Innovation projects require aligning with the organizational objectives, resource, core competencies and receive the aid of the firm's structure. To implement the innovation strategy successfully it's important that the firm identify the projects ability to generate both technological and commercial gains, wider understanding of the dynamics of innovations and effective process for implementing the innovation strategy.
Insufficient focus on the positioning strategy-
Once an innovative product is made it's also crucial to introduce it to the market with maximum usage of 4P's.For e.g. Apple's Newton
Certain innovative technologies create negative externalities. Thus government's authorities, environmental concern groups and other industries may influence customers to reject.
Innovative products are introduced to the market without identifying realistic consumer demand thus fails to generate an economic return.
e.g.:-NeXT produced high-tech personal computers without including basic application software.
Most of the firms are sluggish to market their products.
When technology changes faster, firms need to involve developing innovative technologies. When the time gap increases between the initial development of a product and introducing it to the market slows the cycle time. Meanwhile a competitor will gain the first mover advantage introducing another product.
For e.g.:-Apollo computers were the market leaders of engineering computer workstation but their product development took a considerable time slowing the cycle time. Sun Microsystems overtook Apollo with shorter product development phase.
Due to the inability to meet adequate quality level, services and inappropriate designs innovative products fail to provide an economic return.
e.g.:- Digital disk cossets were not portable, couldn't install in vehicles and higher cost.
2. What are some of the advantages and disadvantages of a) individuals as innovators, b) firms as innovators, c) universities as innovators, d) government institutions as innovators, e) nonprofit organizations as innovators?
Entity
Advantages
Disadvantages
Individuals
Individuals are free to think and that helps them to manipulate effective concepts.
Generate royalty fees on patenting and commercializing the innovative goods.
Market acceptance for the product will grow since it's introduced by the real inventor.
Limited scope for idea generation.
Financial incapability to introduce the innovative technology to the market.
Mental agony hinders the development of new technology.
Firms
Established infrastructure, distribution network, suppliers, customer base etc. will help them to market the products effectively in both the local and international markets.
Forming Collaboration will enhance absorptive capacity thereby support firm's R&D.
Firms involve in innovations for commercial gains will have high price that consumers can't afford.
Require investing more on intellectual capacity e.g.: recruiting expertise.
Through collaborations other firms can assess to proprietary information.
Universities
Knowledge and the intellectual capacity is high therefore the limitations are less.
Receive a recognition and royalty fee for university funded researches.
Revenue generation from the university technology transfer activities is limited.
Governments
Allocation of capital for innovation is easier.
Through local and international collaborations government receive a better access to scientific experts.
Nonprofit organization
Capable of generating funds.
Enjoy tax holidays grant by government.
What are some of the ways a firm can try to increase the overall value of its technology, and its likelihood of becoming the dominant design?
Stand alone value :-
A new technology can provide a value to its customer base only if that technology is developed with an understanding of the six utility lever's and buyers experience curve. Furthermore value is created when the customer receives the benefits for the cost invested for purchasing the new technology.
For e.g.:-
Through the establishment of an online ordering system the value preposition it offers is the simplicity of purchase.
Introducing the Honda insight hybrid vehicle the value preposition it created was the greater productivity for the stage of use.
These combinations of values will enhance a product becoming the dominant product.
Network externalities
The value of a particular technology will also be implemented by the install base and availability of complementary goods. Network externality explains that in certain industries the benefit of a particular technology increase with the number of users who consumes that same technology. For e.g. telecommunication, railroads, clothing.
A new technology with a higher standalone functionality than the current technology can fail in the market because it fail to provide a value since it lack the install base and complementary goods. For e.g. the NeXT introduced their first computer with advance graphics capability and object oriented operation system. But it was not compatible with the IBM personal computers which was the dominant design so that most of the software applications were not suited for the system. Therefore the market rejected the new technology. However this can be solved by producing a new technology that could become compatible with the existing technology's install base and the complementary good. For e.g. Sony and Phillips introduced the Super Audio CD. Which enable the user to play regular CD's and recorded super audio CD'S. Moreover to diminish an existing technology completely the new technology needs to involve in frequent technological improvements that could increase the overall value.
Furthermore consumers compare the value of an existing technology and a new technology by considering subjective, objective and future expectations. The new technology will have both the perceived and anticipated values. When consumers' think that the new technology will have a larger install base than the competitors the install base increases for the new technology. Once the perceived or expected install base is high the adoptions for the particular technology will also increase actual install base making the particular technology the dominant one. Firms use extensive marketing strategies to persuade customers to adapt to their technologies by delaying their purchases on existing products. E.g. vaporware, Sega.
Competing for design dominance in markets with network externalities -
The network externality return and the technological utility will determine the market share of a particular theology. If the technologies bring same levels of network externality effect to the market share the technology which provides a stand-alone utility will have the dominance. In most of the industries the complete network externalities are attained when the market share is at a lower level. In such instances one technology will not become dominant therefore there will not be a pressure to select a particular dominant design. Thus several technologies will exist.
Learning orientation
As a firm it requires to invest more on technological development and learning since then they will be capable of achieving wider knowledge and skills. This will help the organizations to determine the future trends and identify the most appropriate technology to develop. Furthermore the firm will be prepared face technological changes and opportunities. With the improvement the firm will be able to increase the overall value of a technology by shaping it to serve customer requirements, larger install base.
