O growth standard an agreed upon solution about a

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o Growth Standard: an agreed-upon solution about a common set of engineering features and design choices Capture a larger market share and can persist for a long time Both efficient and inefficient firms thrive. Prices begin to fall After a standard is established, the basis of competition moves away from product innovations (new or recombination knowledge embodied in new products) toward process innovation (new ways to produce existing products or to deliver existing services) o Shakeout
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Growth rate declines, firms compete to each other for market shares, weaker firms are forced out of the industry. Only the strongest competitors survive Price becomes more important o Maturity Max size, almost zero growth rate, decrease in demand lead to stronger competition o Decline 4 options Exit, harvest (do not invest, maximize CF), maintain, consolidate (buying rivals) Understand “Crossing the Chasm” (an example of the mobile phone industry will be helpful, pp. 229- 230) o Crossing-the-chasm framework : conceptual model that shows how each stage of the industry life cycle is dominated by a different customer group Tech enthusiasts: smallest market segment Early adopters: demand driven by imagination and creativity Early majority: strong sense of practicality Late majority: wait until standards have emerged and are firmly entrenched, prefer strong brand image Laggards: adopt a new product only if it is absolutely necessary Understand four types of innovation (Chapter 7.4) o Markets-and-technology framework : a conceptual model to categorize innovations along the market and technology Incremental innovation (existing tech & existing markets) v.s. Radical innovation (new tech & new markets) Economic incentives (winner-take-all market) Organizational inertia : resistance to changes in the status quo, avoid radical innovation Innovation ecosystem : a firm’s embeddedness in a complex network of suppliers, buyers, and complementors, which requires interdependent strategic decision making Architectural innovative (existing tech & new markets) v.s. Disruptive innovation (new tech & existing markets) How firms can respond to counter disruptive innovations? Continue to innovate in order to stay ahead of the competition Guard against disruptive innovation by protecting the low end of the market Disrupt yourself , rather than wait for others to disrupt you Open innovation : propose permeable firm boundaries to allow a firm to benefit not only from internal ideas and inventions, but also from external ones. Key differences between closed innovation and open innovation (Exhibit 7.13, p. 240)
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Absorptive capacity What is “the long tail”? This concept is briefly mentioned in the context of Netflix example (pp. 209- 210). So, make sure to understand the Netflix example clearly, and the class slide on “Short Head and Long Tail” was meant to help you better understand the Netflix example.
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  • Spring '11
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