Digital Innovation and Virtual Organization in a Global Setting
Institution
Vrije Universiteit Amsterdam (VU)
Compact lecture notes for DIVO elective with examples in red and sample exam questions at the end. The lectures are summaries of the articles, so this summary is all you will need to know for the exam!
Digital Innovation and Virtual Organization in a Global Setting
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Digital Innovation and Virtual Organising in a Global Setting Lecture Notes &
Article Summary
Lecture 1: Fundamentals of Innovation
Types and Patterns of Innovation (Schilling, Ch. 3)
Strategic importance of innovation:
Economies; innovation sustains growth and economic development
Society; innovation helps to solve sustainability challenges
Firms; innovation ensures survival and competitiveness
Kondratieff Waves of Innovation:
o 1st wave: Industrial revolution (train)
o 2nd wave: Industrial production (steel)
o 3rd wave: Scientific revolution (electricity)
o 4th wave: Scientific-technical revolution (car)
o 5th wave: Information and Telecom revolution (computer)
Innovation as a necessity for businesses:
Globalisation
Increased competition (differentiation)
Speed of knowledge development
Shortened product development cycles and product life cycles
Enabling technologies (computer-aided design, 3D printing, etc.)
Innovation: the practical implementation of an idea into a new device or
process
Types of innovation:
Product innovation: embodied in the output of an organisation (goods
and services)
Process innovation: oriented towards improving the effectiveness or
efficiency of production (i.e. techniques of producing or marketing goods
and services)
Architectural innovation: changes the overall design of a system or the
way its components interact with each other
Component innovation: innovation to only components that do not
significantly affect the overall configuration of the system
Incremental innovation: makes a relatively minor change from (or
adjustment to) existing practices, building on existing knowledge base
Radical innovation: very new and different from prior solutions,
requiring completely new knowledge and resources (not synonymous with
disruptive!)
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,Digital Innovation and Virtual Organising in a Global Setting Lecture Notes &
Article Summary
Technological trajectories: the path a technology takes through its lifetime
Technology S-curve phases:
1. Slow initial improvement slow because fundamentals of the
technology are poorly understood
2. Accelerated improvement when the technology gains legitimacy, it
attracts other developers
3. Diminishing improvement technology begins to reach inherent limits,
cost of each marginal improvement increases
Technologies do not always get the opportunity to reach their limits, they may be
rendered obsolete by new…
Discontinuous technology: fulfils a similar market need by building on an
entirely new knowledge base (disruptive innovation)
Adoption of technology:
2
, Digital Innovation and Virtual Organising in a Global Setting Lecture Notes &
Article Summary
There are different categories of people adopting the technology at different
times…
Sustaining innovation: making better products for higher prices to attractive
customers in existing markets
Disruptive innovation: simpler or more convenient products, for lower prices
to new or unattractive customers that are forgotten by sustaining innovation
Can eventually catch up with the sustaining trajectory
Why is disruptive innovation so difficult? Disruptive innovations initially do
not score well on resource allocation criteria:
o Best customers do not want disruptive innovations
o Disruptive innovations do not offer profit margins that they seek
o Small markets do not solve growth needs of large companies
o Financial investment tools are biased towards existing businesses
Technology trajectory begins at a point where it provides performance close to
that demanded by the mass market, but over time it increases faster than the
expectations of the mass market as firms target the high-end market as the
price of the technology rises, the mass market may feel it is overpaying for
technological features it does not value in this case, the low-end market is not
being served, it either pays far more for technology it does not need, or it goes
without
Lecture 2: Innovation in the Digital Age
Organising for Innovation in the Digitised World (Yoo et al., 2012)
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