1.

Distinguish between innovation, invention and

discovery
Invention is the creation of a completely new product, service, process, or technology
through research or experimentation.
Discovery refers to identifying something that already exists but was previously
unknown, such as a market need, resource, or scientific fact
Innovation is the process of transforming inventions, discoveries, or ideas into viable
products, services, or business models that create value and solve real problems.
Innovation is the process of creating new product,services, process or technology inoder
to create value or solve real problem
2. Describe the concept of “gazelles” and “elephants” as
explained by Schumpeter.
Gazelles

 Definition:
Gazelles are small, fast-growing, and highly innovative firms.
 Characteristics:
o Young and dynamic
o Rapid revenue and employment growth
o Disruptive and driven by innovation
o Often high-risk but high-reward
 Role in Economy (Schumpeterian View):
o Act as engines of economic dynamism
o Responsible for creative destruction—they disrupt established markets with new
ideas and technologies.
o Drive job creation and technological progress
 Example:
A tech startup that grows rapidly due to a breakthrough app or product.

Elephants

 Definition:
Elephants are large, established, and stable companies.
 Characteristics:
o Mature businesses
o Slow or stable growth
o Often risk-averse and focused on maintaining market share
o Heavy bureaucratic structures
 Role in Economy (Schumpeterian View):
o Maintain economic stability and large-scale production
o Often get disrupted by more agile gazelles
 o May innovate incrementally but not disruptively
 Example:
Multinational corporations like General Motors, IBM, or Unilever.

3. Define entrepreneurship
Entrepreneurship is the building and management of a business venture having identified
an opportunity to fulfill an existing demand or creating a new one.

4. Describe the innovation process according to the

following frameworks
a. Discovery – Development – Commercialization
b. Human Centered Design (HCD)
c. IdeaScale
d. Lean Innovation
a. Discovery – Development – Commercialization

This is a linear model of innovation that outlines three main stages:

1. Discovery
o Generating ideas through research, brainstorming, or recognizing a market
opportunity.
o Involves understanding problems, emerging technologies, and customer needs.
2. Development
o Turning the idea into a tangible solution (product, service, or process).
o Includes design, prototyping, testing, and refinement.
3. Commercialization
o Launching the developed product or service into the market.
o Involves marketing, sales, scaling, and distribution.

🔄 This model emphasizes moving from idea to market through a structured process.

b. Human-Centered Design (HCD)

HCD is an empathetic, iterative approach to innovation focused on the needs and experiences
of users.
c. IdeaScale

IdeaScale is a crowdsourced innovation platform that helps organizations manage ideas from
conception to execution.

d. Lean Innovation

Lean Innovation is an agile, experiment-based approach that minimizes waste and accelerates
learning.

5. Mention as many sources of innovation ideas as possible.

a. Association
b. Adaptation/analogy
c. Serendipity/chance
d. More structured ways
i. Outcome – driven innovation
ii. Idea – hunter approach

6. Describe the following concepts with regard to business model development

a. Value Creation
b. Value Promotion
c. Value Delivery, and
d. Value Capture
 a. Value Creation
Creating products or services that solve customer problems or fulfill needs.
🛠️Focus: Innovation, design, features, and user benefit.

b. Value Promotion
Communicating the value to potential customers through marketing and branding.
📢 Focus: Awareness, advertising, customer engagement.

c. Value Delivery
Getting the value to the customer through distribution channels, operations, and customer service.
🚚 Focus: Efficiency, accessibility, and experience.

d. Value Capture
Earning revenue and profit from the value provided, typically through pricing and monetization strategies.
💰 Focus: Revenue streams, cost structure, profit margins.

7. Compare and contrast between innovation and entrepreneurship

Similarities:

1. Both involve creativity and problem-solving.

2. Both aim to create value.
3. Both drive economic growth and competitiveness.
4. Both involve taking risks and making decisions under uncertainty.

🔄 Differences:

Aspect Innovation Entrepreneurship

Focus Developing new ideas, products, or methods Building and managing a business

Goal Create or improve solutions Bring solutions to market and earn profit

Output New inventions, processes, or improvements New ventures or startups

Risk Type Mainly technical or idea-based Business and financial risks

 Aspect Innovation Entrepreneurship

Can exist alone? Yes, without a business No, it usually applies innovation

8. Briefly describe the drivers of innovation

9. Describe different frameworks for classification (types) of innovation

Depends on
What is being innovated – Process, Product, Market, Organization
How far is the novelty – Incremental, Architectural, Radical, Disruptive

10. With the aid of a diagram describe Incremental, Architectural, Radical and Disruptive innovation
types
 11. Compare and contrast between the innovation ecosystem and the entrepreneurial ecosystem
Entrepreneurial ecosystem -These are actors and factors that in their totality, support the development of
businesses ventures and processes, i.e.., the process of creating value by exploring opportunities.
There is no single agreed definition, but one definition, according to Spigel. et.al., 2020,
…entrepreneurial ecosystems are the “regional collection of actors (such as entrepreneurs, advisors,
mentors, and workers) and factors (cultural outlooks, policies, R&D systems, and networks) that all
contribute to the creation and survival of high-growth ventures”…
The Entrepreneurial Ecosystem – Components
 Different components have been mentioned by different authors but, generally, these include:

− Infrastructure, Markets/demand, Human capital, Education and Training; Finance,

Networks, Policy & Governance; Support services, Culture, Knowledge, and Innovation.
The Entrepreneurial Ecosystem – Actors
Entrepreneurs, public sector, service providers (marketing, legal, etc.), financial institutions, academia,
investors, non-government organizations, media, etc
The Innovation Ecosystem
 These are actors and factors that in their totality, support the innovation process; creating
technologies and innovations.
The Innovation Ecosystem – Actors

− Entrepreneurs, government, academia (both educational and R&D institutions), industry

(various associations), supporting institutions (institutions that provide specialized,
 professional assistance), financial system (e.g. financial institutions, investors, business
angels, venture capitalists) and civil society (non-government organizations, media, etc.)
Entrepreneurial vs Innovation Ecosystems
 They both show

− Innovation, self-organization, complex components, interdependent relationships

between different actors, non-linearity (dynamism), and adaptability.
 There are, however, differences in

− units of analysis used (startup vs business), context mechanisms (value creation vs value
capture), and roles of individual agents

Unit II: Entrepreneurship and the Entrepreneur:

1. Define entrepreneurship
Entrepreneurship is the building and management of a business venture having identified an opportunity
to fulfill an existing demand or creating a new one.
2. What are the characteristics of an Entrepreneur?

 Creativity and Innovation

Ability to generate new ideas and think outside the box.
 Risk-Taking
Willingness to take calculated financial and personal risks.
 Visionary Thinking
Clear sense of direction and long-term goals.
 Self-Confidence
Belief in their abilities and decisions.
 Resilience
Ability to recover from setbacks and keep moving forward.
 Proactiveness
Taking initiative rather than waiting for opportunities.
 Decision-Making Skills
Ability to make timely and effective choices, even under uncertainty.
 Leadership
Capable of motivating, guiding, and managing teams.
 Opportunity Recognition
Skill in spotting market gaps or unmet needs.
 Goal-Oriented
Focused on setting and achieving specific objectives.

3. Are Entrepreneurs born or made? Argue with justification.

Are Entrepreneurs Born or Made?

✅ Argument: Entrepreneurs are primarily made, not born.

Justification:

🔹 1. Entrepreneurship is a Learned Skill

Most entrepreneurial abilities—like opportunity recognition, risk management, business

planning, and leadership—can be taught and developed through education, experience, and
mentoring.

Example: Business schools and entrepreneurship programs have successfully trained many
individuals to become entrepreneurs, regardless of their background.

🔹 2. Environment Shapes Entrepreneurial Behavior

Social, economic, and cultural environments influence entrepreneurship. Exposure to business,

support systems, access to capital, and networks all play a major role.

Example: People raised in entrepreneurial ecosystems (like Silicon Valley) often become
entrepreneurs through exposure and opportunity, not just natural talent.

🔹 3. Success Requires Practice and Adaptation

Even naturally talented individuals fail without learning, while those with persistence and
willingness to improve often succeed.

Example: Many successful entrepreneurs (e.g., Elon Musk, Oprah Winfrey) built their skills over
time through trial and error.

🔹 4. Research Supports "Made" Theory

Studies show no fixed entrepreneurial gene—traits like risk tolerance, innovation, and
leadership can be developed.

✅ Conclusion:
While some individuals may be born with traits that make entrepreneurship easier (like
confidence or creativity), successful entrepreneurs are mostly made through learning,
experience, and the right environment.

Justification Using Entrepreneurship Theories

🔹 1. Trait Theory (Supports 'Born')

 What it says:
Entrepreneurs possess inborn personality traits such as risk-taking, creativity, and need
for achievement.
 Implication:
Some people are naturally inclined to entrepreneurship.
 Limit:
Not all people with these traits become entrepreneurs, and people without them can still
succeed through experience and learning.

Notable contributors:

 David McClelland – introduced the concept of Need for Achievement (nAch) as a key
entrepreneurial trait.
 Others include John Atkinson, Julian Rotter, and Howard Stevenson.
📌 Conclusion: Traits help, but are not enough on their own.

🔹 2. Behavioural Theory (Supports 'Made')

 What it says:
Focuses on what entrepreneurs do, not who they are.
Entrepreneurship is seen as a learned behaviour, developed through experience,
education, and practice.
 Key idea contributor:
o Focus shifted from who entrepreneurs are to what entrepreneurs do.
o Scholars like Albert Bandura (Social Learning Theory) influenced this
perspective.

📌 Conclusion: Entrepreneurial success comes from actions, not just personality.

🔹 3. Economic Theory of Entrepreneurship (Supports 'Made')

 What it says:
Entrepreneurship emerges in response to economic conditions, such as market
opportunities, access to resources, or policy changes.

Notable contributors:

 Richard Cantillon (first to define an entrepreneur as a risk-taker)

 Jean-Baptiste Say (entrepreneur as an economic agent who shifts resources)
 Joseph Schumpeter (entrepreneur as an innovator and driver of creative destruction)

📌 Conclusion: The environment and incentives create entrepreneurs, not just natural ability.

🔹 4. Social and Cultural Theories (Supports 'Made')

  What it says:
Entrepreneurship is shaped by social context, including education, family background,
role models, and networks.

Notable contributors:

 Max Weber – linked entrepreneurship to cultural and religious values (e.g., Protestant
Ethic)
 Everett Hagen – emphasized social change and status withdrawal
 Hoselitz – connected entrepreneurship to the role of culturally defined values

📌 Conclusion: People become entrepreneurs because of influence and exposure, not birth traits.

🔹 5. Effectuation Theory (Saras Sarasvathy)

 What it says:
Entrepreneurs start with who they are, what they know, and whom they know, and
build opportunities over time through trial and adaptation.

Proposed by:

 Saras Sarasvathy (2001) – Professor at the University of Virginia Darden School of

Business.

📌 Conclusion: Entrepreneurs are developed through interaction and decision-making, not

just inborn genius.

✅ Final Argument:

While some individuals may be born with favorable traits (as Trait Theory suggests),
entrepreneurship is largely a learned and practiced process.
The majority of theories (Behavioral, Economic, Social, and Effectuation) emphasize learning,
environment, and action over innate talent.

4. What are some typical traits of entrepreneurs?

🔹 1. Creativity and Innovation
  Ability to generate new ideas and think differently.
 Key for developing unique products or solving problems.

🔹 2. Risk-Taking

 Willingness to take calculated financial and personal risks.

🔹 3. Visionary Thinking

 Clear long-term goals and the ability to see future opportunities.

🔹 4. Self-Confidence

 Strong belief in their ideas and abilities.

🔹 5. Determination and Resilience

 Persistent in overcoming failures and obstacles.

🔹 6. Proactiveness

 Takes initiative without waiting for others.

🔹 7. Leadership and Team-Building

 Can lead, motivate, and manage others effectively.

🔹 8. Opportunity Recognition

 Skill in identifying unmet market needs or gaps.

🔹 9. Adaptability

 Open to change and quick to respond to challenges.

🔹 10. Strong Work Ethic

 Willing to work hard and stay focused on business success.

5. Mention motives for a person to start their own

business
🔹 1. Desire for Independence

 Wanting to be their own boss and make their own decisions.

🔹 2. Financial Gain

 Aim to earn more income or build personal wealth.

🔹 3. Passion or Interest

 Turning a hobby or passion into a career or business.

🔹 4. Opportunity Recognition

 Spotting a market gap or unmet customer need.

🔹 5. Job Dissatisfaction

 Unhappiness with current employment or lack of career growth.

🔹 6. Need for Flexibility

 Seeking a better work-life balance or flexible work hours.

🔹 7. Personal Fulfillment

 Desire for achievement, purpose, or leaving a legacy.

🔹 8. Social Impact

 Wanting to solve social or environmental problems through business.

🔹 9. Inheritance or Family Tradition

 Taking over or continuing a family business.

🔹 10. Technological or Market Change

 Motivated by new trends, technologies, or regulatory changes that create new business
opportunities.
 6. Mention 6 tests employed to measure Entrepreneurial
Tendencies. State the characteristic domains that are
measured in each case
✅ 1. GET Test (General Entrepreneurial Tendency Test)

 Developed by: Dr. Caird (1991)

 Measures the following domains:
1. Need for Achievement
2. Autonomy
3. Creative Tendency
4. Calculated Risk-Taking
5. Internal Locus of Control

✅ 2. PIAV (Personal Interests, Attitudes, and Values Assessment)

 Measures the following domains:

1. Passion and Values Alignment
2. Personal Motivation
3. Attitude toward work and life
4. Decision-making preferences

✅ 3. MBTI (Myers-Briggs Type Indicator)

 Used to assess personality types that may align with entrepreneurship.

 Key domains include:
1. Introversion vs. Extraversion
2. Intuition vs. Sensing
3. Thinking vs. Feeling
4. Judging vs. Perceiving
(E.g., ENTJ or ENTP types are often entrepreneurial)

✅ 4. Entrepreneurial Quotient (EQ)

 Measures:
1. Entrepreneurial intelligence
2. Business acumen
3. Problem-solving ability
 4. Innovative thinking

✅ 5. DISC Personality Profile

 Used in business settings to assess behavior.

 Key domains measured:
1. Dominance – Leadership and assertiveness
2. Influence – Persuasiveness and social ability
3. Steadiness – Patience and persistence
4. Conscientiousness – Attention to detail and rules

✅ 6. Big Five Personality Traits (OCEAN Model)

 Widely used psychological framework.

 Domains measured:
1. Openness to Experience – Linked to creativity and innovation
2. Conscientiousness – Discipline and goal orientation
3. Extraversion – Sociability and assertiveness
4. Agreeableness – Cooperation and flexibility
5. Neuroticism (Emotional Stability) – Low levels preferred in entrepreneurs

7.What is the dark side of entrepreneurship?

The Dark Side of Entrepreneurship

While entrepreneurship is often celebrated, it also has a “dark side” that involves personal,
ethical, and business-related challenges. These are the negative consequences that entrepreneurs
may face.

🔹 1. Stress and Mental Health Issues

 Long working hours, pressure to succeed, and financial uncertainty can lead to anxiety,
burnout, and depression.

🔹 2. Risk of Failure
  High chances of business failure can cause financial loss, reputation damage, and
personal setbacks.

🔹 3. Work-Life Imbalance

 Entrepreneurs often prioritize their business over family and personal life, leading to
relationship strain and social isolation.

🔹 4. Unethical Behavior

 Pressure to survive or succeed may tempt some to engage in fraud, exploitation, or

corruption.

🔹 5. Obsession with Control

 Some entrepreneurs struggle to delegate or collaborate, becoming micromanagers or

overly possessive of their vision.

🔹 6. Overconfidence and Ego

 Success can lead to arrogance, ignoring advice or risks, which may harm the business.

🔹 7. Exploitation of Workers

 In the pursuit of profits or growth, some entrepreneurs may underpay or overwork

employees.

✅ Conclusion:

The dark side of entrepreneurship reminds us that success comes with personal sacrifices and
ethical responsibilities. Awareness and balance are key to long-term sustainability.
8.Briefly describe the theory of Effectuation. Mention its
4 principles.
✅ Effectuation Theory (Saras Sarasvathy, 2001)

Effectuation is a theory of entrepreneurship that explains how expert entrepreneurs make

decisions in uncertain and dynamic environments.
Instead of starting with a fixed goal and a business plan (causation), they start with what they
have and co-create opportunities along the way.

🔹 Key Idea:

"Entrepreneurs don’t predict the future — they create it using available means."

✅ The 4 Core Principles of Effectuation:

1. Bird-in-Hand Principle

o Start with who you are, what you know, and whom you know.
o Focus on resources already available, not what’s needed in the future.

2. Affordable Loss Principle

o Take action based on what you can afford to lose, not on expected returns.
o Minimizes risk and encourages experimentation.

3. Crazy Quilt Principle

o Build partnerships with people and organizations who are willing to commit
early.
o Co-create the venture through collaboration and shared ownership.

4. Lemonade Principle

o Embrace surprises and setbacks as opportunities.

o Be flexible and adaptive rather than resisting change.

9. Define the term intrapreneurship

 Intrapreneurship is the act of applying entrepreneurial skills and thinking within an existing
organization to develop new products, services, processes, or business models.

10. Describe the concept of open innovation

Open Innovation is a concept where organizations go beyond their internal resources and
actively use external ideas, technologies, and partnerships to accelerate innovation and bring
new products or services to market.

📌 Formal Definition (by Henry Chesbrough, 2003):

“Open Innovation is the use of purposive inflows and outflows of knowledge to accelerate
internal innovation and expand the markets for external use of innovation.”

🔹 Key Concepts of Open Innovation:

1. Collaboration with external partners (startups, universities, suppliers, customers).

2. Sharing knowledge and IP across boundaries.
3. In-licensing and out-licensing technologies or ideas.
4. Crowdsourcing and innovation contests.

Unit III: Managing Innovation:

1. Distinguish between innovation management and
management innovation
Innovation Management

This is all about how organizations handle the process of innovation—from idea generation to
implementation.

Management Innovation

This involves innovating the way management itself works—changing how leaders plan,
organize, and control.

2.Innovation management is equivalent to change

management in an organization. Argue for or against this
statement.
Argument: Against the Statement

While innovation management and change management are closely related and often overlap,
they are not equivalent. They serve different purposes and involve different processes within
an organization.

❌ Key Differences:
Aspect Innovation Management Change Management

Purpose To create, develop, and implement new ideas To help people and processes adapt to change

Ideation, R&D, product development, Employee behavior, communication, and

Focus
market disruption transition support

Opportunity-driven (new tech, market gap, Reaction to internal/external change (new

Trigger
competition) systems, structures)

Scope Strategic and forward-looking Operational and often short- to medium-term

Adoption of change (new processes, policies,

Output Innovation (new products, services, models)
culture)

Mapping the Process Models

Linear Model Mapped Cyclic

Explanation
Stage Model Processes
Involves scanning for opportunities, market needs, and
Strategy (1),
technological trends to fuel innovation. Strategy defines
1. Search Research (3),
direction, Research explores possibilities, and Insight gathers
Insight (4)
valuable findings.
Selection occurs by prioritizing ideas and allocating
2. Select Portfolio (2) resources. The portfolio phase decides which projects are
viable and worth pursuing.
This corresponds directly to building and testing new
Development (5 &
3. Implement products or services. Development covers everything from
6)
prototypes to final rollout plans.
“Capturing” value happens when the innovation reaches
4. Capture Sales (7) customers and generates impact—financial or otherwise.
Sales reflects commercialization and delivery.
b.Briefly describe the managerial activities taking place in
steps 1 – 7 in figure 3.2
Step-by-Step Managerial Activities

1. Strategy
o Define innovation goals aligned with business objectives
o Analyze market trends, technologies, and competitor positioning
o Allocate budgets and resources for innovation initiatives
2. Portfolio
o Select and prioritize innovation projects
o Balance risk vs. reward across the idea portfolio
o Ensure alignment with strategic goals and available capacity
3. Research
o Direct exploratory investigations into technologies or market gaps
o Manage collaborations with R&D teams or academic institutions
o Encourage creative thinking and solution scoping
4. Insight
o Analyze customer feedback, market data, and pilot results
o Identify unmet needs and emerging opportunities
o Refine understanding of what makes innovations valuable
5. Development
o Oversee design, prototyping, and engineering phases
o Manage cross-functional project teams and workflows
o Ensure quality, feasibility, and performance standards are met
6. Test
o Coordinate testing, user trials, and validation procedures
o Monitor performance metrics and identify improvement areas
o Assess readiness for full-scale deployment
7. Sales (or Commercialization)
o Launch product or service into target markets
o Support go-to-market strategies, pricing, and distribution
o Track market uptake, revenue impact, and customer satisfaction

This cycle emphasizes how managers must continuously align innovation efforts with strategy
while navigating uncertainty, complexity, and change. If you'd like to relate this to power
systems or instrumentation, I can break down a custom example for you too. Let’s make it real!
⚡️

c.Map these activities to the core abilities required in

managing innovations (Tidd & Bessant, Section 2.6)
 Mapped Core Ability
Cyclic Step Managerial Activity Explanation
(Tidd & Bessant)
Ability to scan environment
Define innovation Recognizing
1. Strategy and identify strategic
goals, analyze trends opportunities
innovation triggers.
Choosing the right mix of
Select and prioritize
2. Portfolio Strategic selection ideas based on risk, value, and
projects
alignment.
Explore technologies Gathering insights from R&D,
3. Research Knowledge acquisition
and market gaps users, and external sources.
Translating data into
Analyze feedback and Understanding user
4. Insight actionable insights for
refine needs needs
innovation.
5. Design and prototype Effective project Managing resources, timelines,
Development solutions execution and cross-functional teams.
Validate performance Experimentation and Iterative testing and refining
6. Test
and usability learning based on feedback loops.
Commercialize and Value capture and Bringing innovation to market
7. Sales
launch innovation scaling and maximizing impact.

Core Abilities Summary (Tidd & Bessant)

These abilities include:

 Scanning and interpreting signals from the environment

 Strategic selection of innovation projects
 Knowledge management and learning
 Effective implementation under uncertainty
 Capturing value from innovation outcomes
4.With the aid of a diagram describe the types of firms
(A, B, C & D) in the context of their innovation
capabilities
Key Reinforcements

 Firm A (Strategic Innovators): High commitment and competence—leaders in

innovation.
 Firm B (Innovation Learners): High commitment but low competence—eager but still
developing.
 Firm C (Potential Innovators): High competence but low commitment—technically
capable but not strategically focused.
 Firm D (Passive Firms): Low on both fronts—maintain status quo.
Unit IV: The Nature of Technology and
Innovation:
1. With the aid of diagrams, describe Rothwell’s 5
Generations of Innovation
Descriptions of Each Generation

Generation Model Name Key Features Limitations Overcome

Technology Innovation driven by R&D with little Ignores customer needs
1st Gen
Push market input. Linear and sequential. and market feedback.
Innovation responds to identified market Overcorrects by focusing
2nd Gen Market Pull
needs. Still linear. only on market demand.
Coupling Combines tech push and market pull. Begins integrating
3rd Gen
Model Introduces feedback loops. departments and feedback.
Parallel development across
Integrated Breaks down silos and
4th Gen departments. Strong supplier/customer
Model speeds up development.
involvement.
Network Full integration with external partners. Embraces complexity and
5th Gen
Model ICT tools enable real-time collaboration. rapid market changes.
2.What are the consequences of having only a partial
view/understanding of the innovation process? Give
examples
Key Consequences

1. Misaligned Solutions
o Without understanding user needs or market dynamics, innovations may solve the
wrong problem.
o Example: Google Glass was technically impressive but failed due to privacy
concerns and unclear value to users.
2. Poor Timing and Market Entry
o A partial view may ignore market readiness or competitive positioning.
o Example: Microsoft’s Zune launched too late against Apple’s iPod dominance,
despite solid features.
3. Underdeveloped Testing and Validation
o Skipping or rushing experimentation leads to flawed products.
o Example: Theranos promised revolutionary blood testing but lacked scientific
validation, resulting in legal fallout and reputational collapse.
4. Failure to Scale or Commercialize
o Without a clear commercialization strategy, innovations may never reach the
market.
 Example: DeLorean’s futuristic car design couldn’t overcome poor performance
o
and high costs.
5. Unintended Negative Consequences
o Ignoring long-term impacts or stakeholder effects can backfire.
o Example: Ford Pinto’s cost-saving design led to safety issues and lawsuits due to
overlooked crash risks.
6. Wasted Resources
o Investing in poorly conceived or mismanaged innovations drains time, money,
and morale.
o Example: New Coke alienated loyal customers by misjudging emotional brand
attachment.

🧠 Why It Matters

Innovation is a holistic process—from strategy and research to testing and scaling. A

fragmented approach leads to:

 Missed opportunities
 Damaged reputation
 Financial loss
 Organizational resistance to future innovation

3.The (Foster’s) S- curve is a famous tool used to model

the dynamics of a technology. With the aid of a diagram,
briefly explain the different regions in the curve.

Region Description Key Characteristics

1. Technology is new and under development. High R&D effort, low
 Region Description Key Characteristics
Emergence Progress is slow and uncertain. performance gains
Rapid improvement as understanding and Performance accelerates, market
2. Growth
adoption increase. interest grows
Gains slow down as the technology nears its Diminishing returns,
3. Maturity
physical or economic limits. optimization dominates
Performance plateaus; innovation stagnates Signals need for disruption or
4. Saturation
unless a new technology emerges. replacement

4.Describe the challenges of using the S-curve to analyze

technology dynamics.
Key Challenges

1. Uncertainty in Identifying Limits

o The true performance ceiling of a technology is rarely known in advance.
o Firms often disagree on where the plateau lies, leading to premature abandonment
or overinvestment2.
2. Ambiguity in Curve Positioning
o It’s difficult to pinpoint where a technology currently sits on the curve—
emergence, growth, or maturity.
o This ambiguity can misguide R&D planning or market timing.
3. Oversimplification of Innovation Dynamics
o The model assumes a smooth, predictable trajectory, which doesn’t reflect real-
world disruptions, breakthroughs, or setbacks.
o Technologies often evolve in jumps, not gradual slopes.
4. Component vs. Architectural Innovation Confusion
o S-curves work better for component technologies (e.g., CT sensors) than for
architectural innovations (e.g., smart grid systems), which involve market and
system-level shifts.
5. Misuse as a Prescriptive Tool
o Using the S-curve to predict future performance or guide investment decisions
can be misleading.
o Studies show that firms switching early to new curves don’t always gain strategic
advantage.
6. Effort vs. Time Distortion
o If effort invested in a technology fluctuates, plotting performance against time
may misrepresent actual progress.
7. Market and Ecosystem Volatility
o External factors like regulation, user behavior, or complementary technologies
can reshape the curve unexpectedly.
 5. State the managerial issues that one might face when
using S-curves to analyze technological opportunities
1. Difficulty in Identifying the Current Position on the Curve

 Managers may struggle to determine whether a technology is in its emergence, growth,

or maturity phase.
 Misjudging this can lead to premature investment in new technologies or missed
opportunities in existing ones.

🔍 2. Uncertainty in Defining Performance Metrics

 Choosing the right performance indicators (e.g., speed, efficiency, cost-effectiveness) is

complex and context-dependent.
 Inconsistent metrics can distort the curve and mislead strategic planning.

🧩 3. Overlooking External Influences

 S-curves often ignore market dynamics, regulatory changes, or user behavior, which
can drastically alter technology trajectories.
 This creates blind spots in forecasting and risk assessment.

🧠 4. Misinterpretation of Saturation

 A plateau in performance may be mistaken for technological exhaustion, when in fact

incremental improvements or new applications are still possible.
 This can lead to abandoning viable technologies too early.

🔄 5. Challenges in Managing Multiple S-Curves

 Technologies often evolve in waves, requiring managers to juggle overlapping curves

(e.g., analog CTs vs. digital sensors).
 Coordinating resources across these curves demands agility and foresight.

📉 6. Strategic Timing of Technology Switching

 Deciding when to jump to a new curve is risky—too early and you lose ROI, too late
and you fall behind competitors.
 Studies show that aggressive switching doesn’t always yield strategic advantage.

🧪 7. Lack of Granularity

 S-curves may oversimplify complex systems, especially in engineering, where

performance depends on component-level and architectural innovations.
  Managers need more nuanced models to guide R&D investments.

🧭 8. Bias Toward Incremental Innovation

 Firms may focus on extending existing curves rather than exploring disruptive
technologies, due to sunk costs or organizational inertia.
 This can stifle long-term competitiveness.

6.How can you use the S-curves to differentiate between

incremental innovation vs architectural/modular
innovations? i.e. What are the typical ratios of the sources
of technological improvement?
Using S-Curves to Differentiate Innovation Types

The S-curve framework helps visualize how technologies evolve in performance over time or
engineering effort. By analyzing the shape and transitions of these curves, we can distinguish
between incremental, modular, and architectural innovations—and even estimate their
relative contributions to technological improvement.

🔍 Innovation Types on the S-Curve

Innovation
S-Curve Behavior Description
Type

Smooth upward slope within a Small, continuous improvements to existing

Incremental
single curve components or processes

New curve with steep initial Redesign of core components without changing
Modular
slope system architecture

New curve with disruptive Reconfiguration of component relationships and

Architectural
trajectory system design

 Incremental innovation extends the current curve.

 Modular innovation jumps to a new curve by replacing key components.
 Architectural innovation creates a new curve by altering how components interact.

📊 Typical Ratios of Technological Improvement Sources

According to studies like those by Christensen and Henderson & Clark2, the relative
contribution of each innovation type to overall technological progress can vary by industry, but
a general approximation is:
 Source of Improvement Estimated Contribution

Incremental (component-level) ~60–70%

Modular ~20–30%

Architectural ~10–20%

These ratios reflect how most firms rely heavily on incremental improvements, while modular
and architectural innovations—though less frequent—can deliver disproportionate strategic
impact.

⚡ Example in Engineering

In instrumentation transformers:

 Incremental: Improving CT accuracy or reducing burden losses.

 Modular: Switching from analog to digital CTs.
 Architectural: Integrating CTs into smart grid systems with AI-based diagnostics.

Unit V: Capturing Value From Innovation:

1. Describe the two aspects of capturing value from
innovation.
Capturing value from innovation involves two critical aspects that determine whether an
organization can turn its creative efforts into tangible benefits:

💡 1. Appropriability of Innovation

This refers to the ability to protect and retain the economic benefits of an innovation.

🔐 Key Elements:

 Intellectual Property (IP) Rights: Patents, copyrights, trademarks, and trade secrets
help prevent imitation.
 Technological Complexity: Innovations that are hard to reverse-engineer are easier to
protect.
 Legal Environment: Strong enforcement of IP laws boosts appropriability.
 First-Mover Advantage: Being early to market can help capture value before
competitors catch up.

📌 Example: NutraSweet patented its chemical formula and secured FDA approval, making it
difficult for competitors to replicate its success.
🔗 2. Control Over Complementary Assets

These are the resources and capabilities needed to commercialize an innovation effectively.

🧩 Examples of Complementary Assets:

 Distribution Channels
 Marketing and Branding
 Manufacturing Infrastructure
 Customer Support Networks

📌 Example: McDonald’s didn’t invent fast food, but its control over supplier relationships and
advertising allowed it to dominate the market.

🧠 Why Both Matter

Even a brilliant innovation can fail if:

 It’s easily copied (low appropriability)

 The innovator lacks access to critical assets (low control)

Think of Xerox: they pioneered the GUI interface, but Apple and Microsoft captured the value
by better leveraging complementary assets.

2.Companies can excel at creating value (innovating) but

fail to capture it (losing to imitators). Give examples of
such companies, with the products they created and
companies they subsequently lost to.
his is a classic issue in innovation strategy—creating value without capturing it often means
others reap the rewards. Here are some compelling examples:

🧠 Examples of Companies That Created Value but Failed to Capture It

Innovator Product/Innovation Imitator/Successor What Went Wrong

Xerox invented GUI but didn’t

Xerox Graphical User Interface commercialize it effectively. Apple and
Apple, Microsoft
PARC (GUI), Ethernet Microsoft built user-friendly systems and
captured the market.

Napster Peer-to-peer music Spotify, Apple Music Napster revolutionized music access but
sharing lacked a legal business model. Streaming
services refined the concept legally and
 Innovator Product/Innovation Imitator/Successor What Went Wrong

profitably.

Palm pioneered mobile computing but

Early handheld PDA failed to evolve into smartphones. Apple
Palm Apple (iPhone)
devices integrated PDA features into a sleek
phone.

BlackBerry dominated early mobile

Secure mobile email and
BlackBerry Apple, Android enterprise but ignored touchscreen trends
messaging
and app ecosystems.

Friendster had the idea but poor

Early social networking
Friendster Facebook scalability and UX. Facebook optimized
platform
the model and scaled globally.

Kodak invented digital photography but

Digital photography (first Canon, Sony,
Kodak clung to film sales. Others embraced
digital camera) smartphones
digital and mobile imaging.

Segway was innovative but expensive and

Segway Personal mobility device E-scooter startups impractical. E-scooters offered cheaper,
scalable urban mobility.

🔍 Why These Failures Happen

 Weak Appropriability: No IP protection or enforcement.

 Poor Timing or Strategy: Missed market shifts or failed to scale.
 Lack of Complementary Assets: No distribution, branding, or ecosystem.
 Regulatory or Legal Barriers: Like Napster’s copyright issues.

3.Give examples of companies that managed to create and

capture value successfully.
Successful Value Creation & Capture Examples

Company Innovation / Value Created How They Captured Value

Intuitive design, ecosystem integration Premium pricing, brand loyalty, control over
Apple
(iPhone, iOS) hardware/software

Seamless e-commerce, cloud services Scale, data-driven logistics, Prime

Amazon
(AWS) subscriptions

Tesla Electric vehicles, battery tech, Vertical integration, direct-to-consumer model,

 Company Innovation / Value Created How They Captured Value

autonomous driving IP protection

Streaming platform, recommendation Subscription model, original content, global

Netflix
algorithms expansion

Google Search engine, Android OS, cloud AI Ad-based revenue, platform dominance, data
(Alphabet) tools monetization

Sustainable outdoor gear, ethical Brand values, loyal customer base, premium
Patagonia
sourcing positioning

Productivity software, cloud Licensing, enterprise contracts, ecosystem

Microsoft
infrastructure (Azure) lock-in

🔍 Why These Companies Succeeded

 Strong Appropriability: They protected their innovations through IP, brand equity, or
platform control.
 Complementary Assets: They had the right channels—distribution, marketing,
infrastructure—to scale and monetize.
 Strategic Timing: They entered markets when demand was rising and competitors were
unprepared.
 Customer-Centric Design: They solved real problems with elegant, scalable solutions.

4. In the context of capturing value of innovation, briefly

describe these strategies
o Appropriability regimes
o Architecture of the Industry

These two strategies—appropriability regimes and industry architecture—are central to

determining whether a firm can successfully capture value from its innovations, not just create
it.

🔐 a. Appropriability Regimes

This refers to the strength and effectiveness of mechanisms that protect an innovator’s ability
to profit from their innovation.
✅ Key Elements:

 Legal Protection: Patents, copyrights, trademarks, trade secrets.

 Technological Barriers: Complexity, tacit knowledge, difficulty of reverse engineering.
 Lead Time Advantage: Being first to market before competitors catch up.
 Secrecy & Contracts: NDAs, employee agreements, and internal controls.

📌 Example: Pharmaceutical firms rely heavily on patents to prevent imitation and secure returns
on R&D investments2.

A tight appropriability regime makes it harder for competitors to copy innovations, increasing
the innovator’s ability to retain profits.

🏗️b. Architecture of the Industry

This refers to the structure of relationships among firms, suppliers, customers, and
complementors in a given sector—and how those relationships affect value capture.

✅ Key Elements:

 Control of Complementary Assets: Distribution, branding, manufacturing, customer

support.
 Modularity vs. Integration: Whether components can be swapped easily or are tightly
linked.
 Standard Setting: Ability to influence industry norms or platforms.
 Position in the Value Chain: Upstream (tech creator) vs. downstream (market
controller).

📌 Example: TiVo created the DVR, but cable companies captured most of the value by
controlling distribution and customer access3.

A firm that controls key assets or standards in the industry architecture is better positioned to
capture value—even if it wasn’t the original innovator.

5.Why are appropriability regimes perceived to be

stronger in software products than in hardware
(mechanical) products?
The perceived strength of appropriability regimes in software versus hardware stems from
differences in how easily innovations can be protected, replicated, and monetized.

💻 Why Software Has Stronger Appropriability Regimes

 1. Ease of Intellectual Property Protection
o Software can be protected through copyrights, patents, and licensing
agreements.
o Code is inherently codified, making it easier to register and defend legally.
2. High Tacit Knowledge & Complexity
o Many software innovations involve complex algorithms, user interfaces, or
backend systems that are difficult to reverse-engineer.
o Tacit knowledge embedded in development teams adds a layer of protection.
3. Licensing and Control
o Software is often distributed under controlled licenses (e.g., SaaS, subscription
models), allowing firms to retain ownership and limit unauthorized use.
o Updates and cloud-based delivery make it harder for users to copy or modify the
product.
4. Rapid Lead-Time Advantage
o Software firms can iterate quickly, releasing new versions before competitors
catch up.
o This agility reinforces their first-mover advantage.

🔧 Why Hardware Faces Weaker Appropriability Regimes

1. Physical Reverse Engineering

o Mechanical products can often be disassembled and replicated, especially if
patents are weak or expired.
o Competitors can analyze materials, dimensions, and functionality with relative
ease.
2. Limited IP Coverage
o Patents may protect specific components or designs, but functional replication is
often possible without infringement.
o Copyright and trade secrets are less effective for tangible goods.
3. Longer Development Cycles
o Hardware innovation is slower and more capital-intensive, reducing the ability to
maintain lead-time advantages.
4. Dependence on Complementary Assets
o Success often hinges on manufacturing, distribution, and branding, which may
be harder to control than digital delivery.

🧠 Strategic Implication

Software firms often enjoy stronger appropriability regimes because they can combine legal
protection with technical complexity and agile delivery. Hardware firms must rely more on
complementary assets and brand differentiation to capture value.

6.In weak appropriability regimes, innovators have had to

rely on complementary assets. Give such examples
In weak appropriability regimes—where innovators struggle to protect their intellectual property
—complementary assets often become essential tools for capturing value from innovation. Here
are some illustrative examples across industries:

🏭 Examples of Complementary Assets in Weak Appropriability Contexts

1. Coca-Cola and Distribution Networks

 While the secret formula is a strong appropriability asset, Coca-Cola’s real value capture
comes from its global distribution and bottling infrastructure.
 This distribution network ensures market reach and customer loyalty, making replication
by competitors difficult even if the product were imitated.

2. Intel and Manufacturing Capability

 Intel’s proprietary designs face IP leakage risks, but its advanced chip fabrication plants
(fabs) are massive complementary assets.
 These fabs require huge capital and know-how, serving as barriers to entry for
competitors trying to replicate innovations.

3. Spotify and Brand + User Experience

 Music streaming services often operate with similar content, so IP is weakly

appropriable.
 Spotify captured value through superior user interface, brand recognition, and
recommendation algorithms—complementary capabilities that differentiated it from
competitors.

4. Tesla and Supercharger Network

 While electric vehicle designs can be reverse-engineered, Tesla’s Supercharger

infrastructure creates added value and convenience for customers.
 This asset encourages customer lock-in and helps Tesla profit from its innovation despite
IP vulnerabilities.

5. Biotech Startups and Strategic Alliances

 Small biotech firms often can’t fully protect their molecular discoveries.
 By partnering with big pharma companies that have regulatory expertise, manufacturing
facilities, and marketing channels, they leverage complementary assets to commercialize
innovations.

6. Open Source Software Companies

 Firms like Red Hat can’t rely on strong IP protection due to open-source models.
  Instead, they offer complementary services like integration, customization, and support,
which become their primary revenue generators.

A complementary asset is something that enhances or supports the value of a core innovation,
especially when that innovation can’t be easily protected or monetized on its own.

Think of it like this: you invent something amazing, but without the right tools or networks to
deliver it, it's just sitting on a shelf. Those tools, networks, and relationships—that’s your
complementary assets.

⚙️Types of Complementary Assets

Type Description Example

Help promote and sell the
Marketing Channels Apple stores boosting sales of iPhones
innovation
Manufacturing Enables large-scale
Intel's chip fabrication plants
Capacity production
Ensures products reach Coca-Cola’s global bottling and delivery
Distribution Networks
customers system
Customer Support & Red Hat offering tech support for open-
Builds loyalty and adds value
Service source software
Tesla’s brand appeal encouraging EV
Brand & Reputation Instills trust and recognition
adoption
Helps navigate complex Pharma companies helping biotech
Regulatory Expertise
approval processes startups with drug approval

7. However, sometimes, appropriability regimes are

deliberately weakened as a value capture stratergy.
Discuss the case of Open Source Software.
This is a fascinating strategic twist in innovation management. In the case of Open Source
Software (OSS), firms often deliberately weaken appropriability regimes to unlock broader
value capture opportunities. Here's how and why:

🧩 Why Weaken Appropriability in OSS?

In traditional innovation models, firms protect their intellectual property (IP) to prevent
imitation. But OSS flips the script:
  Source code is made publicly available, allowing anyone to use, modify, and
redistribute it.
 This creates a weak appropriability regime—but not by accident. It’s a strategic choice
to foster collaboration, rapid innovation, and ecosystem growth.

🔍 Strategic Benefits of Weak Appropriability in OSS

Strategic Move Value Capture Mechanism Example

Community Harnessing external contributors to improve the
Linux kernel
Development product
Selling support, customization, and integration
Service-Based Revenue Red Hat
services
Building brand and user base before competitors
First-Mover Advantage MongoDB
catch up
Apache web
Network Effects Creating lock-in through widespread adoption
server
Dual Licensing Models Offering free OSS + paid proprietary versions MySQL
Platform Strategy Becoming the foundation for other innovations Android OS

🧠 Theoretical Framing

This aligns with private–collective innovation models, where firms contribute to a public good
(like OSS) but still capture private returns. Scholars like Linus Dahlander and David Teece have
explored how firms in OSS rely on complementary assets—such as brand, support services, and
strategic partnerships—to profit in weak appropriability regimes.

🧪 Real-World Implications

 OSS firms often don’t rely on patents or copyrights for protection.

 Instead, they focus on speed, scale, and community trust.
 This strategy is especially powerful in digital ecosystems, where openness accelerates
adoption and innovation.