Business Strategy &
Innovation Management

Production
Function

Smaller new comer can beat incumbent

Innovation

  • New combinations with economic profit

Schumpeter (Freeman, 2003)

“Creative Destruction” (Schumpeter, 1942)

Technology change - not constant number-> additional value function of production

Efficient new thing takes over old thing.

5 phenomena of innovation

a new good

a new method of production

a new market

a new source of supply of raw materials

a new form of organization

Innovation
study in MOT

Income from production changes when a manufacturer takes new innovation.

smaller manufacturer can take over the bigger
incumbent by new innovation.

Types of innovation

Productivity
Dilemma

Product - specifications + features

Dominant design

Process - cost competition

Mature market

Post- mature

Competence destroying

New comer - equal position with incumbent

Technology changes : mature market -> new market

Disruptive innovation

new comer can disrupt a part of market from incumbent market

incumbent firms can't take care of disrupted new market because of existing C 's needs

Architectural innovation image

Competence Enhancing Innovation: builds up on an existing technology using firm's existing competencies.

Competence Destroying Innovation: replaces a technology and therefore render firm's competencies obsolete

Value

Functional value

Non-functional (Emotional) value

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Regulatory sandbox

2018 - METI - Home appliance - High speed PLC - Panasonic

Merits

Deregulate “Self-regulation” due to overspec. culture

Break barriers to achieve the goal

DEREGULATION - utilize, control waste - effectiveness - diversity - radical innovation

REGULATION - productivity - avoid waste - efficiency - incremental innovation