1. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved Chapter Innovation, Sustainability, and Change 8

2. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-2 Innovation (1 of 4) Defined: The use of new knowledge to offer a new product or service that customers want

3. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-3 Innovation (2 of 4) Invention: use of new knowledge to create or discover new things – Investment in R&D – Communications and Interaction – Involvement of Multiple Functions – The Right People – The Right Environment

4. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-4 Innovation (3 of 4) Commercialization: Product, Promotion, Place, Price Profiting from Innovation – Inimitability and Complementary Assets Model – Implication of the Model – Determining a Firm’s Complementary Assets

5. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-5 Figure 8.1 Inimitability/Complementary Assets Framework (4 of 4)

6. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-6 Generic Strategies for Sustainability of Profits (1 of 3) Block Strategy – Preserving Inimitability 1.Keep know-how proprietary 2.Litigation – Preventing Entry 1.Reputation for lower prices 2.Investment in the market 3.Large market share / Economies of scale 4.Commitment to the market regardless of costs

7. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-7 Generic Strategies for Sustainability of Profits (2 of 3) Run Strategy – continuous innovation Team-Up Strategy – share resources Strategic alliance, Joint venture, Acquisition, Equity arrangement Generic Strategies and the Inimitability and Complementary Assets Model (see fig. 8-2)

8. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-8 Figure 8.2 Block, Run, and Team-Up Strategies (3 of 3)

9. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-9 Change (1 of 7) Sources of Change – The Firm and Its Coopetitors – Macro Environment Technological Political-legal Demographic Sociocultural Economic Natural Change and Innovation

10. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-10 Change (2 of 7) Type of Change – Incremental versus Radical Change – Disruptive Change – Systemic Change – Dynamic Change

11. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-11 Figure 8.3 Disruptive Change (3 of 7)

12. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-12 Figure 8.4 Technology Life Cycle (4 of 7)

13. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-13 Change (5 of 7) When to Expect or Initiate Change – Environmental Scanning  Technology  Economic  Political-legal  Demographic  Sociocultural  Natural – Timing: predicting change

14. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-14 Figure 8.5a Foster’s S-Curve (6 of 7)

15. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-15 Figure 8.5b Automobile S-Curves (7 of 7)

16. Irwin/McGraw-Hill Copyright © 2004 The McGraw-Hill Companies. All Rights reserved 8-16 Questions Innovation, Sustainability, and Change