ndifranco94's version from 2016-12-05 03:51


Question Answer
Formalizationthe degree to which the firm utilizes rules and procedures to structure the behavior of employees
Formalization can be substituted formanagerial oversight, but can make firm rigid
Standardizationthe degree to which activities are performed in a uniform manner
Standardization resultsmooth, reliable outcomes, but can stifle innovation
Centralizationdegree to which decision-making authority is kept at top levels of the firm OR degree to which activities are performed at a central location
Centralized authorityensures projects match firm-wide objectives, may be better at making bold changes in overall direction
Centralized activities result inavoid redunancy, maximize economies of scale, facilitate firm-wide deployment of innovations
Problem with centralized authoritymay not tap diverse skills and resources, projects may not closely fit needs of markets
Tech Innovation is the ____ of competitive successsingle most important driver of competitive success in many industries
How does innovation affect salesmany firms earn over 1/3 of sales on products developed in last 5 years
How does product innovation help firms?Protect margins w/ differentiation, make mfg more efficient
CAD/CAM systemsenable rapid design, shorter production runs
Information Technology has led toshorter product life-cycles, more rapid product introductions, greater segmentation
Why is it hard for most firms to innovate?many firms to do not have an Innovation Strategy
Innovation Strategycommitment to set of coherent, mutually reinforcing policies or behaviors aimed at achieving a specific competitive goal
What does a good innovation strategy do?promote alignment among diverse groups within an org, clarify objectives/priorities, help focus efforts around them
Copying innovation strategy or picking "flavor of the year"not the way to strategize, each firm is diff
What questions should an innovation strategy answer?How will innovation CREATE VALUE for customer?, How will company CAPTURE A SHARE OF VALUE?, What TYPES OF INNOVATION will allow company to create/capture value and WHAT RESOURCES do they need?
Market SegmentationProcess of dividing an entire market up into diff customer segments
Targeting or target marketingdeciding which potential customer segments the company will focus on
Customer Need (B2B)desire outcome that has a business value for a persona
Customer Need (B2C)consumer need = consumer's DESIRE for a product category's specific BENEFIT on a fxnl or emotional level during a specific time or SITUATION
Segment identity factorsDemographics, Usage behaviors, Psychographics (culture)
B2B Customer Needs driven byFirm demographics, company culture, usage behaviors
Jobs-to-be-Done theoryLooking at average consumer doesn't work, need to evaluate circumstances that arise in life. Understand "jobs" that need to be done and create products to be "hired" for that job.
What is segment attractiveness driven by?Market demand, Competitive intensity, Market access
Market demand factorssize, growth rate, potential
Competitive intensity# of companies, ease of entry, substitutes
Market access factorscustomer familiarity, channel access, company fit
Mass-Market StrategyIgnore segments and try to reach as many people as possible with one strategy
Segmentation StrategyApply diff strategies to diff segments to capitalize on each, ex. quality segment = high price low volume, price segment = high volume low price
Adjacent Segment Strategystart in one segment (s/a low price) and gradually move into others over time (ex. Toyota)
How do you define customer valuebenefits > price
Firm profit occurs whenprice > cost (why did I type this out)
Competitive Advantage typescost, differentiation, marketing
Cost Advantageproduce products less expensively
Differentiation Advantageproduct differentiation, better service or reputation
Marketing AdvantageMarket leader, product lines, channel advantage
Scale Effectlarger unit volume = production/purchasing economies
Scope Effectlower average unit cost by adding products w/ similar mfg processes/materials (ex. P&G detergents, Campbell's soups)
Learning Effectseach unit is made more efficiently
Market Share Advantagemore dominant market share leaders have higher profits (ex. Google >> Bing, Yahoo, Ask)
Channel Advantagebiz w/ exclusive distributor access and control channel and possibly market access
Porter's 5 ForcesSupplier power, Buyer power, Threat of sub, Threat of new entry, Competiion
Creativitythe ability to produce work that is USEFUL and NOVEL
Causal ThinkingCome up with goal and gather means to reach it; more structured, less creative
Effectual ThinkingLook at means and define goal based on what you can make; can spark creativity!
Organizational Creativity is a fxn ofindividual creativity + social processes and contextual factors that shape interactions/behaviors
Methods of encouraging creativityIdea collection systems, creativity training programs, culture that encourages (without PAYING for) creativity
Basic Researchincrease understanding of topic or field without immediate commercial application in mind
Applied Researchincrease understanding of topic or field to meet specific need
Developmentactivities that apply knowledge to produce useful devices, matls, processes
Why use Innovation by usersusers have deep understanding of their own needs and motivation to fulfill them
Science Pushinnovation proceeds linearly; sci discovery -> invention -> mfg -> mkting
Demand Pullinnovation originates w/ unmet customer need; customer suggestions -> invention -> mfg
Technology Trajectorypath technology follow through time, how technologies diffuse and improve
Product innovationsembodied in OUTPUTS of org; goods and services
Process innovationsinnovations in WAY an org conducts business; mfg or marketing
What may be a product innovation for one company may be ?a process innovation for another
Radicalness of innovationdegree to which it is new and different from existing products and processes
Incremental innovationsinvolve only minor change from existing practices
Component innovationChange one or more components w/out changing overall design
Architectural innovationchange overall design or way components interact
S-Curveshow rate of tech improvement and diffusion into market
S-curve for market diffusion explanationslow growth b/c poorly understood, accelerated growth as understanding improves, tapers off as approaches limit
Innovators (adopter category)first 2.5% to adopt innovation
Early adopterssecond 13.5% to adopt innovation
Early majoritythird 34% to adopt innovation
Late majorityfourth 34% to adopt innovation
Laggardslast 16% to adopt innovation
Network Externalitiesbenefit from using good increases w/ number of users of same good (e.g. telecommunications)
When are network externalities importantindustries that are physically networked (railroads), when compatibility/complementary goods are important (Windows software)
Increasing returns to adoptionwhen technology becomes more valuable the more it is adopted
Causes of increasing returns to adoptionlearning effects, network externalities
Learning curveas tech is used, producers learn to make it more efficient and effective (lower cost, better performance)
Prior Learning/Absorptive Capacityprior experience influences ability to recognize and utilize new info
Why are Dominant Designs Selected?tech w/ large user base leads to complementary goods, complementary goods attracts more users, cycle continues
First-mover advantagebrand loyalty, tech leadership, capture assets, exploit switching costs, reap increasing returns
First-mover disadvantagehigh R&D costs, undeveloped supply/dist channels, immature enabling tech, uncertainty of customer reqs
Factors Influencing Optimal Timing of EntryHow certain are cust prefs, how much improvement does innovation provide over current soln, does innovation req enabling tech and is it ready, do complementary good matter and are they ready, how big is threat of comp entry, are there increasing returns to adoption, can firm withstand early losses, does firm have resources to accelerate mkt acceptance, is firm's reputation good?
Blue Ocean Strategyinstead of battling with competition in cost-war, differentiate and create new market space
Core Competenciesset of integrated and harmonized abilities that distinguish a firm in the marketplace
Core competencies shouldbe source of comp differentiation, cover range of businesses, be hard to imitate
Discounted Cash Flowuse NPV to caluclate discounted cash inflows over time
Internal Rate of Return (IRR)discounted rate that makes the NPV of investment zero, basically GROWTH RATE of a project; HIGHER IRR IS BETTER
Strengths of Discounted Cash Flowconcrete financial estimates, consider time value of money
Weaknesses of Discounted Cash Flowmay be deceptive, may fail to capture strategic importance
Real Optionsapply stock option model to nonfinancial resource investments
Factors affecting collaboration decisionavailability of capabilties, protecting proprietary tech, controlling tech dev and use, building and renewing capbilities
Large Firms Innovation advantagebetter able to obtain financing and spread costs of R&D, greater economies of scale, learning effects, can take on large-scale/risky projects
Mechanistic Structureshigh formalization and standardization; good for operational efficiency, reliability, but may stifle creativity
Organic Structureslow formalization and standardzation, free-flowing; encourage creativity/experimentation, may yield low consistency and mfg reliability
Loosely-Coupled Organizational Structuresmodular orgs where activities are not tightly integrated; achieve coordination through shared objectives and standards
Center-for-globalall R&D activities are centralized in a single hub
Local-for-localeach division does R&D for local market
Locally leveragedeach division does own R&D but firm attempts to leverage most creative ideas across company
Ways to involve customers in developmentbeta testings, lead users, Crowdsourcing
Crowdsourcingfirms open up innovation task to public
Stage-Gateutilize tough go/kill decision points to help filter out bad projects
New Product Development Process Metricsaverage time to market, % of dev projects that meet deadlines, % of dev projects that stay under budget, % of dev projects that result in completed projects
GE-McKinsey ModelMarket Attractiveness vs Competitive Position
Market Attractiveness (GE-McKinsey)market size, growth, competitive intensity
Competitive Position (GE-McKinsey)Market share, product performance, brand rep
Offensive Strategic Plansinvest to grow, improve position, new market entry
Defensive strategic plansprotect position, optimize position, monetize, harvest/divest; USED LATE IN PRODUCT LIFE-CYCLE
Capital Rationingset fixed R&D budget and rank project to support
Conjoint Analysisestimates relative value individuals place on attributes of a choice
Joint Venturesignificant equity investment from both sides, make new legal entity
Licensingsell IP for royalties
Quality Function Deployment (QFD)matrix of product features, ranked by customer importance and competitor ability
Design for Manufacturingreduce cost and dev time while boosting quality
Market Diffusion categoriesinnovators, early adopters, early majority, late majority, laggards
What is the main driver behind segmentation?profit (make more money by applying diff strategies to diff groups)

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