology & Innovation Strategy Innovation is commercialized invention 6% of independent inventions make it to

market Success rate for inventions in established

firms 4 times as high Invention to Venture can be a long road

(Chester Carlson invented photocopier in 1942. Xerox introduced first copier in 1960).

Dimensions of Tech. Innovations Importance Radicalness Patent Scope

Dimensions of Tech. Innovations Importance

Magnitude of economic value of invention Radicalness

Market effect of the commercialized invention (disruptive innovation)

Patent Scope Breadth of intellectual property protection

New Technology

New Invention

CharacteristicsImportanceRadicalnessPatent Scope

Avail Resources Commercialize

New Firm

Capabilities /Knowledge of

EntrepreneurialTeam

CharacteristicsOf

Industry

No Yes

Tech Innovation Strategy Innovation based on invention & creativity and

is defined as invention that has produced economic value in the marketplace.

Innovation based on commercialization of new technology Skis – Snowboards Schwinn bicycles to mountain bikes

Weird Video

Sources of Innovation Lead users

Product ideas but not average users Sliced peanut butter

Build it & they will come (often fails) Assumes customer will do what they say

(fertilizer vs organic fertilizer) Market analysis

Creativity & Invention

Describe The Problem

Incubateobserve problem

Brainstorm

InsightsInventive think

Build / TestPrototype

Evaluate / TestIdeas

Start

New Technology Ventures Neither the first companies to use

technology nor the companies with the best technology win

Companies with right application for the technology win Apple invented Newton PDA, Palm application graffiti interface

Technology Factors• Feasibility• Performance• Manufacturability

Business Factors• Vision• Target Market• Value Proposition

Strategy• Industry/Competitor Analysis• Expected Competitive Adv.

Expected Economic Results• Revenue / Profitability• Return on Capital• Time to profitability

Question: www.gentex.com Gentex Corp. designs and manufactures

automatic-dimming review mirrors. Its safety mirrors use sensors and electronics to detect glare from trailing approaching vehicles at night and darken accordingly. Describe the technology that Gentex uses. Describe a value-net base for Gentex and who its partners might be.

Question: www.gemcar.com Daimler Chrysler is offering a car called

GEM that runs on a battery and will travel up to 30 miles with a top speed of 25 mph before needing recharging. It sells for $6,000-$8,000. What innovation is necessary to make this car a winner?