Foundations of Strategy Chapter 6: Technology-based industries and the management of innovation Team 6 Morgan Boone Carter Hewlett Brodie Calley Austin Hinkle Nailah Jones

Competitive Advantage in Technology-Intensive Industries Technology.. Innovation.. Advantage Innovation is the initial commercialization of an invention.

Under Armour and their advantages Innovations First to market Ability to protect their technology

Protecting Property Rights Patents Copyrights Trademarks Trade Secrets These are tools used to protect a company's innovations.

Strategies to Exploit Innovation: How and When to Enter Alternative Strategies to Exploit Innovation Licensing Outsourcing Certain Functions Strategic Alliance Join Venture Internal Commercialization

Resources and Capabilities of the Firm Different strategies require different resources and capabilities Smaller companies vs. Larger Corporations

Timing Innovation: To Lead or Follow? Pros and Cons to Leading vs Following Advantages to being and early mover depends on the following factors: The extent to which innovation can be protected by property rights or lead time advantages. The importance of complementary resources The potential to establish a standard Timing depends on resources and capabilities that a firm has at its disposal

Under Armour Leader in Innovation Have vast resources and capabilities

Competing for Standards: Types of Standards A standard is a format, an interface, or a system that allows interoperability Two types of Standards Public- are available to all either free or a nominal charge Private- where the technologies and designs are owned by companies or individuals Mandatory Standards Set by the Government Example: For Under Armor the government regulates the types of materials that can be used in their clothing products

Network Externalities A network externality exists whenever the value of a product to an individual customer depends on the number of other users of that product. Example: The telephone is a classic example. The value of a telephone depends on the number of users using the same system.

Winning Standards Wars Before you go to war, assemble allies Companies cannot afford to go it alone Pre-empt the market Key is to make deals early to penetrate the market Manage expectations Convince customers, and suppliers that you will emerge victories

Creating the Conditions for Innovation “Invention is an act of creativity requiring knowledge and imagination.” In order for creativity to be harvested the organization must create an environment that encourages communication, creativity, and unconstrained forms of experimentation.

Google Free Cafeteria for Employees Napping Pods Intermural Sports Fitness facilities Childcare Legal Services Extra time off and spending money for new parents Reimbursement for continuing education Travel Insurance Personal Trips Included

Organizations that strive to stimulate innovation of new products tend to include the following characteristics: Cross-Functional Product Development Teams Product Champions Buying Innovation Open Innovation Corporate Incubators

Cross-functional product development teams Cross-functional product development teams are best accomplished when members of different departments are placed on one team. These teams are able to radiate a large amount of specialist knowledge very quickly.

Corporate Incubators “Business developments established to fund and nurture new businesses” Corporate Incubators became popular during the IT boom at the end of the 1990s Few companies saw success with this as incubators just became a home for projects that couldn’t get off of the ground.

Product Champions A product champion is an individual within the company that is committed to the product and is very resistant to change. This Person is usually the developer of the idea. Product Champions serve 2 main purposes To incorporate individual creativity To link inventions to subsequent commercialization.

Buying Innovation The recognition by large companies of capabilities that small, technology-intensive start-ups have that they do not. Many large companies look to buy technology, patents, or may choose to acquire the whole company to compensate for this advantage.

Open Innovation “The shift from vertically integrated systems of innovation where companies develop their own technologies in-house, then exploit them internally, to more market based systems where companies buy in technology while also licensing out their own technologies, has given way to ideas of open innovation.” Creating a collaborative network with businesses and developers, allows for firms to grow beyond their own borders. Procter & Gamble’s CEO, A. G. Laffey, challenged the company to have 50% of the new projects introduced by “outsiders” of the company. Some of the companies most profitable products came to the company from this new strategy.

Under Armour- Future Show Competition Under Armour outsources it’s R&D to it’s customers. The winner gets a distribution contract and $50,000. Raes Wear won the 2015 Future Show for the innovation of small pockets in fitness appaeral to hold cell phones, keys, ID cards, etc. while working out.