Strategic management of
innovation
Book + Lecture notes
University Utrecht
Table of contents
LECTURE 1: 05-02-2024.................................................................................................................................. 1
Chapter 1: Introduction........................................................................................................................................2
Chapter 2: Sources of Innovation & Chapter 3: Types and Patterns of Innovation..............................................3
LECTURE 2: 12-02-2024.................................................................................................................................. 5
Chapter 3: Types and Patterns of Innovation.......................................................................................................5
Chapter 4: Standards Battles, Modularity, and Platform Competition..............................................................11
Chapter 5: Timing of entry.................................................................................................................................16
LECTURE 3: 19-02-2024................................................................................................................................ 19
Chapter 6: Defining the Organization’s Strategic Direction...............................................................................19
External analysis............................................................................................................................................19
Internal analysis.............................................................................................................................................24
LECTURE 4: 26-02-2024................................................................................................................................ 32
Chapter 7: Choosing Innovation Projects...........................................................................................................33
Chapter 8: Collaboration strategies...................................................................................................................38
Chapter 9: Protecting Innovation.......................................................................................................................42
LECTURE 5: 04-03-2024................................................................................................................................ 44
Chapter 10: Organizing for Innovation...............................................................................................................44
Chapter 11: Managing the New Product Development Process........................................................................49
LECTURE 6: 11-03-2024................................................................................................................................ 57
Chapter 12: Managing New Product Development Teams................................................................................57
Chapter 13: Crafting a Deployment Strategy.....................................................................................................61
Description: Lecture slide notes are supported by detailed explanations derived from the
book (Strategic Management of Technological Innovation by M. Schilling 9 th ed.).
LECTURE 1: 05-02-2024
Learning objective
What is strategy?
- Explain the role of strategy in a firm’s quest for competitive advantage.
- Define competitive advantage, sustainable competitive advantage, competitive
disadvantage, and competitive parity.
- Assess the origins of strategy and how view on strategy have changed over time.
- Understand the challenges of strategy making.
,Chapter 1: Introduction
- Explain the role of strategy in a firm’s quest for competitive advantage.
- Define competitive advantage, sustainable competitive advantage, competitive
disadvantage, and competitive parity.
- Assess the origins of strategy and how view on strategy have changed over time.
- Understand the challenges of strategy making.
Strategy: a plan, method, or series of actions designed to achieve a specific goal or effect.
- Strategy is a lot of going at war with your competitors. But not always, strategy can be as
much about cooperation as it is about competition.
Strategy thus serves as a plan for the firm’s journey to achieve a superior performance relative to
other competitors by guiding decision-making, resource-allocation, differentiation from competitors,
cost leadership, market positioning and adaptation to changing circumstances over a prolonged
period.
The notion of competitive advantage
- Superior performance relative to other competitors in the same industry or the industry
average.
o Competitive advantage is relative, not absolute.
Sustainable competitive advantage: A firm that can outperform its competitors or the industry
average over a prolonged period.
Competitive disadvantage: refers to a situation where a firm’s performance or capabilities lag behind
those of its competitors in the industry.
- Makes it challenging for the firm to compete effectively in the market and may lead to loss of
market share, lower profitability, and diminished long-term prospects.
Competitive parity: in this situation the firm’s performance or offerings are on par with those of its
competitors.
- The firm is neither at a significant advantage nor at disadvantage compared to its
competitors.
- Often seen as a baseline requirement for survival in the market, as it ensures that the firm
can at least meet the minimum expectations of customers and remain viable.
How do you become a strategic leader?
It is a function of innate abilities and learning.
Leadership actions reflect:
- Age, education, and career experiences.
- Personal interpretations of situations.
Upper Echelon’s Theory: describes how the values, perspectives, and experiences of top
management influence organizational outcomes. It is suggested that factors such as personal
circumstances, values, and experiences of influence unique perspectives of top management.
Outcomes include strategic choices and performance levels.
Difference between tactical move and strategic move: with a strategic decision you’re making a
significant commitment with long-term consequences. Whereas a tactical decision has a short-term
2
,consequence in mind and can be reversed easily. During this course: think about both strategic and
tactical moves you’ll make during simulations.
Elements of good strategy:
Analysis:
Formulation
Implementation
How to achieve and sustain competitive advantage is the main goal of this course.
Chapter 2: Sources of Innovation & Chapter 3: Types
and Patterns of Innovation
Explain why innovations occur in an industry, and why some innovations rise to
dominate other.
Understand various sources of innovation.
Assess the underlying mechanisms for creating and diffusing innovation.
Review various models and types of innovations
Innovation: basic definitions and distinctions
- Creativity vs invention
- Creativity is usually defined as the ability to produce useful and novel work.
- Invention is usually defined as the outcome/result of the creative process.
Invention vs innovation
- The first-time occurrence of an idea/concept qualifies as an invention, can be carried out
anywhere.
- The first-time commercialization of an idea/concept is considered an innovation, occurs
mostly in firms.
Innovation vs Technological change
- Innovations can be technological, nontechnological, or both. Innovation is a broader term
than technological change – All technological changes are innovations, but all innovations are
not technological changes. E.g.: The Apple iPod did not use new technology, the real
innovation here was in its design.
Firms innovate because of commercial needs, and their starting point is often reviewing and
combining existing knowledge, only in its absence firms invest in new research (science). Also, in
most settings user experience is considered a more important input than science.
Chain linked model of innovation.
- Innovation is not a sequential (linear) process.
- Innovation is a learning process involving multiple inputs, interactions, and feedbacks in the
process of knowledge creation.
Innovation: a novel and useful idea that is successfully implemented.
- Innovation can be the basis for gaining and sustaining competitive advantage.
- Innovation can create and destroy value.
3
, - Innovation often comes in waves. Many firms dominated an early wave of innovation and are
challenged by the next wave.
o Traditional networks vs cable providers.
o Cable providers vs streaming content.
o Typewriters to PC’s to mobile devices.
- Initial innovations are foundational for other rapid innovation.
Types and patterns of innovation
- A conceptual model to categorize innovations along the market (existing/new) and
technology (existing/new) dimension.
- Incremental innovation:
o Builds on established knowledge.
o Results from steady improvement.
- Radical innovation:
o Novel methods & materials
o Entirely new knowledge base or recombination of existing knowledge.
o Targets new markets and technology.
- Architectural Innovation:
o Existing knowledge leveraged into a new market.
o Known components, existing technology, used in a novel way.
- Disruptive innovation:
o Leverages new technologies in existing markets.
o New product/ process meets existing customer needs.
Patent: a form of intellectual property that gives the inventor exclusive right s to benefit from
commercializing a technology for a specific time period in exchange for public disclosure of the
underlying idea
Trade secret: valuable proprietary information that is not in the public domain and where the firm
makes every effort to maintain its secrecy.
4
innovation
Book + Lecture notes
University Utrecht
Table of contents
LECTURE 1: 05-02-2024.................................................................................................................................. 1
Chapter 1: Introduction........................................................................................................................................2
Chapter 2: Sources of Innovation & Chapter 3: Types and Patterns of Innovation..............................................3
LECTURE 2: 12-02-2024.................................................................................................................................. 5
Chapter 3: Types and Patterns of Innovation.......................................................................................................5
Chapter 4: Standards Battles, Modularity, and Platform Competition..............................................................11
Chapter 5: Timing of entry.................................................................................................................................16
LECTURE 3: 19-02-2024................................................................................................................................ 19
Chapter 6: Defining the Organization’s Strategic Direction...............................................................................19
External analysis............................................................................................................................................19
Internal analysis.............................................................................................................................................24
LECTURE 4: 26-02-2024................................................................................................................................ 32
Chapter 7: Choosing Innovation Projects...........................................................................................................33
Chapter 8: Collaboration strategies...................................................................................................................38
Chapter 9: Protecting Innovation.......................................................................................................................42
LECTURE 5: 04-03-2024................................................................................................................................ 44
Chapter 10: Organizing for Innovation...............................................................................................................44
Chapter 11: Managing the New Product Development Process........................................................................49
LECTURE 6: 11-03-2024................................................................................................................................ 57
Chapter 12: Managing New Product Development Teams................................................................................57
Chapter 13: Crafting a Deployment Strategy.....................................................................................................61
Description: Lecture slide notes are supported by detailed explanations derived from the
book (Strategic Management of Technological Innovation by M. Schilling 9 th ed.).
LECTURE 1: 05-02-2024
Learning objective
What is strategy?
- Explain the role of strategy in a firm’s quest for competitive advantage.
- Define competitive advantage, sustainable competitive advantage, competitive
disadvantage, and competitive parity.
- Assess the origins of strategy and how view on strategy have changed over time.
- Understand the challenges of strategy making.
,Chapter 1: Introduction
- Explain the role of strategy in a firm’s quest for competitive advantage.
- Define competitive advantage, sustainable competitive advantage, competitive
disadvantage, and competitive parity.
- Assess the origins of strategy and how view on strategy have changed over time.
- Understand the challenges of strategy making.
Strategy: a plan, method, or series of actions designed to achieve a specific goal or effect.
- Strategy is a lot of going at war with your competitors. But not always, strategy can be as
much about cooperation as it is about competition.
Strategy thus serves as a plan for the firm’s journey to achieve a superior performance relative to
other competitors by guiding decision-making, resource-allocation, differentiation from competitors,
cost leadership, market positioning and adaptation to changing circumstances over a prolonged
period.
The notion of competitive advantage
- Superior performance relative to other competitors in the same industry or the industry
average.
o Competitive advantage is relative, not absolute.
Sustainable competitive advantage: A firm that can outperform its competitors or the industry
average over a prolonged period.
Competitive disadvantage: refers to a situation where a firm’s performance or capabilities lag behind
those of its competitors in the industry.
- Makes it challenging for the firm to compete effectively in the market and may lead to loss of
market share, lower profitability, and diminished long-term prospects.
Competitive parity: in this situation the firm’s performance or offerings are on par with those of its
competitors.
- The firm is neither at a significant advantage nor at disadvantage compared to its
competitors.
- Often seen as a baseline requirement for survival in the market, as it ensures that the firm
can at least meet the minimum expectations of customers and remain viable.
How do you become a strategic leader?
It is a function of innate abilities and learning.
Leadership actions reflect:
- Age, education, and career experiences.
- Personal interpretations of situations.
Upper Echelon’s Theory: describes how the values, perspectives, and experiences of top
management influence organizational outcomes. It is suggested that factors such as personal
circumstances, values, and experiences of influence unique perspectives of top management.
Outcomes include strategic choices and performance levels.
Difference between tactical move and strategic move: with a strategic decision you’re making a
significant commitment with long-term consequences. Whereas a tactical decision has a short-term
2
,consequence in mind and can be reversed easily. During this course: think about both strategic and
tactical moves you’ll make during simulations.
Elements of good strategy:
Analysis:
Formulation
Implementation
How to achieve and sustain competitive advantage is the main goal of this course.
Chapter 2: Sources of Innovation & Chapter 3: Types
and Patterns of Innovation
Explain why innovations occur in an industry, and why some innovations rise to
dominate other.
Understand various sources of innovation.
Assess the underlying mechanisms for creating and diffusing innovation.
Review various models and types of innovations
Innovation: basic definitions and distinctions
- Creativity vs invention
- Creativity is usually defined as the ability to produce useful and novel work.
- Invention is usually defined as the outcome/result of the creative process.
Invention vs innovation
- The first-time occurrence of an idea/concept qualifies as an invention, can be carried out
anywhere.
- The first-time commercialization of an idea/concept is considered an innovation, occurs
mostly in firms.
Innovation vs Technological change
- Innovations can be technological, nontechnological, or both. Innovation is a broader term
than technological change – All technological changes are innovations, but all innovations are
not technological changes. E.g.: The Apple iPod did not use new technology, the real
innovation here was in its design.
Firms innovate because of commercial needs, and their starting point is often reviewing and
combining existing knowledge, only in its absence firms invest in new research (science). Also, in
most settings user experience is considered a more important input than science.
Chain linked model of innovation.
- Innovation is not a sequential (linear) process.
- Innovation is a learning process involving multiple inputs, interactions, and feedbacks in the
process of knowledge creation.
Innovation: a novel and useful idea that is successfully implemented.
- Innovation can be the basis for gaining and sustaining competitive advantage.
- Innovation can create and destroy value.
3
, - Innovation often comes in waves. Many firms dominated an early wave of innovation and are
challenged by the next wave.
o Traditional networks vs cable providers.
o Cable providers vs streaming content.
o Typewriters to PC’s to mobile devices.
- Initial innovations are foundational for other rapid innovation.
Types and patterns of innovation
- A conceptual model to categorize innovations along the market (existing/new) and
technology (existing/new) dimension.
- Incremental innovation:
o Builds on established knowledge.
o Results from steady improvement.
- Radical innovation:
o Novel methods & materials
o Entirely new knowledge base or recombination of existing knowledge.
o Targets new markets and technology.
- Architectural Innovation:
o Existing knowledge leveraged into a new market.
o Known components, existing technology, used in a novel way.
- Disruptive innovation:
o Leverages new technologies in existing markets.
o New product/ process meets existing customer needs.
Patent: a form of intellectual property that gives the inventor exclusive right s to benefit from
commercializing a technology for a specific time period in exchange for public disclosure of the
underlying idea
Trade secret: valuable proprietary information that is not in the public domain and where the firm
makes every effort to maintain its secrecy.
4
