Domande di esame Strategic and Innovation management, Prove d'esame di Strategia E Innovazione

Scarica Domande di esame Strategic and Innovation management e più Prove d'esame in PDF di Strategia E Innovazione solo su Docsity! STRATEGIC AND INNOVATION MANAGEMENT Exam: Written test: n. 18 questions -15 multiple choice questions (a,b,c), 1 mark for each right answer; -3 open questions, 0-5 marks according to the accuracy of the answer; -60 mins. -no penalty for wrong answers FIRST LESSON Economist experts individuate 12 MEGATRENDS: 1. R&D knowledge exploration to create value for firms the systemic work and case, strict rules knowledge exploitation. The main investors in R&D are the US and China. Relationship between:  Economic development, educational system and R&D investments (NIS, National Innovation System; model of the triple helix: universities, firms and public administration);  Economic and financial performance and R&D investments and innovation management capabilities The research and experimental development (R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society and the use of this stock of knowledge to devise new applications. R&D organization: the main research areas Biotechnology, Nanotechnology, ICT digitization, Energy, Aerospace, Chemistry, Microelectronics and semiconductors, Transportation, New materials and green materials. The role of the government top-down view reasons  the government helps in many fields effective environment for innovation ensure fair competition, orientation and values, market failures (Risk of imitation; disclosure paradox: unwanted knowledge spillovers; protection mechanisms (IPRs); Inability to recover the economic financial organizational efforts;Lacks of complementary resources). Levels could be: local, national or sovranational with respect to  selecting priorities (covid, defense) and fund allocations (UIA, PNRR, HORIZON 2020) Main players that have common values and norms firms, universities, users(suggesting new advance), public institutions  NIS (national innovation system) unit of analysis that expands innovationnetwork of heterogenic players they develop technologies to improve the technological landscape and disseminate new technologies and influence the rate and direction of technological change one for every country  Their relationshipa new framework: triple helix, developed by Etzkowitz and Leydesdorff they define 3 different kinds of interaction 3 modes  Mode one statist model of UNI-INDUSTRY-GOVERNMENT relations (top-down) the state is the main player and decides the stream of research  Mode two lasseiz faire separate spheres with strong borders  Mode three triple helixlike a trilateral network partnership and strategic balance there isn’t a main player so the organizations interface to link with partners cooperative approach that lead to a win-win situation. Examples: decentralized=USA, centralized=France 2. Knowledge  change the paradigm knowledge economy from tangible asset based Corporations tend to concentrate on a knowledge level. Knowledge can be exploited or explored.  Exploration creates and solves problems(R&D) New products to defend/increase competitive advantage  Exploitationefficiency, cutting cost, learning by doing, economy of scalecrucial to recover the R&D investments 3. Time to market related to the life cycle of products. It’s crucial to catch the right time to enter or exit the market before it’s too late. 3 levers short time of products, marketing and credit cards 4. StandardizationIn industry after industry, a large group of consumers has emerged to reject the homogenized product design and performance of standardized global products. Opportunities for companies willing to respond to the need for products that are more responsive to these needs. The competitive edge lies not only in the efficient global scale production capability rather on the sensitive and responsive to local needs. This is also the downstream part of the value chain where most of the profit lies. Examples are Taylorism, total quality management, ISO, international franchising and cultural industries 5. Deregulation in the 80s to make funds flow from different countries new set of rules that reshaped a landscape for financial funds 6. Multinational companies  Internationalization of the supply chain, e.g.: cost reduction  Internationalization of factories and plants, e.g.: cost cutting, proximity to the market; offshoring of competencies  Internationalization of the R&D learning markets cool hunters; Technology (Silicon Bangalore); several learning markets for the same industry e.g. automotive  Internationalization of financial activities deregulation and ICT  Internationalization of commercial activities international marketing 7. Digitization and platformization mangrove society= we are both interacting in a physical and a digital way 4 curves volume of data, number of connected people, number of connected things, information cost 8. Network logic 9. Globalization/deglobalization  Interdependence from complementarity The value chain is geographically widespread; a firm engages in activities that complement in other countries, or in firms situated in different countries; reconfiguration of international labour division Interdependence from competitiveness The country/firm competitiveness and the country/firm performances are linked to and are influenced by the performances and the aims of foreign competitors and of foreign countries  1st: XV XVI C., oceanic explorations for commercial purposes, discovery of America, South America, routes to the Indian Ocean; roots for the rise of the capitalist model. Practical unity of the world, concrete basis: the world is one and we can reach every point. Main technologies: sails, navigation  2nd: late XIX C until the 1st World War, driven by economic and political aims, imperialistic vision; European nations project their power all over the globe; birth of colonial empires (British and French; Spanish and Portuguese empires are in crisis); driven by the desire to acquire political prestige. Main technologies: steam engines, electricity, telegraph; rise of the industrial age; 3rd: the unity of the globe is taken for granted; borders are not a problem, high speed with which events are transmitted; main technologies: ICT. Globalization involves a deep re-configuration of international labour division international value co-creation From “trade- in- goods” to “trade- in- tasks” Problems crisis of the central government; crisis of national institutions; lack of answers to social problems; lack of legitimacy of central administration Problems between firms and government:  divergence of destiniesFirms are free to leave, offshore; public government and public local administrationdeeply rooted in the territory  divergence of aims Economic rules Financial-economic performances look at shareholders’ need; Political focus looks at citizens’ social needs: education, employment, justice, equity, health perks For the host government, MNC is source of technology, expertise, regional development, employment. For the MNC, the host govenment is source of profit growth, improvement of competitive position, new demand, new market Outcomes depend on  Government’s power: its control over local markets; competition among MNCs for the access to the country market  MNCs power: financial and technological and managerial resources; competition among national governments for those resources Globalization is driven by: a) businesses (MNCs, partnerships, strategic alliances→ e.g.: JVs) b) the reduction of transport costs (i.e. low cost airline companies) and by the reduction of communication costs (ICT and digitization) c) International and global institutions (Mercosur, UE, WTO) 10. Urbanization Begun with the 1st Industrial Revolution, the exponential rise of cities seems to constitute a transition from the Anthropocene (Crutzen, 2006) to a new era that Geoffrey West, theoretical physicist and among the leading experts in complex systems, has named "Urbanocene". Exponential urbanization is one of 4. Information to be clear or not on the market 4 structures: perfect competition, oligopoly, duopoly, monopoly 1. The first strategic tool to analyze the position is Porter’s 5 competitive forces model the main forces influencing the level of profit in the industry, based on the level of investment and how they could decrease the profit. 2 of these forces are the so-called vertical forces (suppliers and buyers), while 3 are considered horizontal forces (potential entrants, substitutes and competitors/incumbents) 1. Degree of existing rivalryDetermined by number of firms, relative size, degree of differentiation between firms, demand conditions, exit barriers. 2. Threat of potential entrants. Determined by attractiveness of industry, height of entry barriers (for example, start-up costs, brand loyalty, regulation, etc.). 3. Threat of substitutes. Determined by number of potential substitutes, their closeness in function and relative price 4. Bargaining power of suppliers Determined by number of suppliers and their degree of differentiation, the portion of a firm’s inputs obtained from a particular supplier, the portion of a supplier’s sales sold to a particular firm, switching costs, and potential for vertical integration. 5. Bargaining power of buyers Determined by number of buyers, the firm’s degree of differentiation, the portion of a firm’s inputs sold to a particular buyer, the portion of a buyer’s purchases bought from a particular firm, switching costs, and potential for vertical integration. 6. Recently Porter has acknowledged the role of complements. a) how important complements are in the industry. b) whether complements are differentially available for the products of various rivals (impacting the attractiveness of their goods), c) who captures the value offered by the complements. 2. Another model to follow could be the network of value (coopetition) this model is based on cooperation and competition, opposed to Porter’s model, that was based only on competition. The elements composing the model are:  Competitors  Buyers  Complementors  Suppliers  Firm  The value is considered and outcome of the cooperation between the elements of the model that operate in the market. (ex. Strategic alliance, licensing etc.) In the example of Sony, the same player could have different roles at the same time in relation to another firm (Apple) 3. The third model could be the stakeholders’ analysisWho are the stakeholders? What does each stakeholder want? What resources do they contribute to the organization? What claims are they likely to make on the organization? Stakeholders include customers, employees, stockholders, lenders, rivals, suppliers, the government, and the local community. Internal analysis Strategic intent: Firms should identify resources and capabilities needed to close the gap between strategic intent and current position (from “as is” to “to be”). Assessing the firm’s current position  Resource-based view (RBV) of the firm to analyze the firm’s capabilities with an internal analysis using a framework made of commodities, specific resources, core competences.  Commoditiesundifferentiated inputs, unskilled labor, public knowledge  Specific resources difficult if not impossible to imitate this kind of resources. Strictly related to the history of the company. They are difficult to transfer among firms because because of transaction costs and transfer costs, and because the assets may contain tacit knowledge and are path dependent. Resources can be classified in tangible, intangible (knowledge, technology, and patents), social capital (reputation and loyalty)  Core competences from one asset to a team of assets interacting with each other. They are a source of competitive advantage, define the fundamental business, stem from a set of resources Capabilities can be classified in functional (deals with vertical knowledge), coordination (interfunctional processes), and dynamic (Schumpeterian environment which leads to a change of paradigm and asks a double loop learning). Usually, managers use 4 dimensions to identify the capabilities: level of inimitability (protected by patents), imperfect transferability, rare (not diffused), durable (helps in the long period). Casual ambiguity deals with the protection of the competences of the company, if they are inimitable, so that competitors don’t understand how to replicate them. Core competences create berries with the mechanism of insulation. The multidimensionality of competitive advantage decreases the level of transparency of the competitive advantage; it’s the uncertain imitability, which means that I see their resources, but I can’t copy nor replicate them. External analysis (external dynamics, megatrends, environment) swot Strategy, Mintzberg proposes different analysis, a dynamic vision based on the emerging processes. Managers make different steps in the strategic world  Intentional strategy wanted. For Mintzberg there was the possibility to fail, so that part of the plan would be implemented and part of it would no be implemented at all (not implemented strategy)  Deliberate strategy part of the plan that’s been implemented. At the same time there are opportunities that the managers didn’t foresee but become the emergent strategy and are included in the deliberate strategy  Implemented strategy the strategy implemented e the emergent that becomes part of the plan itself. He underlines the possibility for managers to use the strategy implementation to learn from errors and new opportunities that they catch during the path. Experiencing and reinventing the plan during the implementation. Decisional levels of strategy  2 levels 1- Corporate strategy = includes diversification (geographic and business diversification) and vertical integration. Vertical integration upstream and downstream integration. The initial stage is production of components. Companies that move in the upstream integration, process raw materials and produce semi-finished products. Companies that move in the downstream integration, … Perfect means that there is a perfect quantity provided in the initial stage of both the streams, so I don’t depend on any supplier. Partial means that the firms integrate in both streams, but it’s not enough to satisfy the initial stage’s quantities, so I have an interdependence with the suppliers because I need more inputs. However, the company can still be flexible. Sort of window to observe and learn from other companies. Excess means that the company is involved in the stream activities, but the output is in excess for the initial needs, so the company becomes a supplier for the market. At the same time, it has a vertical integration and diversification, gaining revenues and becoming a business unit. The make or buy dilemma (production and transaction) the TCE framework=describes the enterprise not In terms of production function but in organizational terms. The firm is a bundle of transactions, from an activity to another. (transaction=transfers of goods or services through technologically separate units; one phase of the activity ends, and another begins. Efficient boundaries are the result of decisions. It’s also a problem, based on different points of view (classical and neoclassical) Commons and Coase (the nature of the firm is a bundle of transaction). Following those theories, they were neglected, until Williamson recovered this concept. In the 70s there was a crisis of the welfare state and of the mass production. The companies reshape the value chain because they face inefficiency under their roofs. As a result, they start to reconfigure their boundaries, deciding to outsource some activities from vertical integrated to fragmented companies. According to Williamson, managers should pay attention to 2 costs: cost of production (physical transformation from stage A to B) and cost of transaction (coordination and information costs)  Transaction costs deal with internal costs of transaction too. This means that managers should take in account both of them, market and hierarchy  Ex ante supplier/partner search, data collection and price information, conducting negotiations, stipulation  Ex post control of performances, execution, costs fulfilment, legal costs for litigation Market crisis because of the failure to meet the deadlines due to opportunistic behaviour, price increase or dissemination of confidential information vertical integration (hierarchy) Crisis of hierarchy because of bureaucratic hypertrophy, organization systems that are too large and complex outsourcing in market  It becomes a loop In the 80s there was criticism around Williamson’s theory he inserts in his model the hybrid forms strategic alliances, partnerships, licensing, and cross licensing. Business diversification Rationale dominant logic (luxury), economies of varieties (sharing tangible and intangible resources and capabilities), cross subsidies (financial support from a business to another, typical for multi-business). According to the different kinds of business units, we define different models distinguish between unrelated (conglomerate model) and related diversification in terms of market and technology proximity between businesses:  Limited diversification singles business more than 95% of the revenues generated by a single business  Limited diversification dominant business links between the businesses in terms of tangible and intangible assets. Single business generates 70-95%  Related diversification related constrained each business generates less than 70% of revenue and the various SBU share numerous common links  Related diversification related linked each business generates less than 70% of revenues and SBU share few links or different bonds and common characteristics.  Focus a small number of strategic features  Divergence a divergent value curve compared with competitors When managers want to reshape the curve of the industry, one way is to put the attention on the demand chain (buyers, influencers, users) Map of pioneers, migrants and settlers, based on today and tomorrow, inside the same portfolio. The settlers are in the red ocean, blue ocean for the company, the migrants indicate the businesses that try to move forward the blue ocean, but today are neither in the red nor the blue ocean. The pioneers represent the succeed of the blue ocean strategy. Usually, red ocean provides financial resources to the blue ocean. The balanced scorecard (BSC) strategic tool that provides the analysis of four dimensions, rating dimensions to track performance. The implementation fulcrum is the representation of the strategy in a strategic map, dividing the goals. … o Aims  Vision and strategy fostering consensus, clarifying vision, forming consensus  Communicating and linking communicating and educating, correlating rewards to performance measurement  Harmonization, planning and aims definition articulating a shared vision, goals definition, align strategic initiatives and resources, establishing milestones  Feedback strategic learning providing strategic feedback, facilitating strategy review and learning (single loop and double loop learning) The BSC is characterized by four dimensions: financial perspective, customer perspective, internal perspective and the innovation and learning perspective. For each pf these dimensions, the managers are asked to answer the questions to measure the dimensions. - Economic and financial deals with shareholders expectations. (Indicator, number, like percentages description of the activities that managers should implement to achieve the goals - Customers deals with the market and the demand (appreciation of our customers) - Learning and innovation how to increase the efficiency and the capacity to change and improve (invest in R&D) - Internal organization process in what processes the firm should excel  goals, measures, target, initiative, for all the four dimensions. “Balanced” refers to the intrinsic nature of the model. Indeed, the scoreboard deals with both short term and long-term and internal and external strategies. In particular, the learning perspective is long term, while the economic and financial is short term. Customers is external and internal organization process is internal strategy. Innovation management Innovation the main difficulties are: - multiple dimensions (technological, social, economic, political, legal, ecological) - sometimes it’s difficult to notice phenomena - very difficult measurement - hard to monopolise  protected by patents The pioneers of innovation: Adam Smith (technological progress embedded in capital asset and enabling the labour productivity), Karl Marx (social progress, not individual; must be inserted in the context of social relationship and social conflicts), and J. Schumpeter (a source of industrial change; new goods, processes and models, conquest of new sources of supply; creative response, uncertain, not measurable; in cluster). Dichotomous classification - invention - innovation - incremental innovation improvements over the dominant standards/architectures of product, process, or organizational models - radical innovation disruptive, dramatic break with existing products, processes, and organizational models; often at the origin of new industries or new market segments. (relative) - product embedded in new products and services - process changes in the way to provide or obtain, or to make a product - component entails changes to one or more components of a product system without significantly affecting the overall design - architectural changes the overall design of the system or the way components interact. Most architectural changes require component innovations. - Competence enhancing innovations build on the firm’s existing knowledge base (depends on the perspective of the firm) - Competence destroyinginnovation renders a firm’s existing competences obsolete (digitization) There are four different kinds of innovation: Abernathy and Clark distinguish the innovation based on the impact of market competences and technological competences in:  Structural innovation = destroys both prior relationships and current competences strategic consequences new technologies and market segments, approach to problem solving with cooperation, single loop and double loop learning, dynamic capabilities and rise of new industry. High market uncertainty.  Creating niches innovation = maintains or improves current competences and destroys prior relationships with customers in order to create new ones (create new habits)  low level of uncertainty from a technological point of view but a high uncertainty about the reaction of the customers; establishes a temporary monopoly in a new market segment (competitors tend to invent around=not copying but creating similar products)  Incremental innovation = maintains or enhances current competences and current relationshipslow market uncertainty with predictable technological trajectory. The critical dimension is cost  Revolutionary innovation = maintains current relationships and destroys current competences high technological uncertainty as its trajectory is difficult to predict. Low market uncertainty, high product improvements. New rules of competition. Vigorous reaction by the incumbents. MAP: 2 dimensions  market / buyers (1), technologies (2). The first dimension moves along the line of establishing new relationships and destroying prior ones or maintaining them. The second dimension moves along the line of maintaining and destroying current competences.  Limits of their classification: several innovations that are interdependent, as they are the result of a cluster of inventions.  The distinction between inventions and innovations doesn’t help to understand how the characteristics of the inventive process affect commercial exploitation  The cumulative impact of cluster of incremental innovations may have an equal or even greater scope than radical ones  Innovation is not always and only discontinuity because innovations rarely involve a total rejection of previous practices and knowledge, meaning that knowledge is cumulative and not excludable. Why study innovation It is one of the main factors of competitiveness. The ability to manage it in the best possible way turns out to be one of the criteria of success and excellence performances both for individual companies and for an entire economy Importance of innovationinnovation is among the most important driver of competitive success in many industries. Many firms earn over one-third of sales on products developed within last five years. Product innovations help firms protect margins by offering new, differentiated features. Process innovations help make manufacturing more efficient. Successful innovation requires carefully crafted strategies and implementation processes. • Innovation funnel Most innovative ideas do not become successful new products. For example, the New Product Development Funnel in Pharmaceuticals. Innovation constrains the firm to have resilience (coercive). Absorptive resilience allows resilience to come back. Transformative resilience allows to bounce forward, it has new links to production and consumption. Towards a circular economy Innovation for a transformative resilience. A green blue based proposal Exploiting digital technologies for designing and manufacturing  Rebased economy, reusable, re cyclable, repairable, refurbished products Neoclassical theory Technology and technological innovation are exogenous factors to the economic system. Technology is well transparent and perfectly accessible Technology and innovation technology are endogenous components of the socio economic system. Technological progress and socio economic system influence each other (co evolutive approach)  Sociological evolutionary theory (Organization of science, Path dependence (importance of history), Waves of discoveries and inventions, Combinatorial evolution) Research and Development Researchrefers to both basic and applied research. Basic research aims at increasing understanding of a topic or field without an immediate commercial application in mind (theoretical physics; mathematics; oceanographic studies; astronomy etc.). Applied research aims at increasing understanding of a topic or field to meet a specific need (research in marketing; research in packaging; studies to genetically modify plants in order to increase crop yields or directly improve nutritional content Development refers to activities that apply knowledge to produce useful devices, materials, or processes with commercial aims Innovation arises from linkages in networksInnovation arises from the virtuous linkages between several players and sources. Network linkages as strategic, relational, socio-economic capital Innovation as a phenomenon emerging from network relationshipsCooperation (licensing, cross licensing, JVs etc ) and sharing of ideas and knowledge(metaknowledge) Risk and cost sharing The source and the main players of innovation:  Science and Technology push (1950-1960)  Innovation by Users (demand pull) (1965-1980 ca.) Users have a deep understanding of their own needs, and motivation to fulfill them. While manufacturers typically create innovations to profit from their sale, user innovators often initially create innovations purely for their own use. For example, Laser sailboat developed by Olympic sailors; early snowboards. External and internal sources are complements • Firms with in house R&D also develop external collaboration networks. • In house R&D may help firm build absorptive capacity that enables it to better use information obtained externally. - Universities and Government Funded Research UniversitiesMany universities encourage research that leads to useful innovations. • Bayh Dole Act of 1980 allows universities to collect royalties on inventions funded with taxpayer dollars. • Led to rapid increase in establishment of technology transfer offices Knowledge brokersFirms (or individuals) play a pivotal role in the innovation network. Knowledge brokers are individuals or firms that transfer information from one domain to another in which it can be usefully applied. E.g.: Thomas Edison; consulting companies (BCG; McKinsey); Loccioni; Geox. By serving as a bridge between two separate groups of firms, brokers can find unique combinations of knowledge possessed by the two groups. As leader of innovative strategies in terms of the emergence of new market spaces conceptualized as new contexts of use. More specifically, the concept of brokerage is used to frame the innovative strategies that lead to the emergence of new market spaces as new systems of relations between production, technology, and consumption. New market spaces can also be created by innovations that lead to the reconceptualization of existing products. An emblematic example is Swatch’s case, the first watch to be presented as “a creative, artistic, emotional, and fashion accessory”. Swatch’s success is also based on brokerage between different contexts of use. Watches, whose use-in-context was once associated with the “cold” measurement of time, have been reconceptualized by Swatch to bring them into the “warm” and ever-changing domain of fashion. Sources of difficulties may be: - the stickiness of cognitive fames in a given context domain (comfort zone; paradox of Icarus); - another barrier to overcome is the cognitive distance between the different domains to broker Exaptation A character, previously shaped by natural selection for a particular function ( is coopted for a new use (cooptation ))(Gould and Vrba, 1982.) In the history of technology, exaptation is probably more common than in natural history. Many of the most dramatic inventions of the modern age were originally selected for purposes that were quite different from what eventually turned out to be their most enduring trait”. Exaptation leads to the formation of a new market/segmentexaptation as as a strategy that enables a firm to create a new market/segment by means of a novel product that derives from changing the function of an existing product,or a product component or module. T-shaped endowment Specialized or hyper specialized knowledge in at least one discipline (vertical knowledge). Technical response to increasing complexity. Single loop. Strength: information units and disciplinary schemes (contextualized current competences, experienced techniques); Weakness: general scheme dimensions. Dynamic capabilities: Bridge capabilities; they play a crucial synapse role in innovation and knowledge exploration; they allow to recombine and link extant knowledge in different original new way. They enrich the organization with the necessary variety and they expand the space of possible alternatives. They enrich the number of options available to an organization, maintaining or improving its ability to survive. They allow to generate connections and to explore and exploit additional knowledge. It allows to co-evolve with the environment. General schemes make possible to move from one discipline to another from one geographical context to another from different cultures they build a bridge between two or more vertical bar, fostering cross boundary interaction and developing new discipline schemes (new competences) Technology S curves Both the rate of a technology’s improvement, and its rate of diffusion to the market typically follow an s-shaped curve. S-curves in Technological Improvement. Technology improves slowly at first because it is poorly understood. Then it accelerates as understanding increases. Then it tapers off as approaches limits. The x-axis of the graph represents effort. The y-axis of the graph represents performance. The graph is an s- curve with the plateau labelled limit of technology. When money and effort are invested, technology initially improves at a slow pace. With improvements, performance accelerates at an exponential rate. Performance reaches a plateau when technology begins to reach its inherent limits. Technologies do not always get to reach their limits. May be displaced by new, discontinuous technology. 1. A discontinuous technology fulfills a similar market need by means of an entirely new knowledge base. For example, switch from carbon copying to photocopying, or vinyl records to compact discs. 2. Technological discontinuity may initially have lower performance than incumbent technology. For example, first automobiles were much slower than horse-drawn carriages. •Firms may be reluctant to adopt new technology because performance improvement is initially slow and costly, and they may have significant investment in incumbent technology. S-Curves as a Prescriptive Tool Managers can use data on investment and performance of their own technologies or data on overall industry investment and technology performance to map s-curve. While mapping the technology’s s-curve is useful for gaining a deeper understanding of its rate of improvement or limits, its use as a prescriptive tool is limited. True limits of technology may be unknown. Shape of s-curve can be influenced by changes in the market, component technologies, or complementary technologies. Firms that follow s-curve model too closely could end up switching technologies too soon or too late. Diffusion of Innovation and Adopter CategoriesEverett M. Rogers created a typology of adopters: - Innovators are the first 2.5% of individuals to adopt an innovation. They are adventurous, comfortable with a high degree of complexity and uncertainty , and typically have access to substantial financial resources. - Early Adopters are the next 13.5% to adopt the innovation. They are well integrated into their social system and have great potential for opinion leadership. Other potential adopters look to early adopters for information and advice, thus early adopters make excellent "missionaries" for new products or processes. - Early Majority are the next 34%. They adopt innovations slightly before the average member of a social system. They are typically not opinion leaders, but they interact frequently with their peers. - Late Majority are the next 34%. They approach innovation with a skeptical air and may not adopt the innovation until they feel pressure from their peers. They may have scarce resources - Laggards are the last 16%. They base their decisions primarily on experience and possess almost no opinion leadership. They are highly skeptical of innovations and innovators and must feel certain that a new innovation will not fail prior to adopting it. The first graph is a labeled s curve of cumulative adopters . In this graph, the x axis represents time . The y axis represents cumulative adopters ; its values are as follows: 2.5 percent, 16 percent, 50 percent, 84 percent, and 100 percent. The diffusion s curve is a line graph that starts near the origin of the graph, curves upward, and continues in an upward incline, after which it reaches a plateau. Lines extend from each marking of the y axis, splitting the diffusion curve into five sections that correspond to Roger’s adopter categories . In the first section labeled innovators , the line graph extends from the point of origin. In the second section labeled early adopters , the line curves upward. In the third and fourth sections labeled early majority and late majority, respectively, the line continues steadily on an upward incline. In the fifth section labeled laggards , the line plateaus and travels parallel to the x axis. The first section of the curve corresponds to the range of percentage values from 0 to 2.5. The second section of the curve corresponds to the range of percentage values from 2.5 to 16. The third section of the curve corresponds to percentage values from 16 to 50. The fourth section of the curve corresponds to percentage values from 50 to 84. The fifth section of the curve corresponds to percentage values from 84 to 100. The second graph is labelled normal (bell-shaped) curve of market share. In this graph, the x-axis represents time. The y-axis represents market share; its values are as follows: 2.5 percent, 13.5 percent, and 34 percent. There are lines extending from these markings that intersect the bell curve. There are five labels that pertain to Roger’s five categories at the top of the graph: innovators, early adopters, early majority, later majority, and laggards. These labels are arranged parallel to the y-axis. Lines extend from each of these labels to form a grid along with the lines extending from the y-axis. The section of the bell curve that extends from the origin corresponds to the category innovators and pertains to the percentage values between 0 and 2.5. The section of the curve that inclines upward is labeled early adopters and pertains to percentage values between 2.5 and 13.5. S-curves of diffusion are in part a function of s-curves in technology improvement. Learning curve and scale advantage leads to price drops, which accelerate diffusion; as technology is better developed, it becomes more certain and useful to users facilitating its adoption. Eventually market is saturated and rate of new adoptions declines. S-curves of diffusion are in part a function of s-curves in technology improvement. Learning curve leads to price drops, which accelerate diffusion. Usually, technology starts as focused and then it becomes GPT. The diffusion: Digital imaging; GPS as a GPT, used by the military industry. An example of rising GPT is graphene (2D material, flexible), used in several industries, such as aerospace, healthcare, electronics and so on. Shock increase in the demand. Its impact on focused and general technology: - Focused the shock is bounded in one single market - General could trigger the improving technology and those industries that use that technology as well, propagating in several markets with benefits Segment zero (Andy Grove): companies often offer higher level of technology than the one needed by the customers. 3 markets (demand): low-end, mass, high-end market. The fourth line is the technology trajectory, with a different slope. As technology improves (higher rate of diffusion), we find that the low-end market can acquire the technology (that it doesn’t need), or it can avoid it as it is neglected. In this situation, new companies can enter the market trying to meet the needs of the low-end market, but they could be attacked by existing companies. However, low-end markets could satisfy mass markets because they can develop their performance. The segment zero is the origin of new companies that can become new competitors. Technology cycles (Schumpeter): taxonomy of new combinations, that can represent the introduction of a new good, a new production method, the opening of a new market, the conquest of a new source of supply of raw materials and semifinished products. In his opinion, innovation is the creative response of a company. Innovation generates extra profits, which are higher than the sector. However, a quick imitation lowers these We are living in an “onlife” societyreontologization, new ecology there’s a blurred line between online and real life. A typical example is internet of things. A2a (anything to anything) information processes that works a4a (anywhere for anytime). It’s a continuous processing of big data. The ongoing migration from product and service competition to platform-based competition in many industries and markets is driven by forces—packetization of products, services, and activities. Packetization is the capability to digitize something that previously wasn’t digitized. Packetization cube framework: how it’s delivered, purchased, product or service. Digital or physical. In some markets, industry players use modularity to create a platform ecosystem where many different firms contribute to the product system. Modular systems are those that can be separated and recombined to change their configuration, scale, or functions. Standardized interfaces ensure that components are compatible. Modularity is more valuable when there are a) diverse technological options that can be recombined, and b) customers have heterogeneous preferences. Some companies need to find an agreement to share the standard in order to be compatible. 2 types of platforms: - Internal platform or product platform or firm-specific set of resources that a company decides to share the same product family. Design. - External platform or industry/business different companies working together to define a standard interface, it provides a common environment according to the customers’ needs. +  Innovation platforms: These platforms usually consist of common technological building blocks that the owner and ecosystem partners can share to create new complementary products and services, such as smartphone apps or digital content such as from Apple iTunes or Netflix. By “complementary,” we mean that these innovations add functionality or access to assets that make the platform increasingly useful.  Transaction platforms: are largely intermediaries or online marketplaces that make it possible for people and organizations to share information or to buy, sell, or access a variety of goods and services. The more participants, functions, and digital content or services available through a transaction platform, the more useful it becomes (ex: Amazon Marketplace).  Some firms start with one type of platform and add the second type or mix and link the two. We refer to companies that support both types of platforms as hybrids. Some people use the term “hybrid” to refer to companies like Apple, Oracle, SAP, or Salesforce that emphasize a combination of product and platform businesses. Features emphasizing the parallelism between natural and business ecosystem:  Plurality of nested actors with interdependent behaviors  Competitive and collaborative mechanisms  Emerging nature of the ecosystem, manifest with the interaction of the elements Business ecosystem made of two elements: technology and institutions. 1. Human beings capture natural forces to transform and adapt nature itself. The essence lies in the logos, which is the language that creates community and is instrumental in breaking down and analyzing the experience. 2. Formal rules, informal constraints, and enforcement characteristics rooted in human beliefs. Structure and system of the platform … MAMGA: meta, apple, Microsoft, alphabet-google, amazon. There are 4 key roles to consider when studying a platform. These are based on a two-sided network, in developing a platform and the supporting ecosystem around that platform (Parker e Van Alystine, 2012) Players of business platform 4 key roles Platform provider point of contact for common components, rules, and architecture. Point of contact for the users, consumers, and developer. It could be one or many firms. Supply and demand’s side target consumers are the demand side (users). Individuals, businesses, organizations. The content and application developers are the supply side. The crucial dimensions in designing platforms that enable them to generate value in terms of revenues. The main dimensions are four: network effects, degree of openness to the outside, the rules of interaction to share benefits and losses, the shared technical standards. 1. Network effect degree to which every addition user of a platform or app makes it more valuable to every other existing user, without sacrifice. Possibility to create entry barriers. It could be positive or negative (direction). It’s positive if it refers to the ability of a large, well-managed platform community to produce significant value for each other user. It’s negative if … Two types of or direct network effect when adding an additional participant to one side changes value to all the other participants on the same side. Cross-side or indirect network effect when the value on one side increases when it increases on the other side (adding an additional participant to one side increases or decreases the value for all the participant on the other side). One of the main problems of generating network effects is called the chicken or egg problem= does the platform have to “start” from the developers or the users (demand or supply side)? The initial cost per unit is high but it decreases as the quantity increases. Three solutions to the problem stand-alone value for one side first, subsidize one side and then the other, bring two sides on board simultaneously. 2. Degree of openness to the outside the extent that the platform places fewer restrictions on participation, development, or use across its distinct roles. It deals with the restrictions on the access to the platform, related to the entry standards. It’s open when there are no restrictions on participation, the restrictions are reasonable and non-discriminatory. 3. Rules to share benefits and losses both supply and demand side have rules to determine how they interact and transact, how they share the eventual benefits or losses. These rules are established by the platform sponsor. 4. Shared technical standards standard to provide clarity for how components interact. Some platforms build proprietary standards, others tie complementary services to the platform. It deals with algorithms. Three mechanisms to create value: datafication, commodification, curation. - Datafication= to transform the (qualitative) experience in (quantitative) data (big data). The platform captures the data that the users provide. Then the platform diffuses the service. - Commodification= different models. (freemium) - Curation= catch value from the demand and supply side. Content filtering, commercial strategies, and algorithms. The users don’t know about the intrinsic logic of the algorithms, so they make a “black box”. Curation is articulated on three sub modes: customization or advertising (gives the impression that the platform knows and cares the customer), reputation and trend (based on accelerating logic, they don’t count the number of times a word is searched, but how fast the word is searched again), and moderate and balance the language and terms of services. Two kinds of AI: weak (reproductive, the main aim is to reproduce the outcome provided by human beings, not their human process), strong (interested in the process, productive AI, failure as of today). Horizontal envelopment moves firms enter and attack companies of the old economy. Example: Amazon. Platform competition and the red queen effect (Alice in wonderland) the need to run faster and faster just to stay in the same place. The platform ecosystem must evolve at least as rapidly as the rivals in order to survive. Only by changing the rules of the game, firms can escape the red queen effect. Wholly proprietary systems vs. wholly open systems Firms must decide whether and how to protect their technological innovations. Protecting helps a firm retain control of the technological trajectory and appropriate the rents from it. Not protecting is sometimes an advantage for the firm because it encourages others to support the technology and increases its likelihood of becoming dominant. Appropriability=degree to which a firm is able to capture rents from its innovation. It’s determined by how easily or quickly competitors can copy innovations. Some innovations are inherently difficult to copy. Otherwise, companies can try to protect their innovations through patents, trademarks, copyrights or trade secrets. Total quality management was born in Japan. It was difficult for western companies to understand the intrinsic logic, so they made a lot of partnerships with firms abroad. In some industries, legal protection mechanisms (IPRs) are more effective than others. Pharmaceutical patents are strong, electronics might be easily invented around. It’s more difficult to protect manufacturing processes and techniques. In some cases it’s better to diffuse the technology rather than to protect it. Patents are codified knowledge.  wholly proprietary systems  may be legally produced or augmented only by their developers. Advantages: architectural control, ability to define structure, operation and compatibility with other goods and services, ability to drive evolution and pace of technology development  wholly open systems  technology may be freely accessed, augmented, and distributed by anyone. Advantages: dissemination processes, quick and broad adoption, technology might be improved by other firms  Partial opening strategies = grey zone reality lies in the middle of the two systems. Licensing (you get money from royalties, enter new markets). Cross licensing (company A licenses to company B and vice versa because of their complementary technological portfolio/trajectory). Free licensing (doesn’t involve payment for royalties to increase the diffusion). Transfer licensing (enables the partner to share the knowledge but you have to create the environment to do so and promote it). Patent pool (many companies with thousands of technologies so it’s impossible for one company to possess all of them. The “pool” enables them to use and share the knowledge of many patents). Joint venture (capital to create a startup). CLOSED INNOVATION Historically, before the open innovation, there was the closed innovation. In this model, the company sets and maintains the major research activities in house. The company exploits internal resources and competences; new products can be marketed only through the company’s distribution channel, if discarded or deleted, projects remain encapsulated in the company (frozen knowledge). In closed innovation, ideas come from inside the company and knowledge passes through an ideal funnel. In this way, companies selects the projects. Virtuous circle of innovation in the closed innovation strategy has 4 stages: the R&D investments enrich the knowledge of the firm, thanks to that the company obtains new product, offered to the market through the distribution channels, thanks to the sales, the company can start a new virtuous circle. Managers think that successful innovation needs control, as the company generates new ideas, thanks to self-reliance (capabilities of the company). IPRs are one of the main pillars. Closed innovation was effective in the beginning of the last century. Limits of the closed model: - Fossilization of the internal knowledge. False positive, we think it was a good idea. - The knowledge explored, but not exploited, doesn’t transform into profit. False negative risk. The project turned out to be valuable, but it was captured by other companies. OPEN INNOVATION Henry Chesbrough. This approach reduces the risk for false negative because if the company is not sure to catch value, it could decide to propose the idea trying to capture value from the exchange from the external environment. 4 main drivers fostering open innovation model:  Reduction of the product life cycle because in the neoliberal model of capitalism, products are propellers to push markets and generate profit (+marketing and debt)  The increasing cost of R&D so the company isn’t able to sustain the costs alone. The different approach enables innovation, as the companies rely on outside sources.  Hybridization between sectors leads to technological convergence. Cross fertilization of knowledge between boundaries of the industries where it was born. It’s difficult to coordinate the knowledge only inside the firm.