Lecture 6 - BA 310: Innovation 1 Admin Exam Wednesday Oct...

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1 BA 310: Innovation
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2 Admin Exam Wednesday Oct 28, in class Similar format to first exam On Part II material only Review Monday Oct 26 Study Guide & Practice Questions on Compass
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3 Innovation Why is innovation important? The first company to capitalize on an innovation reaps the greatest rewards and most improved operating margins. When competitors start to use the same technologies, your competitive advantage or differentiation gets commoditized. Then its time to move on to the next new thing .” – John Chambers, CEO, Cisco Systems The importance of innovation is at historic highs For “the usual reasons” – broad trends that we’ve seen before: rapid technological change, shifting customer preferences, deregulation, globalization, and so on. Companies specifically target (increasingly) large parts of their sales to be of recently introduced products.
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4 Today’s Roadmap: Innovation Technology Cycle, Leadership and Followership How do you generate innovation? Structural, Cultural, Human Resource Factors How do you develop new products? Goals and Principles
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5 What is Innovation? and related background Innovation – Change in technology, a departure from previous ways of doing things Product innovation – change in actual output Process innovation – change in methods of producing outputs (e.g., TQM) Innovation process – how creative ideas are transformed into a useful product, service, or method of production Technology – methods, processes, systems and skills used to transform resources into products ____________creativity- ability to combine ideas in a unique way or to make unusual associations between ideas ___________ dominant design - a widely-accepted standard — de facto if not de jure — for a particular product or process .
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Classic Technology “Life Cycle” Technical performance Time Theoretical maximum First to mkt. Late to mkt. Dominant design emerges Process innovation increases High product innovation Lots of experimentation Development slows as limit approached
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7 Advantages & Disadvantages of Technology Leadership Technology leadership = (“first to market”): Advantages: “First-mover” – little competition, high profit margins Occupy best niches & build entry barriers (e.g., loyalty, patents) Learn ahead of the competition (Japanese auto firms) Disadvantages: Early products often crude and/or unreliable (Apple Lisa) Market often develops slowly (microwave ovens) Technology develops quickly & so requires sustained investment (CT Scanners)
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8 Technology Followership Technology followership = “late to market”): Advantages: Less risk and uncertainty About market, about technology Learn from leaders Imitate strengths (e.g., Microsoft Windows), avoid weaknesses Disadvantages Leaders occupy entrenched positions Buyers face switching costs (e.g. proprietary O/S) Leaders are a moving target
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This note was uploaded on 02/12/2010 for the course BADM 310 taught by Professor Staff during the Spring '08 term at University of Illinois, Urbana Champaign.

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Lecture 6 - BA 310: Innovation 1 Admin Exam Wednesday Oct...

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