scholten +technological+innovation+1

8/3/2019 Scholten +Technological+Innovation+1

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1UNCHAIN Technological Innovation

Technological Innovation

UNCHAIN

Dr. V.E. Scholten


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Aims for today

to present a class that I teach for 3rd year

bachelor students in Technology-based

entrepreneurship and a class that I teach

for master students on opportunity framing

to get insight into the contents of each

course

to get acquainted with the methods,

assignments and course organisation


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Contents

Analysing environmental change, dominant logic, industry analysis

Analysing opportunities

Technological developments, Fosters S-curve, diffusion and

imitation

Product Life-Cycle and competitive advantage

Intellectual properties

Discussing the John Morse case

Perspectives on opportunity framing


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Analysing environmental change, dominantlogic, industry analysis

Organization Environment

Sustainable

competitive

advantage

Role oftechnology

innovation


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Fortune 500 Computer firms - Return on Assets : 1954-2002

-30

-20

-10

0

10

20

30

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

Year

ROA(%

Apple

Bull

Burroughs*

Casio

Compaq

Control DataDEC

Dell

Fujitsu

Honeywell

HP

IBM

NCR

Nixdorf

Olivetti

Sperry

Sun

Toshiba

Wang

Zenith


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Discontinuoustechnological innovationand firm alignment withthe environment

1) Firm is aligned with environment

==> Dominant logic prevails

2) Change in environment

3) build-up of stress between

changing demands of

environment and inert company

==> need to unlearn dom. logic

4) Stress is too large,

firm renews

5) Firm is aligned

with environment

Environment

Firm



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Various levels of analysis

Macro-environment (PEST framework) Political, Economical,

Social and Technological

Meso/Industry environment

Porters five-forces

Task/Micro

customers, suppliers,

competitors of focal firm

Analysing the environment


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Analysing the environment: Macro level


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Analysing the environment: Macro level


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Analyse van industrien

Analyse waardeketens

Industry valuechain

Analysing the environment: Industry level


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NewEntrants

Substitutes

Industry

Competitors

Intensity of

Rivalry

Suppliers Buyers

Bargaining power Bargaining power

Threat of new entry

Threat of substitutes

Porters Five-Forces

Analysing the environment: Industry level


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12

UNCHAIN Technological Innovation

Technology diffusion

Product life cycle and strategies to exploit innovation

Alternative approaches

Timing: to lead or to follow?

Competitive advantage in technology-intensive Industries Appropriating the returns to innovation

Competing for standards

Implementing technology strategy The conditions for creativity

From invention to innovation

Analysing the environment: Micro, Firm level


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Basic

KnowledgeInvention Innovation Diffusion

IMITATION

ADOPTION

Supply side

Demand side

Analysing the environment: Micro, Firm levelTechnology diffusion


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Basic

KnowledgeInvention Innovation Diffusion

Adoption

Supply side

Demand side

Imitation

1954 1956 1961 1970s



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Electronic imagingElectronic imaging

lightlight--lens openinglens opening

Jet enginesJet engines Piston enginesPiston engines

Fosters S-Curve

Effort invested



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Problems with emerging technology

-Early problems-Low technological performance,

little reliability-Few customers-Unpredictable



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When is the best moment for a start-up toenter, and why?

Why dont existing firms risk that stage?

Problems for start-ups here:-No income-Little customer credibility

-Survival dependent on finance-Burn rate rate of cash consumption-Sinking/ missing the boat



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Dominant design (DD)

Convergence of technologies- standardized product

- economies of scale- efficiency, learning effects

before dominant design

- multiple designs- fragmented market- low barriers to enter

DD



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Clean cars

Dominant design dependent on

- social,

- political,

- organisational,- technological factors

Hybrid

Hydrogene

FlexfuelElectric

Analysing the environment


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Introduction MatureGrowth Decline

Time

Sa

les/profits

Product sales

Product profits

Analysing the environment: Micro, Firm levelProduct life cycle


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Introduction pros and cons for starter

+ First-mover

+ Building a name

+ learning curve

wrong position of market/ technology



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Growth pros and cons for starter

+ High returns

+ Mass market starts, grow into efficient scale

+ Mass market starts, grow in functional areas (distribution etc)

- New entrants

Product Life CycleProduct Life Cycle


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mature pros and cons for starter

+ Convergence to standards

+ Start-ups can benefit through differentiation

large production capacity and efficiency required

Danger of caught in the middle

Shakeout low performers

Import cheap products

Product Life CycleProduct Life Cycle


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Decline pros and cons for starter

exit the industry consolidate of industry maximizing profits



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Twee krachten hebben invloed op de product life cycle

1. Groei van de vraag

2. Kennis creatie en diffusie



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Customers

Health

Insurer

Imitators

Innovator

Producer

Pharmaceutical Industry

Hospital

Analysing the environment: Micro, Firm levelAppropriation of the value


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1. Legal protection

2. Complementary

resources

3. Imitability of the

technology

4. Lead time

Profits

from

Innovation

Value of the

innovation

Innovators

ability to

appropriate the

value of the

innovation



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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.

Also, private contracts between firms and between a firm and its

employees can restrict the transfer of technology and know how.



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Bargaining power of owners of complementaryresources depends upon whether complementaryresources are genericorspecialized.

Manufacturing Distribution

Service

Complementary

technologies

OtherOther

Marketing

Finance

Coretechnological

know-how



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BaseStation

Software company

SMSCenter

Established telecom

Nokia



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Imitability of technology

Chracteristics of the technology

Codified versus Tacit knowledge know-how, intuition, insight, routines

Simplicity versus Complexity Technological sophistication Number of parts



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Lead Time

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

Performance

Learning Curve

Time



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Class on Opportunity Framing

Master level class to understand dynamics of opportunities

Start with the John Morse Case

Was there a better way for John to proceed at any point? Where should he go at the end?

Did he get to many or to few ideas?

What should John have learnt from the process?

What do you think the right approach is?


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Idea identification versus opportunity recognition

Opportunities are temporal need work require a fit need to be valuable, need to solve

something

An idea is not (yet) an opportunity

Ideas remain are free

every can have do not need clients to exist


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Types of opportunities

Incremental,

small improvement of existing product/ process etc

Innovation,

more radical change and improvement

Imitative,

similar product/ service for another target group

Rent-seeking,

no value added/ no productivity increase but exploitation of goods, for

instance land use


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Types of opportunities

Entrepreneurs

Intrapreneurs

Public entrepreneurs

Managers


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Opportunity

Opportunity is a favorable junture of circumstances with a good

change for success or progress

Opportunity is an imprecisely defined market need, or un- or under-

employed resources or capabilities


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Two fundamental views on entrepreneurship Cheah 1990:

Kirznerian Entrepreneurship: New ventures provide products or services that are very

nearly imitations of existing offerings, reproduced with minor variations (Kirzner, 1973).

Schumpeterian Entrepreneurship: New ventures offer products or services that are truly

novel and that represent new and different combinations of resources (Schumpeter,

1934).

Opportunity discussion - The entrepreneur


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Schumpeter & Kirzner

Schumpeter: Reform and revolutionize Creative destruction Reorganizing industry

Disturb existing economic equilibrium

Kirzner Alertness, and perceive opportunities before others do Establish equilibrium Opportunities as combinations of existing knowledge Incrementalism

Would you address Kirzners opportunity as entrepreneurship?


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Examples


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Schumpeter or Kirzner

Which is more likely?

Do they interact?

How do they interact?

Can we find examples?

How about John Morse?


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Rationale for a businessplan

Goal setting theory (Locke and Latham, 1990)

Benefits:

- Planning improves subsequent human action

- Integration and alignment of goals

- Instrumental and forces to rethink issues

- Provides insight in necessary skills, resources

- Framework for actions, schedule and milestones

Opportunity discussionPlanning vs Improvisation


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Often it takes years before the actions in a business plan areexecuted

Then is there any value in improvising?

Improvisation is the degree to which the composition andexecution of an action converge in time. Moorman et al. (1998)

In the purest form there is no time between the decision(composition) and the execution of an action. The entrepreneurexecutes directly the decision he has made.

Extemporaneous composition => composed on the spur of themoment

Opportunity discussionPlanning vs Improvisation


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RedundancyRedundancy

NonNon--redundancyredundancy

Victor E. Scholten

Structural Embeddedness Position of the person or firm in thenetwork

Redundancy (Closure Argument) Trust and enhanced communication,

Reputation flows, Continuity ofLinkage

Non-redundancy (Structural hole

argument) Opportunities, Time advantage, and

Referrals

Opportunity discussionEntrepreneurial networks


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Mini-assignment: paraphrase

Paraphrase: Write it in Your Own Words

The mini-assignment is to write a paraphrase of max. 1000 words

about an appointed literature text and present the paraphrase in

class.

Deals with the main topics and describes the core message of thetext.


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Title, authors and publication date

Main research question

Main results and conclusions

The approach to answer research question

Theoretical perspective/ arguments/ assumptions/ conceptual model

Methods used to provide evidence (quantitative, qualitative, literature review,data collection methods)

Research tradition: to which research field and/ or discussion do the authors

contribute? When necessary you can include some important citations or references

Mini-assignment: paraphrase


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Thank you

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