isom 1380 module 2

  1. normal distribution of adopters and their differences
    • innovators-runs after every new gizmo
    • early adopters-sees the value of the new tech and willing to pay a high cost to purchase and use the tech
    • early majority-not willing to bear a high cost
    • late majority-higher standard, use unless absolutely necessary
    • laggards-do not want to have anything to do with new tech
  2. why is understanding different groups of adopters important
    • understand their expectations
    • if the previous group does not buy it, it affects the adoption of the later groups
  3. reasons for the chasm(why can't a new product mainstream
    innovators and early adoptors are willing to try new tech, they are techies and visionaries,  they view new gizmos as power tools

    while the early majority are more conservative, they are pragmatic and want useful tools
  4. how to cross the chasm
    • demonstrate to early majority that the innovation help them as opposed to showing that the innovation is cool
    • provide support services such as manuals, customer service, set-up assistance; these lower the cost of using innovations
    • concentrate on a vertical marketing strategy;
    • bowling alley strategy-niche market, start off small, be number one and leverage success (don't need to be everything to everyone)
    • choose customers with need, eg. segway for people in law enforecement
  5. adoption s-curve
    low rate of market growth; accelerated market growth(take-off stage, customer base shift to early majority); slowing of market growth
  6. implications of adoption s-curves
    • estimate demand growth over time
    • when difference group of customers adopt new products at different points in time
    • financial attractiveness of product at different time
    • rigtt promotional and pricing strategy
  7. why does the market choose a dominant design
    • less learning or switching cost for customers
    • lower cost for retailers, eg. if Blu-ray is the dominant design, retailers don't need to have HD-DVD in store
    • learning effects for firms; more R&D and better functionality
    • network externality
  8. what is network externality
    the value of  product is affected by the total number of other people using the product
  9. examples of negative network externality
    internet bandwith
  10. examples of positive network externality
    • online gaming
    • xbox
    • blu-ray disc
    • microsoft design
    • mobile phone operating system Android
  11. network externality will depend on...+examples; the superior tech does not necessarily win, eg...
    • installed base(existing customers), eg. number of people who have bought Sony Playstation
    • complementary goods, eg. number of games available on Playstation
    • QWERTY keyboard does not enable people to type in the highest speed, yet it won
  12. examples of regulatory agencies choosing the dominant design
    • european union(EU) regulators chosed GSM over other competing standards for the mobile phone market
    • US regulators chose the NTSC color standard in TV broadcasting
  13. cons of market-based decision for choosing dominant design and examples
    take a very long time to decide on mobile phone standard, eg. US market VS EU
  14. critical point in market based decision for choosing dominant design
    when the number of adoptors cross certain threshold, the network externality become significant and one tech wins
  15. factors crucial of market based decision for choosing dominant design
    • Technological functionality, eg. lomega Zip drive
    • complementary good(alliance)
    • Information, eg. a product becomes more popular when people know it sells well; changes customers purchasing decisions
    • installed base
    • intellectual property, eg. Qualcomm snapdragon processor
  16. determine what intellectual property
    • does it provide a competitive advantage?
    • does it have commercial value
  17. type of intellectual properties
    • patents 
    • copyrights
    • trademarks
    • trade secret
  18. why is providing patent protection important in a society
    • provide incentive to innovate; recoup investment; ow imitators can easily copy
    • disclosure of how the innovation works lead to an increase in the current knowledge base; encourage others to make improvement; the idea is not lost to humanity
  19. type of patents
    • utility(functionality, can be obtained for process or invention)
    • design
    • plant
  20. features of patent
    • only a concrete expression of an idea can be patented
    • commercial value is not accessed during patent application, eg. a dog watch can be patented
    • patent specification-describe how the invention works
    • patent claims
    • if the invention uses company resources, the company gets the patent
  21. what can be patented(3 characteristics)
    • novel
    • non-obvious
    • useful(functional)
  22. patent feature-novel
    • not disclosed before; dippin' dots cannot apply for patent for its ball-shaped ice cream cuz it has been selling the ice cream before application
    • not invented before
    • substantially different from what is existing
  23. patent feature-non-obvious
    • eg. change in size of an existing device
    • substituing one material for another
    • *subjective
  24. what cannot be patented
    • an idea
    • laws of nature or naturally occurring substances
  25. expansion of what is patentable
    • genetically-re-engineered organisms
    • computer software-the code is copyrighted and the algorithm is patented
    • business model, eg. Reverse shopping at, one-click shopping at Amazon
  26. patent laws and what they protect
    • Paris convention for the protection of industrial property-equaluty for foreign nationals and citizens with regard to patent rights
    • Patent Cooperation Treaty-inventor can apply for patent in one country and delay filling for 2.5 years
    • European Patent Convention-one filing
  27. process of obtaining a patent
    • document when the invention was made
    • hire patent attorney
    • conduct a patent search
    • file an application
    • obtain decision from us patent and trademark office
  28. tradeoff of having a broad patent claim
    • pros: prevent competitors from infringing
    • cons: may be invalid cuz applicant is likely to infringe on others' claims
  29. patent strategy
    obtain many patent for one product, eg. the Sensor razor of Gillette, prevent competitors from developing a competing product
  30. patent litigation
    • amazon vs barne&noble
    • polariod vs kodak
    • *punishment depends on whether the infringer know he is infringing
  31. patent trolls-meaning, example
    • a company that buys patents and used the threat of litigation to motivate infringers to license them
    • NTP threaten RIM
  32. advantages of patent
    • slow imitation
    • foster company growth, eg. Qualcomm; licensing revenue
    • facilitate the legal protection of intellectual property
    • increase bargaining power over suppliers, eg. Nokia patents on speakers
    • help new firms raise money
  33. disadvantages of patents
    • not always effective at deterring imitation, competitors may invent around the patent
    • gain may be greater by keeping it a trade secret since a patent only provides a 20 year protection
    • pace of change may make patent irrelevant
    • difficulty proving infringement
  34. what can be copyrighted?
    • artistic, literary or musical work
    • whether it is artistic is irrelevant
    • has to be recorded in some kind of medium
  35. copyrights vs patent
    • copyrights are much easier to obtain
    • less expensive form of protection
  36. who gets the copyright
    the author, unless the work is done for fire, then the copyright foes to the entity commissioning the work
  37. how to get a copyright
    • by putting the work in tangible form
    • by registering the work at the copyright office(provides the right to sue for copyright infringement)
  38. software copyright
    • protect the source code, object code, microcode, screen displays
    • hard to enforce, hence dummy information is included to trace copiers
  39. challenges in protecting copyright
    • technology makes it easy to infringe
    • eg. Napter, Youtube are websites that allow sharing of music and videos
    • recording device such as TiVo and XM Inno
  40. examples of trade secrets
    • Coca-Cola formula
    • KFC fried chicken recipe
    • manufacturing process of drugs
    • customer lists
    • Google's page rank algorithm
  41. Trade secret is better than patent when...
    • the secret cannot be patented
    • market life of a product is longer than 20 years
    • the patent would be hard to enforce
    • the patent would be narorw
  42. patent is better than trade secret when
    • reverse engineering is possible
    • the market life of the product is close to 20 years
    • the patent is easy to enforce
    • the patent would be broad
  43. conditions for trade secrets
    • known only by people in the company
    • have an economic value
    • reasonable measures to keep the information a secret, eg. non-disclosure agreement and non-compete agreement
  44. non-disclosure agreement- for whom and what's in it
    • signed by employees, investors etc. to prevent them from bringing IP to competitors
    • exactly what info to be kept secret
    • legitimate use of the information
    • what must be done with any documents/materials transferred to the employee both during and after employment
    • compensation for non-disclosure
  45. non-compete agreement
    • prevent employees from working for competitors
    • compensation 
    • eg. former employee in HSBC cannot work with CitiGroup
  46. what are trademarks
    • devices that identify the provider of a product or service
    • protect brand names
  47. what is protected under trademark law
    • words
    • numbers and letters, eg. 23andme, 1800free411
    • logos, eg Nike
    • sounds, eg. hulu of Yahoo! and lion roar of MGM
    • fragrances
    • shape(protected by both patent and trademark)
  48. features of trademark
    • obtained by using the trademark or by registering with USPTO
    • valid for 10 years
    • registration allows the right to sue
  49. challenges of trademark
    • provide negative right, enforced through legal action
    • difficult for startup to undertake against large companies
    • although the court ruled in Chewy Vuitton's favor in the lawsuit between Louis Vuitton and Haute Diggity Dog, Walmart is pressured by LV to stop putting Chewy Vuitton on shelf
  50. main difference in IP laws among different countries
    • requirement to manufacture in EU
    • disclosure prior to one year or any disclosure
  51. international agreements on copyright and trademarks
    • The Berne Convention-minimum level of copyright protection
    • The Madrid Protocol-covers trademark in 70 countries
  52. public policy-two approaches towards innovation
    • free-market approach; creative destruction; survival of the fittest
    • State-sponsored approach; providing subsidies to solar power companies and not to wind power companies
  53. free-market approach-advanages
    achieve most efficient outcome in the long run
  54. Free market approach-disadvantage
    • uncertainty for a long period of time until creative destruction plays out
    • other countries that follow state powered companies could lead to these companies dominating the market
  55. state-sponsored approach-advantage
    • less uncertainty-government favors certain industries over others tilts the balance in their favor
    • faster outcome
  56. state-sponsored approach-disadvantage
    • bias the market
    • creative destruction is compromised, only short term advantage 
    • government decisions are unlikely to be as good at identifying efficient outcomes
  57. basic research vs applied research
    • basic: increase the understanding of a topic without an immediate commercial application
    • applied: meet a specific need
  58. definition of development in R&D
    activities that apply knowledge to produce useful devices, materials, or processes
  59. government-funded research-impact of funding university
    • useful innovations
    • university collect royalties on inventions funded by taxpayer; rapid increase in establishment of technology transfer offices
    • contribute to innovation through publication of research results
  60. government funded research-invest in research through:
    • own laboratories
    • science parks and incubators
    • grants for public or private organizations
  61. examples of government discouraging use of technology when cost is greater than benefits
    in India genetic testing for the sex of the baby is forbidden to prevent infanticide
  62. organizations's size and structure on its ability to generate innovation-small and flexible
    • best suited to idea generation
    • foster creativity and experimentation
  63. organizations's size and structure on its ability to generate innovation-formal rule based
    • better investment decisions and more efficient implementation
    • enhance efficiency and coherence across R&D activities
  64. advantage of big firms in innovating
    • obtain financing 
    • spread R&D over large volume
    • economies of scale
    • learning effect
    • able to risk on large Boeing can power aircraft-building projects
  65. disadvantage of big firms in innovating(or advantage of small firms)
    • lower R&D efficiency due to loss of managerial control; it becomes difficult to coordinate all part of the companies
    • more bureaucratic inertia-good ideas get stuck in the middle of hierarchical structure
    • more strategic committment tie firm to current technologies; Icarus paradox: that which you excel at can be your undoing; eg. Kodak thought films were far superior than digital cameras
    • small firms more entrepreneurial
  66. reason for Icarus Paradox
    • reluctance to question the status quo
    • overconfidence
    • carelessness
  67. features of industries suitable for small firms
    • more reliant on skilled labor
    • less concentrated
    • young
    • less captial intensive
  68. structural dimensions of the firm impacting innovation
    • formalization
    • standardization
    • centralization
  69. formalization-what, pros and cons
    • the degree to which firms utilizes rules and procedures to structure the behavior of employees
    • substitute for managerial oversight
    • employees stunted by rules, the rigid structure may stifle creativity
  70. standardization-what, pros and cons
    • the degree to which activities are performed in a uniform manner
    • facilitates smooth and reliable outcomes; eg. Dell reazlies PC will become commodity and that price is more important than product innovation, replicate optimal manufacturing model, more standardized, cut wastage in supply chain
    • limit creativity and experimentation; employees not given automony on how to produce
  71. centralization-what, pros
    • the degree to which decision-making authority is kept at top levels of the firm
    • ensures project match firm-wide objectives
    • avoid redundancy; 3M applied centralization to cut wasted resources
    • maximize economies of scale
  72. pros of decentralization
    R&D activities are more market oriented, as employed by Microsoft
  73. mechanistic structure vs organic structure
    • high formalization and standardization
    • good for operational efficiency, reliability
    • minimize variation-ensure uniform high quality
    • stifle creativity
    • eg. Dell
  74. mechanistic structure vs organic structure
    • low formalization and standardization
    • free flowing
    • encourages creativity and experimentation
    • may yield low consistency and reliability in manufacturing 
    • eg. google
  75. ambidextrous organization-what, examples
    • some divisions organic while some are mechanistic
    • GE-treat certain divisions as separate companies while R&D done on corporate level is shared across divisions
    • Apple-set up organic divisions for new product development
    • USA today-hire new people for online newspaper
  76. skunk works-what, examples
    • a new product development team that operates nearly autonomously, unhampered by bureaucracy, with considerable decentralization
    • eg. several aircraft designs from Lockheed Martin's Advanced Development Program
  77. loosely coupled organization-what, pros and cons
    • a network of loosely connected firms whose activities are not tightly integrated, who coordinate through shared objectives and standards
    • pursue more flexible configurations
    • lose control over the final product,eg. the 787 Dreamliner from Boeing has defect due to the battery it used, which was made in Japan
Card Set
isom 1380 module 2
isom 1380