context of innovation

context of innovation

1. internal context

   • natural of innovation
     • an iteractive search process for novel and useful product, process, servicedesign or technologies
       • innovative outcome can come from
         • unplanned event
         • systemetic search effort base on scientic knowledge
         • creativity often involve change of perspective, look problem from unexpected angle (easier for outsider)
   • recombination
     • innovation most often the result of recombination of existing element of knowledge or build on prior knowlege for inspiration/ prior technology
       • knowledge in one industry may apply on other industry
       • egL pad-based baby milk
     • physical resource: material asset
       • human resource: knowledge
         • diversity people in a team
   • No1 asset: specialized knowledge
     • a resouce can provide competetive advantage: 1. valuable 2. rare 3. inimitable 4. non-substituable
       • but knowledge is fungible
         • if knoweldge is easily exchange or copied, figure out when, how where use that new knowledge
     • R& D
       • not always lead to innovation, but expereince knowledge valuable

2. external context

   • Porter's five forces: explain drivers of innovation
     • 1. rivaly among existing competitor
     • 2. bargaining power of supplier
     • 3. bargaining power of buyer
     • 4. threat of new entrants
     • 5. threat of subsitude products or services

3. theory

   • 1. Rogers diffusion of innovation (adoption speed)
     • 1. relative advantage
       • cost benefit, compare with exisitng one, how much advantage
     • 2. observability
       • see the advantage
     • 3. triability
       • how hard to test, first time trial
     • 4. compatibility
       • whether require user to change behavior
     • 5. complexity
       • hard to learn
     • 6. risk
       • how much switchin cost
   • 2. product life-cycle model
     • • fluid phase:
         • firms are searching for best product design, tech and market are uncertain, engineers have different opinion of fundemental properties and product requirement
           • many small firms exist and ment new entrants, this phase full of innovation, company constantly develop new product feature aligh with customer want
           • high diversity/ diverse design/ fast response to external environment/ rapid change and high margin/ product innovation driven by customer need/ innovation strategy-- performance maxmize/ compete base on product diffrentiation
       • transitional phase
         • market expend and stablize around dominant design
           • rigid and standardize production system/ more automatic production/ user develop loyalties/ firm becomes good at advertising, marketing, distribution/ innovation strategy-- sales maximizing
           • dominant design
             • basic design architecture becomes the accepted market standard (define the product/ product requirement)
               • 50% or more of new sales for 3 years in row
             • constitude industry agreement
               • enforce standardize, so complementary economics can be sought
               • prior to appearance of dominant design, expect to variaed firm enter
               • following it, expect to see exit and consolidation
             • what hold dominant design in place
               • threshold effect: cost of making a change outweight benefit
               • network effect: value of design increase as more people use it
       • specific phase
         • focus on incremental improvement on design and manufacturing efficiency
           • dominate limited large player , product &process innovation continue to decline
           • decrease product variety/ highly integrate--change difficult/ rare process redesign/ competition ceter to rpice / low margin/ oligopoly industry/ economics of scale emphasize/. innovation largely incremental/ strategy-- cost minimizing
   • 3. S-curve of adoption and switching
     • how new innovation disrupt dominant standard
   • 4. Moore's chasm
     • adopter change in stages
       • main reason of s-CURVE
         • the chasm: many product reach first two stages, but fail to jump to early majority
       • significant gap
         • very different groups of consumers
         • communication between 2 groups almost impossible
           • pragmatist only use when product always use by majority pragmatist , and generally look others as reference
             • marketing work with early adopters, not simply effective to early majority

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