Week 3

• What are the characteristics of component/architectural innovations?

  They involve changes in product architecture.
• What types of innovations are competence enhancing/destroying?

  They improve or undermine existing capabilities.
• How do sustaining innovations differ from disruptive innovations?

  Sustaining innovations improve existing products.
• What is the relationship between radical and incremental innovation?

  Radical innovation leads to significant changes.
• What strengths do large firms have in innovation?

  They have better financing for R&D projects.
• How do large firms benefit from their sales volume in R&D?

  Higher sales volume spreads fixed costs better.
• Why might large firms have better-developed complementary activities?

  They have more resources for marketing and planning.
• What potential limitations do large firms face in R&D efficiency?

  Loss of managerial control can decrease efficiency.
• How does growth affect individual scientists' incentives in large firms?

  Incentives diminish as firms grow larger.
• How can large firms feel smaller to enhance innovation?

  By breaking into smaller subunits.
• What happens to companies as they grow larger regarding emerging markets?

  They lose the ability to enter small markets.
• What is a common preference of large firms regarding cash flow?

  They prefer safe cash flow over risks.
• What can strategic commitments to customers and suppliers lead to?

  They can tie firms to existing technologies.
• Why does investing in new innovation lose appeal for successful companies?

  It becomes a smaller part of income.
• How do capabilities migrate in organizations over time?

  From resources to processes and values.
• What are sustaining technologies?

  Innovations that improve existing products.
• What defines disruptive innovations?

  They create new markets with initially worse products.
• Why do large companies often lose emerging growth markets?

  Smaller companies pursue them more effectively.
• What must managers create to cope with change in innovation?

  A new organizational space for capabilities.
• What are the three ways managers can create new capabilities?

  • Create new organizational structures within the firm.
  • Spin out an independent organization.
  • Acquire a different organization with suitable processes.
• What are the characteristics of heavyweight teams?

  Members work closely and share project success.
• What is a primary requirement for spinout organizations?

  They must not compete for resources with mainstream projects.
• Why is CEO oversight crucial during disruptive changes?

  Values shape resource allocation processes.
• What should managers evaluate when considering acquisitions?

  Resources and processes/values of the target company.
• What can happen if capabilities are embedded in processes and values during an acquisition?

  Integration can erase those capabilities.
• What must organizations facing change assess?

  Resources and adequacy of processes and values.
• What is a critical management responsibility in a changing environment?

  Supporting capable people with suitable processes.
• Why might established companies struggle with innovation?

  Due to outdated organizational structures.