Master Strategic Management
Corporate Entepeneurship
SUMMARY LECTURES
,lecture 1: Introduction to innovaters dillemma
The fall of Nokia Nokia struglled with introduction smartphones
- They felt the could do ntothing wrong
- They respond slow to trends
- They didn’t do anyting wrong, but didn’t addapt to change from hardware to software
Innovator’s dilemma
Typologies of technological change:
- Old vs. new (Cooper and Schendel, 1976)
- Competence-enhancing vs. competence-destroying (Tushman and Anderson, 1986)
- Incremental vs. radical (Utterback, 1994)
- Sustaining vs. disruptive Large established firms are mostly struggling with this
o Old firms are less succesfull with disruptive innovation hard to stay succesfull
The success syndrome
1. Fit succes
2. Size and age size & age creates inertia:
a. Structural: hire more people & become slower
b. Cultural: firms are convinced that what they do
is right, they don’t want to change.
3. Success in stable markets
4. Failure when markets shift
Is inertia always bad?
- It may result from accountability & reliability
- If you want to be succesfull in the future, it is bad
- Have to keep eye on the past and future
- Ex. Microsoft underestimates Iphone, overconfidence and don’t see the need for change
Innnovatiors dillema: Large companies depend on their existing customers and investors for
resources. They listen closely to these customers and investors and kill ideas for which there is little
need.
Dotted line
- Low line: least demanding customer (student & bikes)
- High line: most demending (boomers & bikes)
Bold line
- At the top: progress due to sustaing technology
- Above the dotted line: overshooting customers needs
At the bottom:
- C. New firm that does tecnholgical innovation (at first
customers don’t want to pay for it)
- D. Technology becomes better and meet customers
demand
- E. Serve the even more demainding customers
, Lecture 2: Ambidexterity
Ambidexterity Solution to innovators dilemma
- Use the cash cow to gain money
- Invest in new things
Organization structure: example Google
- Complex structure Alphabet: different business units (google, YouTube, investments etc.)
- Google can focus on their current core competencies innovation: become more efficient
- Other brands have more independence: own strategy & execution different innovation
Advantages
1. Allows each unit to deploy the right approach to strategy and execution
2. Makes it easier to build the required capabilities in each business
3. Lower the hurdles to acquiring and growing companies
4. Easier structure, different leadership teams easier growth for employees
Size and Structural Dimensions of the Firm: is bigger better?
Pro’s
1. Large firms are able to spread the cost of R&D over a larger volume
2. Large firms have scale and learning effects
3. Large firms can spread the risk less big problem if an investment turns out badly
Con’s
1. Large firms are less efficient in R&D
2. Large firms become inert and do not react to changes
3. The ICARUS Paradox overconfidence due to successfulness: managers are overly
confident and over-invest in current products and processes, and new activities are
neglected and discouraged. (success syndrome/overshooting)
Empirical Findings
Small firms outperform large firms in:
- Patenting (less R&D cost per patent)
- New Drug Introductions
- New Product Improvements
Large firms outperform small firms in
- Incremental Innovations
- Process Innovations
- Some industries that are scale intensive
Large firms respond by imitating small firm behavior in structure and culture.
- However, a tension stays between the formal, mechanistic need of a large company and the
informal, autonomy-oriented expectations of a small R&D unit.
Corporate Entepeneurship
SUMMARY LECTURES
,lecture 1: Introduction to innovaters dillemma
The fall of Nokia Nokia struglled with introduction smartphones
- They felt the could do ntothing wrong
- They respond slow to trends
- They didn’t do anyting wrong, but didn’t addapt to change from hardware to software
Innovator’s dilemma
Typologies of technological change:
- Old vs. new (Cooper and Schendel, 1976)
- Competence-enhancing vs. competence-destroying (Tushman and Anderson, 1986)
- Incremental vs. radical (Utterback, 1994)
- Sustaining vs. disruptive Large established firms are mostly struggling with this
o Old firms are less succesfull with disruptive innovation hard to stay succesfull
The success syndrome
1. Fit succes
2. Size and age size & age creates inertia:
a. Structural: hire more people & become slower
b. Cultural: firms are convinced that what they do
is right, they don’t want to change.
3. Success in stable markets
4. Failure when markets shift
Is inertia always bad?
- It may result from accountability & reliability
- If you want to be succesfull in the future, it is bad
- Have to keep eye on the past and future
- Ex. Microsoft underestimates Iphone, overconfidence and don’t see the need for change
Innnovatiors dillema: Large companies depend on their existing customers and investors for
resources. They listen closely to these customers and investors and kill ideas for which there is little
need.
Dotted line
- Low line: least demanding customer (student & bikes)
- High line: most demending (boomers & bikes)
Bold line
- At the top: progress due to sustaing technology
- Above the dotted line: overshooting customers needs
At the bottom:
- C. New firm that does tecnholgical innovation (at first
customers don’t want to pay for it)
- D. Technology becomes better and meet customers
demand
- E. Serve the even more demainding customers
, Lecture 2: Ambidexterity
Ambidexterity Solution to innovators dilemma
- Use the cash cow to gain money
- Invest in new things
Organization structure: example Google
- Complex structure Alphabet: different business units (google, YouTube, investments etc.)
- Google can focus on their current core competencies innovation: become more efficient
- Other brands have more independence: own strategy & execution different innovation
Advantages
1. Allows each unit to deploy the right approach to strategy and execution
2. Makes it easier to build the required capabilities in each business
3. Lower the hurdles to acquiring and growing companies
4. Easier structure, different leadership teams easier growth for employees
Size and Structural Dimensions of the Firm: is bigger better?
Pro’s
1. Large firms are able to spread the cost of R&D over a larger volume
2. Large firms have scale and learning effects
3. Large firms can spread the risk less big problem if an investment turns out badly
Con’s
1. Large firms are less efficient in R&D
2. Large firms become inert and do not react to changes
3. The ICARUS Paradox overconfidence due to successfulness: managers are overly
confident and over-invest in current products and processes, and new activities are
neglected and discouraged. (success syndrome/overshooting)
Empirical Findings
Small firms outperform large firms in:
- Patenting (less R&D cost per patent)
- New Drug Introductions
- New Product Improvements
Large firms outperform small firms in
- Incremental Innovations
- Process Innovations
- Some industries that are scale intensive
Large firms respond by imitating small firm behavior in structure and culture.
- However, a tension stays between the formal, mechanistic need of a large company and the
informal, autonomy-oriented expectations of a small R&D unit.
