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Summary Chapter 8 advanced management
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Summary advanced management chapter 8 Fundamentals of Strategy and lectures
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Proeftoets STRATEGY
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Summary chapter 8 advanced managementInnovation and entrepreneurship
Innovation is fundamental in today’s organisation but involves hard choices.
Intro on innovation PowerPoint: generic learnings
High R&D expenses by itself does not breed innovativeness
Client orientation breeds innovative success
But supply-driven Trial and error prevails over vertical collaboration with clients
While retail-client-collaboration is less profitable than horizontal collaboration
Fight for market power stimulates large firms to innovate
Fight for market power stimulates small firms for me too-products and product-extensions
In the Netherlands: too small growth ambitions, and job creation, by start ups
8.2 Innovation sources
Invention: involves the conversion of new knowledge into a new product, process or service. The
sources of invention are simply new knowledge.
Innovation: involves the conversion of new knowledge into a new product, process or service and the
putting of this products, process or service into actual use. Because this more extended innovation
process emphasises use (langdurig gebruik benadrukt), the sources of innovation are more complex.
Strategist have to make choices with regard to four fundamental issues: (1) how far to follow
technological opportunity as against market demand, (2) how much to invest in product innovation
rather than process innovation, (3) how far to open themselves up to innovative ideas from outside, (4)
whether to focus on technological innovation rather than extending innovation to their whole business
model.
Technology push or market pull
Technology push is the new knowledge created by technologists or scientists that pushes the
innovation process. Research and development laboratories produce new products, processes or
service and then hand them over to the rest of the organisation to manufacture, market and distribute.
> according to this strategy managers should support those scientists and technologists with ample
resources. Generous R&D budgets are crucial to making innovation happen.
Market pull reflects a view of innovation that goes beyond invention and sees the importance of actual
use. In many sectors, users, not producers, are common sources of important innovations. In
designing their innovation strategies, therefore, organisations should listen in the first place to users
rather than their own scientists and technologists. Two contrasting approaches to market pull are:
1. Lead users: in many markets it is lead users who are the principal source of innovation. In
extreme sport such as snowboarding, it is leading sportspeople who make the improvements
necessary for greater performance. In this view, then, it is the pull of market experts that is
responsible for innovation. Managers need to build close relationships with those lead users.
Marketing and sales identifies those people and technologists translate their ideas in products.
2. Frugal innovation: involves sensitivity to poor people’s real needs. Responding not only to
these users’ lack of money but also to the tough conditions in which they live. Frugal
innovation typically emphasises low cost, simplicity, robustness and easy maintenance.
The key is to balance actively. Thus a stagnant technology push organisation might use more market
pull; a stagnant market pull organisation might invest more in fundamental research.
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