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Strategic Choices 9: Innovation and Entrepreneurship
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Strategic Choices9: Innovation and Entrepreneurship
Exploring Corporate Strategy 8e, Pearson Education 2008
Learning Outcomes (1)Identify and respond to key innovation dilemmas, such as the relative emphases to place on technologies or markets, product or process innovations, and the broad business modelAnticipate key issues facing entrepreneurs as they go through the stages of growth from start-up to exit
Exploring Corporate Strategy 8e, Pearson Education 2008
Learning Outcomes (2)Anticipate and to some extent influence the diffusion or spread of innovationsDecide when being a first-mover or follower is most appropriate in innovation, and how an incumbent organisation should respond to innovative challengersEvaluate opportunities and choices facing social entrepreneurs as they create new ventures to address social problems
Exploring Corporate Strategy 8e, Pearson Education 2008
Exhibit 9.1 The Innovation-Entrepreneurship FrameworkTimingEntrepreneurshipInnovationRelationships
Exploring Corporate Strategy 8e, Pearson Education 2008
What is Innovation?Innovation involves the conversion of new knowledge into a new product, process, or service and the putting of this new product, process, or service into use, either via the marketplace or by other processes of delivery.
Exploring Corporate Strategy 8e, Pearson Education 2008
Sole TechnologyFor what reasons is it important to be authentic in the skateboarding shoe market?If a big company like Nike or Adidas was looking to grow in this market, what would you advise it to do?
Exploring Corporate Strategy 8e, Pearson Education 2008
Implications of Product/Process Innovation ModelNew developing industries favour product innovationMaturing industries favour process innovationSmall new entrants have greatest opportunities in early stages of an industryLarge incumbent firms have advantage in later stages
Exploring Corporate Strategy 8e, Pearson Education 2008
What is a Business Model?A business model describes the structure of product, service, and information flows and the role of participating parties.
Exploring Corporate Strategy 8e, Pearson Education 2008
What is Diffusion?Diffusion is the process by which innovations spread amongst users, varying in pace and extent.
Exploring Corporate Strategy 8e, Pearson Education 2008
Supply Side Determinants of Pace Diffusion Degree of improvementCompatibilityComplexityExperimentationRelationship management
Exploring Corporate Strategy 8e, Pearson Education 2008
Demand Side Determinants of Pace DiffusionMarket awarenessObservabilityCustomer innovativeness
Exploring Corporate Strategy 8e, Pearson Education 2008
Exhibit 9.3 The Diffusion S-Curve
Exploring Corporate Strategy 8e, Pearson Education 2008
Decision Points Indicated by S-CurveTiming of the tipping pointTiming of theplateauExtent ofdiffusionTiming of thetripping point
Exploring Corporate Strategy 8e, Pearson Education 2008
The MySpace SnowballHow should potential advertisers have interpreted the upwards blip in daily reach in late 2004 and downwards blip in early 2006?How would you forecast future demand for MySpace?
Exploring Corporate Strategy 8e, Pearson Education 2008
What is a First-Mover Advantage?A first-mover advantage exists where an organisation is better off than its competitors as a result of being first to market with a new product, process, or service.
Exploring Corporate Strategy 8e, Pearson Education 2008
First-Mover AdvantagesExperience curvebenefitsScalebenefitsPre-emption of scarceresourcesReputationBuyerswitching costs
Exploring Corporate Strategy 8e, Pearson Education 2008
Late-Mover AdvantagesFree-ridingLearning
Exploring Corporate Strategy 8e, Pearson Education 2008
What is a Disruptive Innovation?A disruptive innovation creates substantial growth by offering a new performance trajectory that, even if initially inferior to the performance of existing technologies, has the potential to become markedly superior.
Exploring Corporate Strategy 8e, Pearson Education 2008
Lush Cosmetics, A Disruptive Innovator?What are the advantages and disadvantages of a fixed rule such as discontinuing one-third of a product range annually?What are the limits and dangers of customer-driven innovation as at Lush?
Exploring Corporate Strategy 8e, Pearson Education 2008
Exhibit 9.6 Stages of Entrepreneurial Growth
Exploring Corporate Strategy 8e, Pearson Education 2008
What is Social Entrepreneurship?Social entrepreneurship involves individuals and groups who create independent organisations to mobilise ideas and resources to address social problems, typically earning revenues but on a not-for-profit basis.
Exploring Corporate Strategy 8e, Pearson Education 2008
Social Entrepreneurship DecisionsSocial missionOrganisational formBusiness model
Exploring Corporate Strategy 8e, Pearson Education 2008
Chapter Summary (1)Three fundamental decisions in innovation facing strategists include the relative emphasis to put on technology push or market pull, whether to focus on product or process innovation, and how far to concentrate on technological innovation or business model innovationInnovations often diffuse into the market following an S-curve modelManagers have a choice to enter first or enter later
Exploring Corporate Strategy 8e, Pearson Education 2008
Chapter Summary (2)Incumbents must be careful of being victim to disruptive innovationsEntrepreneurs face characteristic dilemmas as their businesses go through the entrepreneurial life cycle of start-up, growth, maturity, and exitSocial entrepreneurship offers a flexible way of addressing social problems
Exploring Corporate Strategy 8e, Pearson Education 2008
Key Debate: Are Large Firms Better Innovators Than Small Firms? What kinds of managerial action might you consider if you were trying to increase the innovativeness of a large firm in a high-technology manufacturing industry?
Exploring Corporate Strategy 8e, Pearson Education 2008
Case Example: Skype (1)
Exploring Corporate Strategy 8e, Pearson Education 2008
Case Example: Skype (2)Skypes software allows people to use the Internet to make free calls to other Skype usersSkypes costs are very low. Customers use their own computers and marketing is accomplished via word of mouthIt earns revenues on ancillary services
Exploring Corporate Strategy 8e, Pearson Education 2008
Case Example: Skype (3)
Exploring Corporate Strategy 8e, Pearson Education 2008
Case Example: Skype (4)eBay purchased SkypeThere are similarities in the business modelseBay plans to leave Skype to manage its own business
Use ebay video: start at 5:50 to 6:13. This is the section on how surprised ebay was that people are selling cars on ebay.
