TWC Summary of Concepts by Arun

TWC Notes 2013-14 T1
Professor: Rajah Kumar

Complied by A Arun Kumar
Technology and World Change
Challenges for corporate Leaders:
- Pressure to outpace market and outsmart competition
- Cut cost vs invest for growth
- Create more impact with products and less impact on environment
- Do more with less and better and faster
- Stakeholders have become varied and demanding
Factors that Undermine Profitability
- Innovation to Commoditisation cycle accelerating
- Developed markets saturated and emerging markets underserved.

With the advent of Technology, the value in
manufacturing has gone down. The value addition
has moved to R&D on one end and Marketing on
the other.
Healthy Wealthy Corner (High Income and Long life)
Countries like US are not falling behind. Other
countries are catching up.
Technology affects every aspect of our lives.

Science a fuller knowledge or understanding of the subject under study. Driven by curiosity to
expand mans knowledge. Understand the natural world.
Technology solve problems of the modern world. Technological Literacy is the ability to use,
manage, evaluate and understand technology.
GGS
Proximate Causes Event which Is closest or immediately responsible for producing some observed
result.
- Military Technology
- Germs (Infectious Diseases)
- Maritime Tech
- Centralised Political Structure
- Writing
Ultimate Causes Real reason which is at a higher level than a Proximate Cause.
- East/west axis
o determined the spreading of wild species
o Availability of food
o Stratification of society (in the case of
Atahullpa)
- The fertile crescent vs the landlocked New Guinea
Eurasia Vs The Americas
- Eurasia was E-W while America was N-S. Since it is
easier to spread when the climate is similar, in
Eurasia there was better sharing of ideas
Identification Problem
- Difficult to simultaneously change variables
- We cannot carry out controlled experiments mutually interacting effects
interdependance of problems
- Solution: Natural Experiments
o Isolated change occurs in one aspect of the environment and social scientists will be
able to study the changes. E.g. New Guinea Vs the Western World
o E.g. Maori vs Moriori Maori were from a war torn region so they were equipt
whereas the Moriori were a hunter-gatherer population with simple technologies
Food Production Vs Hunter Gatherer
- More consumable foods
- Selective breeding (UN-natural Selection) of plants and animals that are more profitable
- Led to a sedentry lifestyle, storage of foods, societies surround agricultural societies and
were supported by taxation [led to denser populations]
Exploring Innovation
Combination = connecting things. E.g. horse and plough
Cumulation = adding technologies to work together
The Renaissance (14
th
to 16
th
century)
- Wealthy patrons supported arts and education
- Humanism spread through Western Europe (human values and concerns)
The Scientific Revolution and Enlightenment (18
th
century)
- Before this, science was based in religion (e.g. earth is the center of the universe
geocentric theory by aristotole refuted by astronomer Nicoloaus Copernicus and
Galileo[used telescope to support his study] and moved towards a heliocentric theory)
- Later began relying on observations and
mathematics to transform the natural sciences
- Challenged the traditional way of understanding
the universe
- Sir Isaac Newton pioneered modern physics with
the law of gravity etc.
- Enlightenemnt thinkers sought to discover
natural laws that governed society as scientific
laws
The Industrial Revolutions (18
th
to 20
th
century)
- Aristocracy ruled
- People made their own sustenance
- More was created in the past 250 years than the preceding 2500 years combined.
- Machines were invented to replace human labor
- New energy developed
- Increased metal usage
- Revolutions
o 1
st
Britain 1700s : steam engine, textiles (China and India), iron (metallurgy)
o 2
nd
Germany/ US: Chemical industry, electricity and mass production
o 3
rd
US : Silicon Valley & Computing
- Industrial revolution was not
o The beginning of industrialisation
o the beginning of innovation
o the absolute beginning of economic growth
o it was just the change in the degree of change!
- 5 Areas changed to lead to an industrial revolution
o Technological Change
How technology incrementally improved, with occasional major advances
o Economic Change
Supportive industries grew
Gove respected private properties and protected the interests of inventors
and entrepreneurs
o Population Changes
Laws on land ownership led to agricultural productivity improvement
o Social Attitudes
People wanted to be rich through commercial and industrial success
(capitalism)
o Natural Resources
Increasing availability of such resources.
- The emergence of The Factory
o Mill where production took place in a coordinated fashion, under supervision.
o To use steam engines, economies of scale were needed.
o Factory work was hard, and income per capita growth was low
o Loss of independent businesses
o It enabled
Mass production
Developing a factory system to produce
Rural to urban migration
Development of capitalism
Development of new socio-economic classes e.g. working class, bourgeoisie
and wealthy industrials
Commitment to R&D increased to stay competitive
- Technologies were created in many ways
o Heroic inventions
o Occasional big advances (punctuated equilibrium)
o Incremental changes
o It was also due to networks and other organisations spreading ideas
o Cumulation of ideas/ knowledge from various aspects/ sectors helped to build on
ideas one another had
- England as a starting point of IR
o Capital for investing in means of production
o Colonies and markets for goods
The colonies provided a market for selling the goods
o Raw materials for production (from colonies)
Own Coal/ Iron
Colonies had their industries e.g. China silk industry
o Workers (from colonies)
o Merchant marine
Largest fleet built up from commercial revolution
o Geography
Political centre of Great Britain
Excellent harbours and ports
Stable government
No internal trade barriers
- Necessity is the Mother of Invention
o When the spinning machine was too slow the power loom was created
increased demand for raw cotton the cotton gin (separate seeds from the fibres)
was created for this stronger iron was needed so iron smelting was improved
and steel was developed
o This continues on and on
- Textile Industry
o First to be industrialised
o GB learnt a lot from India and China
- Development of Steam Engines
o Before this was water power built over fast moving streams and rivers
o Since it did not have enough power we moved to try harness steam power
Hero of Alexandria, Egypt 1
st
century B.C.
Thomas Newcomen, England (1704) steam engine to pump water from
mines
James Watt, Scotland (1769) improved engine to power machinery
- Transportation
o Before it was pulled by animals , Ships used sails
o Later with steam engines, trains and ships and automobiles became faster and more
efficient
o Railroads were built
1830 Stephensons Rocket train travelled 40 miles in 1.5 hrs
1869 Westinghouses air brakes made train travel safer
- Communication Revolution
o 1844 Telegraph, Samuel F.B. Morse, communications across continents
o 1876 Telephone, Alexander Graham Bell, human speech (accident when using a
telegraph)
o 1866 Atlantic cable, Cyrus W. Field
o 1895 wireless telegraph
o 1907 radio tube, radio broadcasts can go around the world
o 1925 Television, Audio and Visual Broadcast
- Printing Revolution
o Iron printing press, 1800 1830 Rotary press , 1870 Linotype Machine, 1884
newspapers became cheaper to produce so the number of newspapers
increased.
- Agriculture
o Farming machinery fewer workers needed so they displaced to urban centres
to work in factories more people in cities = more production of food and raw
materials
o It became a science during the agricultural revolution
Schools
Pesticides, fertilisers
GM food
New techniques hydroponics, aeroponics
- Results of Industrial Revolution
o Economy
Expansion of worldwide trade
Increased standard of living + lower unemployment
May not be for everyone, low paid factory workers may be worse off
than before
o Politics
Reduced landed aristocracy
Growth of democracy
o Social
Growth of cities population increases
Improved status of women


Chapter 1
Technological innovation is the driver of competitive
success
Discovery Act of finding something natural for the first
time
Invention To devise, fabricate or create and original
item for the first time
Innovation To introduce something new for the first
time/ Successful exploitation of ideas/ commercial
application of a new product or process.
Science Knowledge attained through study or
practice/ systematic knowledge of the physical or
material world through observations or
experimentation.
Engineering application of math and science to make useful the properties of matter and sources
of energy in nature
Technology Practical application of science and knowledge to commercial and organisational
activities.

Levers of Growth
- Innovation, in both R&D and Business Value Chain
- Acquisitions
- Brand
- Market Driven
- Emerging markets
Advances in IT = faster innovation
- Computer Aided Design/ Computer Aided Manufacturing
- They lead to rapid design and shorter production runs
- Led to shorter product lifecycles (rapid product obsolescence), rapid product introductions
and greater market segmentation

Invention
Commercialisation
(includes D of R&D)
Diffusion
Innovation
Imapct on Society
- Wider range of goods and services to people worldwide
o Efficient food production and improved medical technologies
o Higher GDP
o But negative externalities like pollution, erosion, antibiotic resistant bacteria
The importance of Strategy
Carefully crafted strategy and implementation
- Innovation funnel, most ideas do not become successful new products
- Wheel = invention bicycle wheel with rubber = innovation
Degree of novelty

Examples:
Line extensions = Toothpastes, washing powder, shampoo
Completely new = Walkman, iPod
Repositioning = Haagen Dazs changed their target audience to adults

Why innovations fail
- Technological failure
- Market Failure
o Market conditions change
o Consumers needs not met Sinclain C5 elecctrical tricycle had a maximum speed of
12mph and range of 6.5 miles
Routes to Innovation
1) Individual (Heroic)
a. Technical Entrepreneurs
b. Edison founded GE to produce and sell lightbulbs
c. Wilhelm Conrad invented X-rays
2) Corporate R&D (Closed)
a. Pfizer developed Viagra
b. 3M developed the Post-It note
3) Open
a. Universities led projects, CAPTCHA

Commercialisation
- Inventions have limited value so commercialisation is the process to unlock the latent value
of the technology to real economic value.
- These mechanisms are known as business models

Value Creation
- Enable the user to recognise the benefit and the value that can be gained from invention
- Moe vital for technology from scientific breakthroughs cause they need to find a use for this
discovery
- Supplier must identify the customer base and articulate the value proposition
Value Capture
- Appropriating value from the activities undertaken by innovator
- Value is mainly revenue and other gains
- Value capture renting, charge by transaction, advertising, subscription, after sales support
- 3 Key Value Capture Factors
o Uniqueness
Controlling the knowledge generated by innovation
o Complementary Assets
Control the assets necessary to exploit the knowledge
Bargaining power of owners of these depends on whether these resources
are generic or specialises
o Power in the value network
Apple Iphone revenue generation mechanism
- Additional revenue from apps created by many people
- Breakaway from traditional ways and innovate new ways
- Protecct with patent (capture value)
- Proprietary systems (prevents other OS from coming in) Barrier to Entry
Value capture in Medical Drugs
- Strong Patents
3 Business Models to create Value
- Incorporate the Technology into the current business (most value)
o Though it was not part of their product lines, Apple decided to incorporate the iPod in
2001
- License the technology to a third party (least value)
Monetary Physical Relational Organizational Human
Property Systems
Cash Plant Formalized processes Management contracts
Tangible Investments Equipment Customer contracts Codified knowledge Documented accessible
Receivables / debtors Inventory Formal alliances Patents skills inventories
Payables / creditors Finished goods Brands
WP Mastheads
Raw materials
Structural appropriateness Top management quality
Customer loyalty Informal processes Top management experience
Plant flexibility (behavior, attitude) Organizational reputation Ability to execute
Credit ratings Plant modernity Quality of supply Brand meaning on strategy
Undrawn facilities Infraestructure contracts (strenght, stature) Leadership capabilities
Intangible Borrowing capacity Tradability of assets Right to tender, compete Productivity of R&d Problem-solving
Receivables certainty Access rights Right to design processes ability
Balance sheet strenght Networks Quality of corporate Employee loyalty
Inventory (good and usable) Regulatory imposts governance (behavioral, attitudinal)
Know-how, show-how Personel reputation
Tacit knowledge Workforce adaptability
Employee
engagement
Fuente: Asset Economic Holdings Tracked by traditional accounting
Not tracked by trad. Accounting
Traditional Accounting Assets Intellectual Capital Assets
Low rate
of diffusion
Rapid diffusion
Moderate
Diffused
o If company is not able to produce itself it can license and collect royalties
o E.g. Philips on DVD tech
o LED retrofit Bulbs for Philips
- Launch a new venture to exploit the technology in new business arenas (if the business is
risky easier to cut losses)
o Dyson was not able to get support for his dual cyclone technology. So he set up a new
venture to produce this product.
Sailing-ship effect
- Old wooden ships were being challenged by steam ships
- They incrementally improved themselves to have better carrying capacity but there was only
a limit to improvement so they were eventually displaced.
Xerox 914 Copier
- They realised no company will want to purchase the product that was so expensive
- So they decided to lease it to the user who only need to pay for copies above 2000 a month
on top of subscription fee.
- When it became easy to use and cheap, many people began photocopying and Xerox
flourished.
Diffusion
- Innovations are adopted and used by
consumers
- Popular innovations exhibit a rapid rate
of diffusion
- Follows a S curve
- It has a transformative effect (e.g. PC)
- Render existing products/ services
obsolete (e.g. railways ended coach
services)
- Processes can be diffused (e.g. float glass
process)
Profiles
- Innovators: Adopt new ideas(technologies, concepts and behaviours in early stages)
- Early Adopters: Still have some traits of innovation (risk concern)
- Early Majority: First Signs of Diffusion
- Late Majority: Delay adoption until they see the clear advantages of it
- Laggards: wait for maturing implementation and risks involved are smaller
Reasons for the S curve
- Social factors: peer pressure, fashion, word of mouth, social networks
- Bandwagon Effect
Chapter 2
Forms of innovation
- Product (benefits consumer directly)
o Using new technology (Dysons Dual Cyclone Vacuum)
o Reconfiguring technology (Sony Walkman)
o Better at meeting customer needs (Workmate workbench)
o Meeting new consumer needs(JCB excavator)
- Service (Benefits Consumer Directly)
o New Technology (Amazon.com use internet)
o Better t meeting cutomers need (PayPal)
o Meeting a new consumer need (facebook)
- Process (Benefits business/ producer cost savings to consumer)
o New Technologies
float glass technique
o New methods/ organisation
Fords moving assembly line
Toyotas Just-In-Time Production (passes the preparation and delivery
problem onto the producer of the item higher in the value chain)
Product Vs Process
- Product embodied in the outputs of an organisation its goods or services
- Process innovations in the way an organisation conducts its business
- They can both enable one another
- A product innovation for one industry may be a process innovation for another
o UPS creates a new distribution service (product innovation for UPS) it allows a
customer business to distribute the goods more widely and easily (process
innovation)
Types of Innovation
- Component knowledge
o Knowing how each component performs a well-defined task
o is needed for a core design concept
- System Knowledge
o How the components are linked together
o Architectural knowledge

- Incremental: Short term and small innovations (modifications) new model of washing
machine
- Modular: Components change but cover stays the same (e.g. clockwork radio)
- Architectural: same components but system/ design changes Sony Walkman
- Radical: everything changes (iPod) leads usually to a dominant design
Competence-Enhancing vs Competence-Destroying innovation
- Enhancing build on the firms knowledge (e.g. Intel Pentium IV from Pentium III)
- Destroying making existing competencies obsolete (e.g. electronic calculators vs slide rule)
Innovation leads to creative destruction
- Qwerty vs Dvorak Keyboard
- Competing designs will enter a shake out phase that will determine a dominant design
(may not be technically superior)
- Collective switching cost will be too high after the design is established lock in effect

Chapter 3
Technology is self-reinforcing, and it feeds on itself.
It is embedded in artefacts and in people and
organisations. Needs a lot of tacit knowledge and
cannot be easily documented.
Developments in technology give rise to
technological change
Long wave cycles (K-wave)
- Developed by Kondratiev (Russian
Economist)
- 50 year cycles of economic activity
- Each cycle is associated with a transforming technology

Phases of Long Wave Cycle
- Recovery: incresed innovation, new products, high novelty, premium prices
- Prosperity: diffusion stage, spread of innovation, standards emerge
- Recession: Surplus capacity, process improvement, productivity growth
- Depression: consolidation, new industries mature, intense price competition, inventions and
discoveries of next phase
A new paradigm emerges with potential for big leaps
New industries appear when old industries dissapear
5
th
wave (current)
- 1980s onwards
- IT and Communications technology
- Started with PC
- 1990s Dot Com Bubble
- E-commerce led to big growth
What does this theory mean?
- Technological Change is cyclical
- Variations in rates of innovation (there are periods where innovations are bunched together)
- Different eras = different focus on innovations
- Some tech have bigger implications
- New tech change together with institutions (e.g. education, politics, management, capital
markets, legal frameworks)
A technological paradigm is a field of technology where search for innovation is conducted by a
significant group of people with a particular historic context (e.g. nuclear tech, semiconductors)

Chapter 4
3 Features of Innovation
- Complexity and Impact
- Populism media and society
- Focus is just on success/ failure
Moores Law: Every 2 years the number of components on an are of silicon will double. Predicted
the personal computers and fast telecommunication networks
IC technologies made faster circuits that were smaller and cheaper alloweing many new things
like space travel, telecommunications and many electronic devices. BUT it causes a lot of electronic
waste.
Theories of Innovation
- Technology S-curve Technology Life Cycle
Relationship between efforts put into improving a product or process and the results one gets back..


A technology matures when it reaches its physical limits (sail ship effect)
May become too large or complex to improve
Point of inflection on the S-curve will show that the existing tech has matured and it is time for a
new tech
During the paradigm shift there will be a period of shakeout where competing technologies will try
to beat one another to become the dominant design
Successive S-curves for a product as it incrementally improves (Successive generations of HDD)
- Punctuated Equilibrium
Changes do not occur continuously, rathe when a new technology or business model comes along,
the paradigm will have a sudden shift and will become constant once its done.
Punctuated equilibrium are when long periods of equilibrium are punctured by periods of rapid
change when industry structure is revolutionised by innovation


Technological discontinuities/ breakthroughs trigger periods of ferment (turbulant change)
During stability there will only be incremental innovations
Until equilibrium is achieved, there is competetive turmoil that leads to a shake-out followed by a
relative calm. broken saw-tooth pattern.
It differentiates radical and incremental innovation
F1 Cars Carbon fibre
What causes Inertia
1) Traditions
2) Sunk costs/ prior investments
3) Political constraints senior management unwilling to let go of outdated technologies
4) Commitments to outmoded technologies

- Dominant Design
Desing or product configuration that wins the allegiance of the market place. One that competitors
and innovators must adhere to if they hope to command a significant market following.
Accepted market standard
e.g. Microsoft OS, Excel Spreadsheet, Qwerty Keyboard, VHS recording system

Not necessarily the most innovative
How they arise
- Consumer preference
- Market power of dominant player
- Regulation
This theory helps us understantd the importance of the user, the importance of standards and the
importance of business strategy
- Absorptive capacity
Ability of a firm to recognise new information from an external source and assimilate it and apply it
to its own commercial sector
Duckers 7 Sources for Innovative Opportunities
- Changes in industry or market structure
- Demographics
- Changes in perception, mood and meaning
- New knowledge

Depends on their capacity to learn
- Exposure to relevant knowledge
o Appropriate networks
- Presence of prior related knowledge
o Needed in order to evaluate external knowledge acquired through networks
- Diversity of experience
o Value outsider opinions
o Too much internal focus and concentration on incremental work may hamper firms
absorptive capacity
This theory is more sophisticated than other theories of innovation
Chapter 5
Insight (how the ideas come about)
- Association
o Bringing unconnected ideas together
o Correction Fluid by Bette Nesmith
- Adaptation
o Taking and existing solution in one area and adapting it to another area
- Analogy
o A principle is used in one context and is used for a different purpose in another
o Velcro from animal fur sticking with burs
- Serendipity/ Chance
o Random occurrence give rise to new insights
o Alexander Graham Bell discovery of telephone because an assistant tightened the
clamping screw
o X-rays, penicillin, popsicle
Sources
- Individual
o garage model, Determination, ingenuity, perseverance
o Venture Capitalists: Invest in home-run
theories, ROI is ultimate goal, investing
3
rd
parties money, more demanding on
results
o Angels: Invest for returns, but are more
modest in expectations, social/
community aspect on investments,
usually investing their own wealth
o James Dyson, Dyson Dual Cyclone
o Bill Gore, Gore-Tex
- Corporate Undertakings
o Corporate labs
o AT&T Bell Labs, Xerox PARC
o New discoveries lead to new products
o May be declining giving way to open innovation
- Users
o Scientists invent and use instruments for their personal needs
o Later get a manufacturer to produce for them
o E.g. medical equipment
- Outsiders
o Provide a different perspective
o Not weighed down by traditional thinking and existing paradigms
o Not-Invented-Here syndrome in corporations is a barrier adverseness to things
not made within the company, Apples Single Button mouse
o Absorptive capacity is greater
- Spill overs
o Research from one firm benefits another. E.g. VisiCalc spreadsheet was copied by
Lotus then later Microsoft (since software was not patentable in that time)
o Linked to staff mobility people with the knowledge may move away
- Process Needs
o Due to demands of competition or the Market, e.g. moving assembly line
o Bottle-necks, or need to lower costs
o E.g. Float glass technique, moving assembly line

Chapter 6
Insights
- Sources of insights Ch 5
Product development
- Turning ideas and technologies
into products
- Prototypes/ models
Design
- Attributes and shape of product
- Tolerances to which it has to be manufactured
- Materials and process
Business Model (Market Evaluation)
- Value Creation or Value capture
- Revenue Generating Streams
Product Engineering
- In-house or outsource
- Simplifying design: reduce parts count, standardise components, self-aligning parts,
assembly operations requiring single linear motion
Pilot testing
- Test if it can go in the market
- Customer reaction
- Safety requirements
Full scale manufacturing
Design
Insight/
Research
Market
Evaluation
Market/Pilot
Testing
Full Scale
Manufacturing
& Launch
Development
A generic model of the innovation process
Innovation
Research & Development Commercialisation
Production
Engineering
- Training
- Quality control and monitoring systems
- Production capacity(learning curve of workers, potential flaws, distributors need time to
build up stock
- Then ramp up the production
Market Launch
- Advertising
- Ensure outlets have the appropriate stock
- Product literature
- Must consider current and future market conditions
Models of the Innovation Process
- Technology Push
o Technology is driver
o Linear/ sequential
o marketplace is a passive receptacle for fruits of R&D
o Pharmaceutical Industry
o 50s and 60s, companies focused predominantly on scientific breakthroughs
o Scientists may overlook easy solutions
o They may have limited knowledge on true user market
- Demand Pull
o Based on market need, customer driven, source of inspiration
o technological incrementalism danger as firms try to incrementally innovate to
meet customer needs but miss out the emerging technologies that may lead to
radical disruptive innovations
o Need pull, users dont know what they truly want and it is hard for the producers to
create
- Coupling Model
o Both technology push and demand
pull
o Slows process
- Integrated Model
o Project team based product development
o just-in-time production
o Emergence of concurrent/
parallel development
o Matrix, someone from each
department come together to
form a team (finance,
logistics, HR, management)
- Network Modes (Open Innovation)
-
Research & Development Commercialisation
Current
Market
New
Market
F
ir
m
b
o
u
n
d
a
r
y
Research
projects
Firm boundary
Firm boundary
F
irm
b
o
u
n
d
a
ry
Innovation: Commercialisation via external path
Innovation via internal path (Closed innovation)
Innovation: R & D via the external path
Source: adapted from Chesbrough (2003)
o Guarantees flexibility and speed of development
o Strategic partnerships and collaborative marketing
o E.g. Apple iPod all the parts from other producers
o Firms could use external ideas as well as internal ideas (open innovation)
Mobility of knowledge
Educated staff
Mobility of capital
o Needs strong links to external knowledge sources and multi-functional team-based
approaches to facilitate knowledge sharing
o Spreads the risk and costs
o Faster development firm buys licenses instead of waiting to invent it
Chapter 7
Intellectual Property
New Economy capabilities of companies to create value. AKA the Knowledge Economy reliance
on know-how, human creativity and innovation intangible assets have increased in comparison to
30 years ago.
Netscape went public as a $17m company it only had 50 employees, 50 telephones and the
companies software inventory it was valued at $3Bn on the first day of trading what was
bought was the people who had built Netscape Netscape was acquired by AOL for $10Bn just
before it was acquired it released its source code for its browser and created the Mozilla
Organisation
What is IP
- It is the term that describes ideas, inventions,
technologies, artwork and literature
- Forms: Patents, Trademarks, Copyrights
- Must be: Novel, Useful, Tangible, Lawfully
Managed
IPR (Intellectual Property Rights)
- Gives Recognition
- Confers the right for the IPR owner to stop exploitation of his idea
- Gives owner a way to benefit from his ingenuity
- IPR can be licenced provided some conditions
are met
- To stimulate and encourage innovation

Conditions to Show idea is New
- Novelty: must not have been made publicly anywhere in the world before the date of patent
application filing
- Inventive Step: Invention must not be obvious to someone skilled in the art (someone who is
implied to have general knowledge on the subject)
- Capable of Industrial Application: must have a technical aspect. Must be able to
commercialise
Process
- File an application (request for information)
- Search and Publication (check if it already exists)
- Full (substantive) examination
Types
- Registered Design
o Outward appearances
o Exceptions:
Must-Fit related to a design purely a matter of function
Must-Match part can only be designed to match the overall functionality
of the item
o 2D and 3D covered
o 5 years (extended up to 25 years)
- Design Rights
o Unregistered designs
o Automatic
o If it is made by employee it confers to the employer
o 15 years
- Trademarks
o Must satisfy the requirements of the Trade Marks Act 1994
Sounds, smells, containers
o Distinctive, not deceptive, cannot cause confusion with others
o 10 years (renewable) can be revoked
- Passing Off
o Common law right
o No need to register
o Form of misrepresentation, trader cannot sell a good under the pretence that they
are the goods of another
- Copyright
o Intangible right
o Springs to life when the work is created, and belongs to the person creating the
work, if the author is an employee it goes to the employer
o Activities covered by copyright, copying, adapting, distributing, issuing and renting,
public performance, broadcasting
- Trade Secret
o Specialists know how. Formulas or recipes, companies will ask them to sign a NDA
Chapter 8
Necessity is the mother of invention.
(Innovation Strategy)
Innovation Funnel most innovative ideas do
not become successful new products. Even if
they become products it does not guarantee it
creates revenue for the innovator
Fantastic ideas, clear inventions, invest in R&D, tech leadership may not result in successful
innovation as it is more about value creation. We need to remember that we are in a state of flux
and discontinuity in the theories of punctuated equilibrium and dominant design. Competing ideas
appear and follow the introduction of a new major innovation.
Value capture is different even if you are late to innovate you will benefit if you can capture value
well.
- First to market =/= value capture
o Competing designs (even Inferior designs) may offer better consumer value.
Firms can collaborate with competitors
Attack the market
- Long term consequences on the lifecycle of the innovation, the future of the firm and the
strategic decisions and management that needs to be done.
Strategy vs Tactics
- They go had in hand.
- Strategy = long them direction of the company
- Tactics = short term measures that add up to the overall strategy (since it takes time to make
money)
Operational Decisions (short term) vs Strategic Decisions
- Operational Decisions come into effect
quickly
- Strategic Decisions are long term and
impact a lot of people e.g. SG going into
bio-tech industry/ Philips selling away
TV business/ Google buying Motorola
Hierarchy of Strategies
- 3 levels
Business Strategy
- Strategy of the firm on the whole
- Long term objectives such as growth or internalisation/ how to beat the competitors

- Cost leadership strategy
o Access to capital
o Skill in designing products and efficient manufacturing
o Efficient distribution channels
o Risk: other firms can lower their costs, competitors can leapfrog production
capabilities
- Differentiation strategy
o High scientific research
o Skilled labour force (creative, sales, product development)
o Corporate reputation
o Risks: imitation, changes in customer taste (sunk costs cannot be recouped),
competitors may have even greater differentiation
- Focus strategy
o Narrow segment
o Low volume so less bargaining power with suppliers
o Can charge customers higher as they do not have close substitutes
o Risks: imitations and changes in target segments, easy for broad-market cost leader
to adapt its product, other focusers may be able to serve even better
- Stuck in the Middle
o Porter says this is the worst place to be in no competitive advantage
o If they want to choose more than one then they should create separate business
units for each strategy. E.g. FairPrice
Functional Strategy
- Technology Strategy
o Which technologies should the organisation employ
o The one that gives them competitive advantage is the firms core technology
Healthcare Tech is the core tech for GE
o Broad and depth look at the technology
Product Strategy
- Long term development of product or service
- Roadmap for the product or service
- Vision of the product and how it fits in the overall direction of the organisation
- Covers what sort of innovation strategy
External route of innovation
- Lack of resources (finance, facilities, staff)
- Lack of knowledge
- Poor fit with firms strategy (if the application market is too small)
- Lack of reach (tech may have world-wide application but firm may not have the global reach
to market the technology)
- Why license?
o Licensees may have the
knowledge like tacit knowledge
based on experience
o to finance
o Motivation: inventor may not be
commercially savvy
o Complimentary assets, transaction
costs, competition in the final
product market.
- Spin-Offs
o Creating another firm to exploit
innovation
o Technology of the innovation is not closely related to the core technology of the firm
so they relocate the technology to make it the core of another firm and gain the
returns from that.
o How to do this
Initial Public Offering (IPO)
Management Buy-Out (MBO)
Sale to venture capitalists
Sale to another company
Internal Routes to innovation
- First/ Early Mover Strategy
o Gain the dominant/ enduring market position
o Premium pricing for novelty
o Tech leadership
o Good brand recognition and better product positioning
Strategic
Challenges
for the Firm
Whether to enter?
When to enter?
Where to enter?
Routes
Licencing
Spin-offs
Innovation Strategies
First mover
Follower
Sideentrance
Derivative
o Acquire patents
- Wait for discontinuity to happen then enter market
o Free rider/ imitator/ latecomer strategy
Can be used or copied easily
Complementary assets of the late comers such as marketing and
manufacturing can be lower cost
Learning effects, they can learn from the first movers mistake
- Side-Entrant
o Achieve market entrance via niche not head on
- Derivative Strategy
o Add new technology to old products
o Re-innovation
o Less risky and builds on existing customer knowledge
o Leads to incremental innovation
When to enter a market
- Easily imitable but only 1 firm can produce it: they can choose when to enter
- Several firms can produce imitable goods: they will race to capture market
- If good is extremely easily imitable: wait for others to invest in developing before entering.
- More likely to enter if they had the specialised assets (distribution channels)
- Entered earlier when their core products were threatened by several potential rivals
Chapter 13
Cluster concept: geographic concentrations of interconnected companies and institutions in a
particular field. Porter (1998)
Collaborative networks
- are important in high tech sectors because individual firms rarely possess all the necessary
resources and capabilities
- Innovation: Joint Ventures, Licensing, Second-Sourcing agreements, research associations,
govt sponsored research, informal networks
- Technology clusters are regional clusters of firms that have a connection to a common
technology
- Tech Spill overs spread of knowledge across organisational and regional boundaries
based on strength of protection mechanisms (patents), nature of knowledge base and
mobility of labour pool
- Agglomeration Economies benefits firms reap by locating in close geo proximities
willingness to exchange through building trust via interaction attract other firms to the
area supplier and distributor markets grow to service cluster leads to infrastructure
improvements. HOWEVER, it increases competition therefore their pricing power is affected.
other firms can gain access to their proprietary knowledge lead to traffic congestion
and pollution
-
Nature of clusters
- Geographic concentrations
- High specialisation
- Large no of small and medium firms
- Ease of entry and exit
- High innovation rate
- Talent pipeline
Tacit knowledge
- Difficult to exchange over long distances
- Growing importance of socially organised learning processes behind innovation

Bottom of the Pyramid (BOP)
- Challenges for corporate leaders
- External factors undermining profitability
o Innovation to commoditisation cycle is accelerating
o Developed markets are saturated and developing markets are underserved
- BOP has 4 Billion people living on less than $2 a day
- Even poor people spend poorest of poor still have access to media and communication
devices
- Assumptions that are wrong
o Poor cannot buy
o Rural populations are poor and urban pop is rich
- BOP markets
o Have money
o Are brand conscious
o They are connected
o Accept advanced technologies easily
o
o They have a need to consume new goods and services
o They look for dignity and choice
- Philosophy for developing for BOP
o Small unit packages (sachets)
o Low margin per unit
o High volume
o High returns on capital employed
o No more an S Curve but more of an I curve

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TWC Notes 2013-14 T1

Professor: Rajah Kumar

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