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ISFE Summary 2021 All Literature
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In this summary, I have covered all mandatory literature for the course ISFE (GEO3-2221)
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Innovation Strategies of Firms and EntrepreneursInnovation Strategies of Firms
and Entrepreneurs
GEO3-221
Week 1
Podcast 1
Van de Ven (2017)
Despite the authenticity of innovations, they tend to follow a similar process from concept to
implementation. It is a nonlinear cycle of divergent and convergent activities that may repeat in
unpredictable ways over time. As a result, managers should be held accountable for increasing
the odds of success by developing and using skills regarding learning, leading, relating and
cycling.
The innovation journey tends to follow the following steps. First, a random number of coincidental
events occur that enable a new innovative direction. Then, after an initially intentionally following a
structured pathway, converged behavior, a more random pathway shapes and is pursued, the
divergent behavior. This is a continuous cycle, as a more convergent pathway is taken again after
a divergent pathway, which results in a more divergent pathway again, and so on. As a result of
this cycle of unknowns, managers should develop the skills to navigate in this ‘streaming river’
and pivot their way to success.
Transition between a convergent and divergent cycle are di cult since both demand di erent
skills. In addition, the exact moment of the transition is unknown and unpredictable. Innovation
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, Innovation Strategies of Firms and Entrepreneurs
leaders can place boundaries on divergent and convergent patterns with their resource
investments, organizational structuring and by selecting participants.
Innovation leaders would have the room to build experience around these cycles and not be
punished by pure results. Therefore, allowing beginners to start with small, low cost projects.
Podcast 2
Van Weele, van Rijnsoever, Nauta (2017)
Incubators provide early startups with a broad range of services and resources. The actual
bene ts of participating in such incubators are ambiguous. This is a result of insu cient usage by
startups of the services and resources provided by the incubators. However, it is also the quality
of those services and resources which can lead to bad results. In addition, incubated
entrepreneurs often have a very technological background, therefore they might neglect the
o ered services and resources as they do not recognize its value.
Firms can be seen as a collection of tangible and intangible resources. Tangible resources of a
rm can be: physical capital, its technologies, plants, equipment; nancial capital, the monetary
resources.
Intangible resources are: knowledge, both organizational and technical; social capital, the
ability to extract value form social structure; and legitimacy, an organization’s right to exist and
perform an activity.
Firms continually assess the resources in its possession, and organize accordingly by
accumulating (internally), acquiring (externally), and divesting resources in line with their priorities.
Incubators can use a strong intervention or a more ‘laissez faire’ model to support startups.
Entrepreneurs often engage in incubators as they aim to use the tangible resources provided,
such as nancial capital.
However, often they ended up with important intangible resources, such as business
knowledge. In addition, the social resources provided by incubators were also helpful.
Entrepreneurs were often found to have insu cient self-awareness regarding their
business knowledge and were often short-term focused as they did not do activities such as
writing business plans, sales seminars, etc. which do not provide short-term results. In addition,
entrepreneurs did not like to step out of their comfort zones. Most rst-time entrepreneurs also
tended to lack consciousness about the resource gaps in their organizations. This can be the
cause of entrepreneurs not making the most of the incubator’s resources.
Strong intervention from incubators can help entrepreneurs to identify resource gaps and to
develop the missing resources, especially for rst-time entrepreneurs.
For entrepreneurs, it is important to nd an incubator that is in line with their needs. First-
time entrepreneurs should engage with strong intervention incubators, whereas more experienced
entrepreneurs should engage with more laissez faire incubators.
Incubators should not polish their programs towards the wants of startups, since they
often do not know what they need due to their unawareness.
Incubators should be an environment where startups:
- learn how to identify gaps in their resource base
- Develop willingness and ability to autonomously develop these resources
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, Innovation Strategies of Firms and Entrepreneurs
Podcast 3
Francis & Bessant (2005)
Innovation is key for rms as this can lead to di erentiation and pro tability. Innovations
capabilities cannot be con ned to just products, but can be distinguished in four main ways:
• Product innovation, introducing or improving products
• Process innovation, introduce or improve processes
• Positioning innovation, de ne or re-de ne the position of the rm or products
• Paradigm innovation, de ne or re-de ne the paradigm of the rm
Product innovation can be considered in several dimensions, such as number, timing, and rate of
change of product platforms, variations/ derivatives, modularity, etc. Product innovation tends to
be related to the maturity of the industry.
Product innovation tends to require making decisions with unknown consequences,
making bets and channeling resources.
Process innovation is anything related with improvements in the sequence of activities across an
organization that are transformations. New technologies can increase precision, reduce waste,
etc. Improved training can also help to improve a process. Processes tend to be very complex
and interdependent, therefore needing a systemic approach. Business process re-engineering
seeks to overcome problems by identifying core processes and subject them to intensive
development.
Process innovation can be facilitated by systemic analysis and comparative
benchmarking, such as process mapping, activity analysis, problem analysis, video recording, etc.
Process innovation can also happen at supply chain level, not just at rm level.
Position innovation does not a ect the composition or functionality of a product, but the
meaning of the product in the eyes of the consumer. This can be achieved by marketing, using
market data. Position marketing tends to be related to rms, brands or products, but can also
relate to institutions.
Product positioning is what the rm would like typical customers from target groups to feel
and say about their product/brand/company. It is based around the management of identities
through advertising, marketing, media, packaging, etc.
Paradigm innovation refers to a switch in organizational orthodoxy or culture. Two types of
paradigm innovation can be distinguished.
First, innovation in inner-directed paradigms, which targets organizational values and
people management policies.
Secondly, innovation in outer-directed paradigms, or business models. It is aimed at the
outside environment of the rm. Businesses often need a single Driving Force, a dominant
paradigm, since it cannot pursue all future business development option simultaneously.
The most dramatic forms of recon guration business model follows acquisitions, mergers,
joint ventures and alliances.
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, Innovation Strategies of Firms and Entrepreneurs
It is critical for organizations to move beyond a steady state and to continue to make bets on
innovation, even when these bets do not t inter current portfolio. Otherwise, new entrants with
radically di erent products and business models could be a disruptive force.
The four innovation types can help companies in three di erent ways:
- Focussing e ort
- Managing interdependencies
- Enlarging choice
Hopp, Antons, Kaminski, Salge (2018)
Not all technological change is disruptive, and it is important to distinguish between di erent
types of innovation and the responses they require by organizations.
Disruptive innovation research describes a process in which new entrants challenge incumbent
rms, despite inferior resources. New entrants might target over-looked niches with an inferior
product, in the eyes of incumbent’s and its customers, and move up market as they improve their
product. Or, new entrants create new markets.
Faced with disruption, incumbent rms focus on organizational strategies: new business
units and business models. They need to focus on the organization as a whole and willing to
cannibalize their own revenues.
Radical innovation research stems from the creation of new knowledge and the commercialization
of completely novel ideas or products. It is more focused on the types of organizational behavior
and structures that explain and predict the commercialization of breakthrough ideas. Unlike
sustainable innovations, radical innovations help rms to stay competitive in the long run.
Emphasis is on dynamic and organizational capabilities, such as leveraging core
competences or scaling faster. Another point of focus is on people, who need vision to see the
possibilities of novel ideas.
For disruptive innovation, the key organizational renewal is in the needs of customers (outside),
whereas the for radical innovation, the key lies within the capabilities of the incumbent rm itself.
Meeus & Edquist (2006)
Innovation, as described by Schumpeter, is a historic and irreversible change in the way of doing
things, but also creative destruction. For product innovation, they question is what is produced.
For process innovation, the question is how a good is produced. There are also other
distinguishable innovations, such as: incremental innovation (continuous), radical innovation
(discontinuous), and shifts in general purpose technology, or techno-economic paradigms.
It is also useful to distinguish three types of changes. First, changes at the level of the innovative
product or process, such as technological characteristics, functions, quality.
Second, changes at the level of the innovating agents, such as competencies,
organizational structures, market position.
Third, changes at the value chain level, such as users’ competencies or supplier
involvement.
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