1. Technology, Innovation, Timing

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

3. Technology Life Cycle First Mover / Follower Perform Potential time
emergent growth mature decline
First Mover / Follower

4. Characteristics in Life Cycle

5. First-Mover
Advantages
Disadvantages

6. First-Mover Advantages Disadvantages 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

7. 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)

8. First-Mover vs Follower
With insufficient information early entrance can lead to large costs
Too long, firm may lose the first-mover advantage

9. First-Mover vs Follower
Cash Flow
Innovation No Competition Low Competition Strong Competition
Window of Opportunity
First Mover
Follower

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

11. Tom Peters
Innovation Easy Markets Underserved

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

13. 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)

14. 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 Xerox introduced first copier in 1960).

15. Dimensions of Tech. Innovations
Importance
Radicalness
Patent Scope

16. 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

17. 5 Expected Trajectory Current performance of the innovation
Innovation Strategies 5
Disruptive or radical innovations introduce a set of attributes to a marketplace different than the ones that mainstream customers historically have valued, and the products often initially perform unfavorably along one or two dimensions of performance that are particularly important to those customers.
The Expected Trajectory of a Disruptive Innovation
High
Range of performance required in the mainstream market
Performance
Expected Trajectory
Current performance of the innovation
Low
Now
Time
Chapter 5: Figure 5.7
Technology Ventures: From Idea to Enterprise

18. New Technology
New Invention
Characteristics
Importance
Radicalness
Patent Scope
Avail Resources
Commercialize
New Firm
Capabilities /
Knowledge of
Entrepreneurial
Team Of
Industry
No Yes

19. 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

20. 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

21. Creativity & Invention
Describe
The Problem
Incubate
observe problem
Brainstorm
Insights
Inventive think
Build / Test
Prototype
Evaluate / Test
Ideas
Start

22. 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

23. 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