Trine University Deterministic Factors Strategic Alliance and Networks Case Study

Trine University

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Paul Trott INNOVATION MANAGEMENT AND NEW PRODUCT DEVELOPMENT Sixth Edition Innovation Management and New Product Development Innovation Management and New Product Development Sixth Edition Paul Trott Portsmouth Business School Harlow, England • London • New York • Boston • San Francisco • Toronto • Sydney • Dubai • Singapore • Hong Kong Tokyo • Seoul • Taipei • New Delhi • Cape Town • Sao Paulo • Mexico City • Madrid • Amsterdam • Munich • Paris • Milan Pearson Education Limited Edinburgh Gate Harlow CM20 2JE United Kingdom Tel: +44 (0)1279 623623 Web: First published 1998 (print) Second edition published 2002 (print) Third edition published 2005 (print) Fourth edition published 2008 (print) Fifth edition published 2012 (print) Sixth edition published 2017 (print and electronic) © Pearson Professional Limited 1998 © Pearson Education 2002, 2005, 2008, 2012, 2017 The right of Paul Trott to be identified as author of this work has been asserted by him in accordance with the Copyright, Designs and Patents Act 1988. The print publication is protected by copyright. Prior to any prohibited reproduction, storage in a retrieval system, distribution or transmission in any form or by any means, electronic, mechanical, recording or otherwise, permission should be obtained from the publisher or, where applicable, a licence permitting restricted copying in the United Kingdom should be obtained from the Copyright Licensing Agency Ltd, Barnard’s Inn, 86 Fetter Lane, London EC4A 1EN. The ePublication is protected by copyright and must not be copied, reproduced, transferred, distributed, leased, licensed or publicly performed or used in any way except as specifically permitted in writing by the publishers, as allowed under the terms and conditions under which it was purchased, or as strictly permitted by applicable copyright law. Any unauthorised distribution or use of this text may be a direct infringement of the author’s and the publisher’s rights and those responsible may be liable in law accordingly. All trademarks used herein are the property of their respective owners. The use of any trademark in this text does not vest in the author or publisher any trademark ownership rights in such trademarks, nor does the use of such trademarks imply any affiliation with or endorsement of this book by such owners. The screenshots in this book are reprinted by permission of Microsoft Corporation. Pearson Education is not responsible for the content of third-party internet sites. The Financial Times. With a worldwide network of highly respected journalists, The Financial Times provides global business news, insightful opinion and expert analysis of business, finance and politics. With over 500 journalists reporting from 50 countries worldwide, our in-depth coverage of international news is objectively reported and analysed from an independent, global perspective. To find out more, visit pearsonoffer. ISBN: 978-1-292-13342-3 (print) 978-1-292-16540-0 (PDF) 978-1-292-17069-5 (ePub) British Library Cataloguing-in-Publication Data A catalogue record for the print edition is available from the British Library Library of Congress Cataloging-in-Publication Data A catalog record for the print edition is available from the Library of Congress 10 9 8 7 6 5 4 3 2 1 20 19 18 17 16 Cover image: Max Margarit/Shutterstock Print edition typeset in 10/12pt Sabon LT Pro by iEnergizer Aptara® Ltd Print edition printed and bound in Slovakia by Neografia NOTE THAT ANY PAGE CROSS REFERENCES REFER TO THE PRINT EDITION Contents Preface Acknowledgements Plan of the book 1 xix xxiii xxix Part One Innovation management 1 Innovation management: an introduction 2 The importance of innovation The study of innovation Two traditions of innovation studies: Europe and the USA Recent and contemporary studies The need to view innovation in an organisational context Individuals in the innovation process Problems of definition and vocabulary Entrepreneurship Design Innovation and invention Successful and unsuccessful innovations Different types of innovation Technology and science Popular views of innovation Models of innovation Serendipity Linear models Simultaneous coupling model Architectural innovation Interactive model Innovation life cycle and dominant designs Open innovation and the need to share and exchange knowledge (network models) Doing, using and interacting (DUI) mode of innovation Discontinuous innovation – step changes Innovation as a management process A framework for the management of innovation New skills Innovation and new product development 4 7 9 10 11 12 12 13 13 15 16 17 18 20 21 21 22 23 24 24 25 Case study: Has the Apple innovation machine stalled? 35 26 27 28 30 30 33 34 v Contents 2 3 vi Chapter summary Discussion questions Key words and phrases References Further reading 41 42 42 42 46 National systems of innovation and entrepreneurship 48 Innovation in its wider context The role of the state and national ‘systems’ of innovation Why firms depend on the state for so much How national states can facilitate innovation National scientific capacity and R&D offshoring The impact of the economic crisis on innovation Fostering innovation in the United States and Japan Triple Helix of university–industry–government relationships that drives innovation The right business environment is key to innovation Waves of innovation and growth: historical overview Fostering innovation in ‘late-industrialising’ countries Innovation within the 28 European Union states Improving the innovation performance of the EU Entrepreneurship Entrepreneurship and innovation Defining entrepreneurship Technological entrepreneurship: a question of context Science and technology policy Small and medium-sized enterprise Innovation policy Entrepreneurship policy 50 52 52 53 56 56 56 Case study: Pizza delivery with unmanned drones 76 Chapter summary Discussion questions Key words and phrases Websites worth visiting References Further reading 81 81 82 82 82 85 Market adoption and technology diffusion 86 Time lag between innovation and useable product Innovation and the market Innovation and market vision Analysing internet search data to help adoption and forecasting sales Innovative new products and consumption patterns 88 88 89 57 59 59 62 63 65 68 69 71 73 74 74 75 76 89 89 Contents 4 Marketing insights to facilitate innovation Lead users Users as innovators in the virtual world Crowdsourcing for new product ideas Frugal innovation and ideas from everywhere Innovation diffusion theories Beacon products Seasonality in innovation diffusion The Bass Diffusion Model Adopting new products and embracing change Market adoption theories 91 93 95 95 97 98 100 102 102 102 104 Case study: How three students built a business that could affect world trade 104 Chapter summary Discussion questions Key words and phrases References Further reading 110 111 111 111 113 Managing innovation within firms 116 Organisations and innovation The dilemma of innovation management Innovation dilemma in low technology sectors Dynamic capabilities Managing uncertainty Pearson’s uncertainty map Applying the uncertainty map in practice Managing innovation projects Organisational characteristics that facilitate the innovation process Growth orientation Organisational heritage and innovation experience Vigilance and external links Commitment to technology and R&D intensity Acceptance of risks Cross-functional cooperation and coordination within organisational structure Receptivity Space for creativity Strategy towards innovation Diverse range of skills Industrial firms are different: a classification Organisational structures and innovation Formalisation Complexity Centralisation Organisational size The role of the individual in the innovation process IT systems and their impact on innovation 118 118 119 120 120 121 123 124 126 129 130 130 130 131 131 131 131 132 132 133 135 136 136 137 137 137 138 vii Contents 5 6 viii Management tools for innovation Innovation management tools and techniques Applying the tools and guidelines Innovation audit 141 141 144 144 Case study: Gore-Tex® and W.L. Gore & Associates: an innovative company and a contemporary culture 145 Chapter summary Discussion questions Key words and phrases References Further reading 149 150 150 150 153 Operations and process innovation 154 Operations management The nature of design and innovation in the context of operations Design requirements Design and volumes Craft-based products Design simplification Reverse engineering Process design Process design and innovation The relationship between product and process innovation Managing the manufacturing: R&D interface in process industries Stretch: how innovation continues once investment is made Innovation in the management of the operations process Triggers for innovation Design of the organisation and its suppliers: supply chain management Business process re-engineering (BPR) Lean innovation 156 157 158 160 162 163 163 164 166 168 168 168 169 170 175 178 179 Case study: Innovation on the production line 180 Chapter summary Discussion questions Key words and phrases References Further reading 184 184 185 185 186 Managing intellectual property 188 Intellectual property Trade secrets An introduction to patents Novelty Inventive step Industrial applications 190 193 193 195 195 195 Contents 7 Exclusions from patents The patenting of life The configuration of a patent Patent harmonisation: first to file and first to invent Some famous patent cases Patents in practice Expiry of a patent and patent extensions Patent extensions The use of patents in innovation management Patent trolls Do patents hinder or encourage innovation? Alternatives to patenting Trademarks Satisfy the requirements of section 1(1) Be distinctive Not be deceptive Not cause confusion Brand names Using brands to protect intellectual property Exploiting new opportunities Brands, trademarks and the internet Duration of registration, infringement and passing off Registered designs Copyright Remedy against infringement Damages Injunction Accounts Counterfeit goods and IP 196 196 198 198 199 200 201 202 203 203 204 205 207 208 209 209 210 210 210 211 212 212 213 214 216 216 216 216 216 Case study: Pricing, patents and profits in the pharmaceutical industry 218 Chapter summary Discussion questions Key words and phrases References Further reading 221 222 222 222 224 Part Two Turning technology into business 225 Managing organisational knowledge 226 The Battle of Trafalgar Technology trajectories The acquisition of firm-specific knowledge The resource-based perspective Dynamic competence-based theory of the firm Developing firm-specific competencies 228 229 230 230 231 233 ix Contents 8 x Competencies and profits Technology development and effort required The knowledge base of an organisation The whole can be more than the sum of the parts Organisational heritage When the performance of the organisation is greater than the abilities of individuals Characterising the knowledge base of the organisation The learning organisation Innovation, competition and further innovation Dominant design How firms cope with radical and incremental innovation Developing innovation strategies Leader/offensive Fast follower/defensive Cost minimisation/imitative Market segmentation specialist/traditional A technology strategy provides a link between innovation strategy and business strategy 234 235 236 237 237 Case study: The cork industry, the wine industry and the need for closure 251 Chapter summary Discussion questions Key words and phrases References Further reading 260 260 260 261 262 Strategic alliances and networks 264 Defining strategic alliances The fall of the go-it-alone strategy and the rise of the octopus strategy Complementary capabilities and embedded technologies Interfirm knowledge-sharing routines Forms of strategic alliance Licensing Supplier relations Outsourcing Joint venture Collaboration (non-joint ventures) R&D consortia Industry clusters Low technology industry rely on networks for innovation Innovation networks The ‘virtual company’ Motives for establishing an alliance The process of forming a successful strategic alliance Negotiating a licensing deal Terms for the agreement 266 268 269 270 271 271 272 272 273 273 273 274 275 275 278 279 279 280 281 238 239 241 242 244 244 248 249 250 250 250 251 Contents 9 Rights granted Licence restrictions Improvements Consideration (monetary value) Reports and auditing of accounts Representations/warranties Infringement Confidentiality Arbitration Termination Risks and limitations with strategic alliances The role of trust in strategic alliances The concept of trust Innovation risks in strategic outsourcing Eating you alive from the toes up The use of game theory to analyse strategic alliances Game theory and the prisoner’s dilemma Use of alliances in implementing technology strategy 281 281 281 281 282 282 282 282 282 282 283 284 285 286 289 289 290 292 Case study: And the winner is Sony’s Blu-ray – the high-definition DVD format war 292 Chapter summary Discussion questions Key words and phrases References Further reading 299 299 299 300 302 Management of research and development 304 What is research and development? The traditional view of R&D R&D management and the industrial context R&D investment and company success Classifying R&D The operations that make up R&D R&D management and its link with business strategy Integration of R&D Strategic pressures on R&D The technology portfolio The difficulty of managing capital-intensive production plants in a dynamic environment Which business to support and how? Technology leverage and R&D strategies Strengths and limitations of this approach Allocation of funds to R&D Setting the R&D budget Level of R&D expenditure 306 307 307 310 313 315 317 318 319 320 Case study: The long and difficult 13-year journey to the marketplace for Pfizer’s Viagra 322 322 324 326 326 327 329 330 xi Contents Chapter summary Discussion questions Key words and phrases References Further reading 10 Managing R&D projects 342 Successful technology management The changing nature of R&D management Organising industrial R&D The acquisition of external technology Level of control of technology required Forms of external R&D Effective R&D management Managing scientific freedom Skunk works Technology roadmapping The link with the product innovation process The effect of R&D investment on products Evaluating R&D projects Evaluation criteria 344 346 349 350 351 352 355 355 359 360 360 362 363 363 Case study: CSI and genetic fingerprinting 368 Chapter summary Discussion questions Key words and phrases References Further reading 374 374 375 375 376 11 Open innovation and technology transfer Background The dominant economic perspective Open innovation The paradox of openness Introduction to technology transfer Information transfer and knowledge transfer Models of technology transfer Licensing Science park model Intermediary agency model Directory model Knowledge Transfer Partnership model Ferret model Hiring skilled employees Technology transfer units Research clubs xii 337 337 338 338 339 378 380 381 382 384 384 385 386 386 387 388 388 388 388 390 390 390 Contents European Space Agency (ESA) Consultancy Limitations and barriers to technology transfer NIH syndrome Absorptive capacity: developing a receptive environment for technology transfer Linking external technology to internal capabilities Managing the inward transfer of technology Technology transfer and organisational learning 390 391 391 392 393 395 396 397 Case study: How developments in electronic sensors create destruction in the disposable nappy industry 398 Chapter summary Discussion questions Key words and phrases References Further reading 403 403 404 404 406 Part Three New product development 409 12 Business models What is a business model? The business model and the business plan The range of business models The sixteen business model archetypes Revenue models Enterprise models Industry models The parts of the business model The offering The customer side The infrastructure The finances The business model dilemma of technology shifts Considerations in designing a business model Switching costs Scalability Recurring revenues Cashflow Getting others to do the work Protecting the business from competitors Changing the cost structure Intellectual property is an asset The technology licence and business relationships Continual adaptation of the business model The licensing business model Income from licensing 410 413 415 416 417 420 421 422 422 423 423 424 424 426 428 428 428 428 429 429 429 429 430 430 431 431 432 xiii Contents Marketing issues related to the licensing model Financial and strategic implications Costs and benefits of the licensing model Other strategic uses of licensing Case study: Developing a new product for the teeth whitening market 435 Chapter summary Discussion questions Key words and phrases References Further reading 441 442 442 442 443 13 Product and brand strategy 446 Capabilities, networks and platforms Product platforms Product planning Product strategy Competitive strategy Product portfolios The competitive environment Differentiation and positioning Differentiation Product positioning Competing with other products Managing brands Brands and blind product tests Brand strategy Brand extensions Market entry Launch and continuing improvement Withdrawing products Managing mature products 448 449 451 454 454 455 456 457 457 458 460 462 462 464 465 468 470 471 472 Case study: Umbrella wars: GustBuster® and senz° 473 Chapter summary Discussion questions Key words and phrases References Further reading 477 477 478 478 479 14 New product development Innovation management and NPD Product development as a series of decisions New products and prosperity Considerations when developing an NPD strategy Ongoing corporate planning xiv 432 433 433 434 480 482 484 484 485 485 Contents Ongoing market planning Ongoing technology management Opportunity analysis/serendipity NPD as a strategy for growth Market penetration Market development Product development Diversification A range of product development opportunities What is a new product? Defining a new product Classification of new products Repositioning and brand extensions New product development as an industry innovation cycle Overview of NPD theories The fuzzy front end Customer cocreation of new products Time to market Agile NPD Models of new product development Departmental-stage models Activity-stage models and concurrent engineering Cross-functional models (teams) Decision-stage models Conversion-process models Response models Network models 486 486 486 486 487 487 487 488 488 490 492 494 496 497 498 499 501 502 502 503 503 505 505 506 507 507 507 Case study: Launching innocent into the growing fruit smoothie market 508 Chapter summary Discussion questions Key words and phrases References Further reading 516 516 516 517 519 15 New service innovation The growth in services Growth in knowledge-intensive business services (KIBS) Outsourcing and service growth Different types of services Technology and new service development New services and ...
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Final Answer



Strategic Alliance and Networks: Case Study
Institutional Affiliation




The case depicts that being in possession of the best technology or first in the market are
not deterministic factors of the winner of the format battles. In other words, it is not a guarantee
that when a company has the best and quality technology or is first entrant it is a must that it will
be the winner (Trott, 2017). However, there are various analytical factors such as licensing,
marketing, et al. that influence or determine the winner. For example, HD DVD that was created
by Toshiba was removed from the market although it was the first product. Similarly, Betamax
video format that was created by Sony was defeated by JVC’s VHG despite enjoying the firstmoving.
A scenario where a single format is selected over others can be seen when Google
decided to launch its high-quality WebM format. After the release, digital video publisher was
left with no option to either join royal-free format by Google or to move to H.264 industry that
was more expensive. In t...

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