TE 571: Innovation and Entrepreneurship in ICT

Unit I: The Entrepreneurial Ecosystem Innovation Types and Sources

1. Distinguish between 𝑖𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛, 𝑖𝑛𝑣𝑒𝑛𝑡𝑖𝑜𝑛 and 𝑑𝑖𝑠𝑐𝑜𝑣𝑒𝑟𝑦.
𝑨 𝒅𝒊𝒔𝒄𝒐𝒗𝒆𝒓𝒚 refers to recognizing or uncovering for the first time something already exists
in the natural world, that nobody has found before,
It's about finding something previously unknown. Examples include discovering a new
planet, a new species of animal, or a new scientific principle.
𝑰𝒏𝒗𝒆𝒏𝒕𝒊𝒐𝒏 refers to the creation of something entirely new. It's a process of bringing
something into existence that did not previously exist.
This could be a physical object, a process, or a system. Examples include the invention of the
printing press, the telephone, or the internet.
𝑰𝒏𝒏𝒐𝒗𝒂𝒕𝒊𝒐𝒏 refers to a process of taking something that already exists and improving it,
making it more efficient, or finding a new application for it.
It's about making things better or doing things differently. Examples include improving the fuel
efficiency of a car, developing a new software application, or creating a new business model.
2. Describe the concept of “𝑔𝑎𝑧𝑒𝑙𝑙𝑒𝑠” and “𝑒𝑙𝑒𝑝ℎ𝑎𝑛𝑡𝑠” as explained by Schumpeter.

𝑬𝒍𝒆𝒑𝒉𝒂𝒏𝒕𝒔 are well established and larger companies with lots of muscle and "staying-
power," but slow moving and vulnerable to fast-changing environments.
Elephants need to be released from their classic business and processes to think differently.
These larger companies have all the structure they need, but need to refocus on innovation
process of what customers really are asking for.
𝑮𝒂𝒛𝒆𝒍𝒍𝒆𝒔 are smaller, moving fast, and usually have a great product and a strong focus on
innovation process of what customers really are asking for, but need to define foundational
processes and goals that set them up to take the next steps.

3. Define entrepreneurship
𝐸𝑛𝑡𝑟𝑒𝑝𝑟𝑒𝑛𝑒𝑢𝑟𝑠ℎ𝑖𝑝 is the process of identifying, developing, and launching a new business,
often involving innovation and taking on financial risks to create a profitable venture.
It encompasses the activities of starting, managing, and growing a business, and often includes
the creation of new products, services, or processes.

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
The innovation process, viewed through the lens of development, generally involves a series
of stages aimed at transforming ideas into tangible products, services, or processes. These
stages typically include idea generation, development, and commercialization.
1. 𝐼𝑑𝑒𝑎 𝐺𝑒𝑛𝑒𝑟𝑎𝑡𝑖𝑜𝑛
This initial stage involves identifying opportunities for innovation through various methods
like market research, customer feedback, trend analysis.
2. Development
Promising ideas are further developed into prototypes or minimum viable products (MVPs).
This stage involves refining the design, functionality, and user experience based on feedback
and testing.
3. Commercialization
Successful ideas are then implemented and commercialized, either through new product
launches, process improvements, or other forms of innovation.
This stage involves bringing the innovation to market, scaling it up, and ensuring its successful
adoption by users or customers.

b. 𝐻𝑢𝑚𝑎𝑛 𝐶𝑒𝑛𝑡𝑒𝑟𝑒𝑑 𝐷𝑒𝑠𝑖𝑔𝑛(𝐻𝐶𝐷)

HCD is an innovation approach that prioritizes the needs, experiences, and contexts of the
people who will use a product, service, or system.
Here’s how HCD relates to innovation
1. Emphasizing User Needs: HCD shifts the focus from a product or technology-driven
approach to one that is deeply rooted in understanding user needs.
2. Fostering Collaboration and Co-creation: HCD encourages collaboration among designers,
users, and other stakeholders throughout the innovation process.

𝐼𝑑𝑒𝑎𝑆𝑐𝑎𝑙𝑒’𝑠 𝑟𝑜𝑙𝑒 𝑖𝑛 𝑓𝑜𝑠𝑡𝑒𝑟𝑖𝑛𝑔 𝑖𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛

1. Idea management platform: IdeaScale provides tools for collecting, organizing, and
prioritizing ideas.
2. Collaboration and feedback: The platform facilitates communication and feedback on ideas,
allowing for refinement and development.
3. Turning ideas into action: IdeaScale helps organizations move from idea generation to
implementation and impact.
c. 𝐿𝑒𝑎𝑛 𝑖𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛
Lean innovation is focused on increasing efficiency by capturing customer feedback early and
often and minimizing waste in the product development cycle.
Key Principles of Lean Innovation:
𝑖. Customer Focus: Lean innovation emphasizes gathering early and frequent feedback to
ensure the product or service resonates with the target audience.
𝑖𝑖. Elimination of Waste: Lean innovation aims to minimize waste in all aspects of the
innovation process, including time, resources, and effort.

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

𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠: Customer feedback and needs are a crucial source of innovative ideas, accounting
for up to 50% of innovations according to some studies.
𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑎𝑛𝑑 𝑖𝑛𝑡𝑒𝑟𝑛𝑎𝑙 𝑠𝑜𝑢𝑟𝑐𝑒𝑠. Ideas from employees, especially those in marketing,
sales, and leadership positions, can be valuable sources of innovation.
𝐸𝑥𝑡𝑒𝑟𝑛𝑎𝑙 𝑐𝑜𝑙𝑙𝑎𝑏𝑜𝑟𝑎𝑡𝑜𝑟𝑠. Suppliers, competitors, and other external partners can provide
fresh perspectives and ideas.
𝐶ℎ𝑎𝑛𝑔𝑒𝑠 𝑖𝑛 𝑝𝑒𝑟𝑐𝑒𝑝𝑡𝑖𝑜𝑛. Shifts in how people view or understand things can lead to
innovation, even if the underlying facts haven’t changed.
𝐼𝑛𝑑𝑢𝑠𝑡𝑟𝑦 𝑎𝑛𝑑 𝑚𝑎𝑟𝑘𝑒𝑡 𝑐ℎ𝑎𝑛𝑔𝑒𝑠. Shifts in industry structure or market dynamics can create
opportunities for new products or services.
𝑁𝑒𝑤 𝑘𝑛𝑜𝑤𝑙𝑒𝑑𝑔𝑒. Advances in scientific or technical knowledge can enable innovations,
though these often have longer lead times.
𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝑛𝑒𝑒𝑑𝑠. Identifying inefficiencies in existing processes can drive innovation to
improve them. For instance, the development of linotype revolutionized newspaper production.
𝑈𝑛𝑒𝑥𝑝𝑒𝑐𝑡𝑒𝑑 𝑜𝑐𝑐𝑢𝑟𝑟𝑒𝑛𝑐𝑒𝑠 𝑜𝑟 𝑒𝑣𝑒𝑛𝑡𝑠. Unexpected successes, failures, or external events can
often spark innovative ideas. For example, Post-it Notes were created after an accidental
discovery of a weak adhesive at 3M.

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

Value Creation, Value Promotion, Value Delivery, and Value Capture
𝑖. 𝐕𝐚𝐥𝐮𝐞 𝐜𝐫𝐞𝐚𝐭𝐢𝐨𝐧 refers to the process of generating additional value to customers,
stakeholders, or a company by going beyond the initial investment or input and turning
resources into something valuable through hard work.
𝑖𝑖. 𝐕𝐚𝐥𝐮𝐞 𝐩𝐫𝐨𝐦𝐨𝐭𝐢𝐨𝐧 refers to effectively communicating and delivering the unique value
your product or service offers to the target customer, ensuring they understand why it's the best
solution for their needs.
𝑖𝑖𝑖. 𝐕𝐚𝐥𝐮𝐞 𝐝𝐞𝐥𝐢𝐯𝐞𝐫𝐲 is the process of ensuring that a business provides its customers with
solutions that meet or exceed their expectations, leading to satisfaction and a positive return on
their investment. It encompasses everything from identifying customer needs to delivering the
final product or service and managing the relationship.
𝑖𝑣. Value capture refers to how a company extracts financial returns from the value it creates
for customers. It's the process of converting the benefits offered by a product or service into
revenue and profit.

7. Compare and contrast between innovation and entrepreneurship.

𝐈𝐧𝐧𝐨𝐯𝐚𝐭𝐢𝐨𝐧 𝐈𝐧𝐯𝐞𝐧𝐭𝐢𝐨𝐧
1. a process of taking something that already refers to a process of bringing something
exists and improving it, making it more into existence that did not previously exist.
efficient, or finding a new application for it.
2. Find new ways to use the existing knowledge creation of something entirely new
3. Target to meet the needs and expectation of Target to expand the boundaries of human
the market. understanding.
4. Requires creative thinking and experimental Requires leadership, commitment, hard
skills. work and risk taking ability.

Comparison: Innovation often precedes entrepreneurship, as a new idea or product is necessary

to start a business.
For eg: A scientist developing a new drug is an innovator. A company that takes that drug and
brings it to market, building a sales and distribution network, is engaging in entrepreneurship.

8. Briefly describe the drivers of innovation

Internal Drivers:
𝐼𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙𝑠: A company's employees are the foundation of innovation. Their curiosity,
passion for learning, and creativity for problem-solving are crucial for generating new ideas.
𝑇𝑒𝑎𝑚𝑠: Most innovations require collaboration and diverse skill sets. Effective teamwork and
communication are essential for developing and implementing innovative solutions.
𝑂𝑟𝑔𝑎𝑛𝑖𝑧𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐶𝑢𝑙𝑡𝑢𝑟𝑒: A culture that encourages experimentation, accepts failure as a
learning opportunity, and provides resources for innovation is vital for sustained success.
𝑃𝑟𝑜𝑐𝑒𝑠𝑠𝑒𝑠: Streamlined and efficient processes can free up resources and time for innovation.
Implementing agile methodologies and other process improvements can facilitate innovation.
External Drivers:
𝑀𝑎𝑟𝑘𝑒𝑡 𝑁𝑒𝑒𝑑𝑠 𝑎𝑛𝑑 𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟 𝐷𝑒𝑚𝑎𝑛𝑑: Identifying unmet needs and developing solutions
that address customer pain points is a powerful driver of innovation.
𝐶𝑜𝑚𝑝𝑒𝑡𝑖𝑡𝑖𝑜𝑛: The desire to outperform competitors can spur innovation as companies strive
to offer better products, services, or experiences.
𝑇𝑒𝑐ℎ𝑛𝑜𝑙𝑜𝑔𝑖𝑐𝑎𝑙 𝐴𝑑𝑣𝑎𝑛𝑐𝑒𝑚𝑒𝑛𝑡𝑠: New technologies provide opportunities for innovation
across various industries. Keeping technological developments and adapting them to one's
business is crucial.
𝐸𝑐𝑜𝑛𝑜𝑚𝑖𝑐 𝐶𝑜𝑛𝑑𝑖𝑡𝑖𝑜𝑛𝑠: Economic growth or downturns can influence the types of innovations
that are pursued. For example, during economic hardship, companies might focus on cost-
saving innovations.

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

Depending on what is being innovated
𝑃𝑟𝑜𝑑𝑢𝑐𝑡 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: This involves creating new or improved goods or services that offer
enhanced value to customers. Examples include the introduction of a new smartphone model
or a new type of software.
𝑃𝑟𝑜𝑐𝑒𝑠𝑠 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: This refers to the implementation of new or significantly improved
methods for producing or delivering goods or services. This could involve changes in
technology, equipment, or management systems.
𝑃𝑜𝑠𝑖𝑡𝑖𝑜𝑛 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: This type of innovation involves changing the context in which a
product or service is introduced. This could involve repositioning an existing product in a new
market or targeting a different customer segment.
𝑃𝑎𝑟𝑎𝑑𝑖𝑔𝑚 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: involves a fundamental shift in the way something is done, often
creating entirely new markets or industries. Examples include the introduction of the
automobile, the smartphone, or the internet.
𝑇𝑒𝑐ℎ𝑛𝑜𝑙𝑜𝑔𝑖𝑐𝑎𝑙 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛 : involves the application of new technologies to create new
products and services.
𝑂𝑟𝑔𝑎𝑛𝑖𝑧𝑎𝑡𝑖𝑜𝑛𝑎𝑙 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: involves the change in organizational structure, process and
practices.
𝐵𝑢𝑠𝑖𝑛𝑒𝑠𝑠 𝑀𝑜𝑑𝑒𝑙 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: involves reimagining how value is created, delivered, and
captured within an organization, reflecting on the core business and how it can be dynamically
evolved through the integration of existing and new technologies.
It encompasses changes to pricing strategies, distribution channels, and customer engagement
methods, with the aim of driving sustainable growth and competitive advantage in the market.
Service Innovation
𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑖𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: focuses on enhancing the quality and value of services delivered to
customers.
It involves redesigning service delivery processes, introducing new service offerings, and
leveraging technology to improve customer experiences and differentiate offerings in the
market.
10. With the aid of a diagram describe Incremental, Architectural, Radical and Disruptive
innovation types
(𝑖). 𝑨𝒓𝒄𝒉𝒊𝒕𝒆𝒄𝒕𝒖𝒓𝒂𝒍 𝑰𝒏𝒏𝒐𝒗𝒂𝒕𝒊𝒐𝒏: involves reconfiguring existing components within a
business to deliver new value to customers and potentially create a new market.
It focuses on redesigning the structure or architecture of products, processes, or systems to
enhance performance or functionality. Examples include modularization, platformization, or
reengineering processes to improve efficiency and flexibility.
(𝑖𝑖). 𝑫𝒊𝒔𝒓𝒖𝒑𝒕𝒊𝒗𝒆 𝑰𝒏𝒏𝒐𝒗𝒂𝒕𝒊𝒐𝒏 : introduces a new product or service that fundamentally
alters the competitive landscape, often by targeting underserved or overlooked market
segments.
It typically starts at the low end of the market and gradually gains traction, eventually
displacing established players. Examples include the rise of digital streaming services
disrupting traditional media or electric vehicles challenging the automotive industry’s status
quo.
(𝑖𝑖𝑖). 𝑹𝒂𝒅𝒊𝒄𝒂𝒍 𝑰𝒏𝒏𝒐𝒗𝒂𝒕𝒊𝒐𝒏: represents a departure from existing norms and conventions,
introducing breakthrough technologies or concepts that redefine industry paradigms.
It involves creating entirely new products, services, or business models that revolutionize how
markets operate. Examples include the advent of smartphones revolutionizing communication
or blockchain technology transforming financial services.
(𝑖𝑣). 𝑰𝒏𝒄𝒓𝒆𝒎𝒆𝒏𝒕𝒂𝒍 𝑰𝒏𝒏𝒐𝒗𝒂𝒕𝒊𝒐𝒏: involves making small, incremental changes and
improvements to existing products, processes, or services over time.
It focuses on refining and optimizing existing offerings to enhance performance, quality, or
user experience. While less flashy than radical innovation, incremental innovation plays a
crucial role in driving continuous improvement and maintaining competitiveness in mature
markets.
11. Compare and contrast between the innovation ecosystem and the entrepreneurial ecosystem
Focus: Innovation ecosystems prioritize the creation of new ideas, technologies and products,
while entrepreneurial ecosystems prioritize the creation and growth of new businesses.
Scope: Innovation ecosystems can be broader, encompassing various industries and sectors,
while entrepreneurial ecosystems are often more localized and focused on specific geographic
areas.
Agency: Innovation ecosystems may involve larger organizations and institutions, while
entrepreneurial ecosystems often place a greater emphasis on the role of individual
entrepreneurs.
Nature: Innovation ecosystems are often more flexible and adaptable to change, while
entrepreneurial ecosystems can be more place-based and focused on building a strong local
network.
In essence, innovation ecosystems provide the raw materials (ideas, technologies) for
entrepreneurial ecosystems to build upon. They are interconnected and interdependent, with
innovation fueling entrepreneurship and entrepreneurship driving the commercialization of
innovation.

Unit II: Entrepreneurship and the Entrepreneur:

1. Define the term “Entrepreneur”
An entrepreneur is an individual who takes the risk to start their own business based on an
idea they have or a product they have created while assuming most of the risks of the business.

2. What are the characteristics of an Entrepreneur?

𝑖. 𝑉𝑖𝑠𝑖𝑜𝑛: An entrepreneur has the capacity to see beyond the present. They are skillful at
imagining a future that others may not see, establishing stretch goals and motivating others to
join them on their path.
𝑖𝑖. 𝐷𝑒𝑡𝑒𝑟𝑚𝑖𝑛𝑎𝑡𝑖𝑜𝑛 is an important characteristic of successful entrepreneurs. You must be
willing to face whatever you encounter without giving up. It may also include selling yourself
and your brand at every opportunity, even when it gets you out of your comfort zone.
𝑖𝑖𝑖. 𝑆𝑒𝑙𝑓 − 𝑑𝑖𝑠𝑐𝑖𝑝𝑙𝑖𝑛𝑒 : Being a business owner often means getting up early, staying up
late, or going to work on the weekends, which requires dedication and discipline. Business
leaders who practice self-discipline also lead their teams by example, which can motivate
employees to work hard.
𝑖𝑣. 𝑆𝑒𝑙𝑓 − 𝑎𝑤𝑎𝑟𝑒𝑛𝑒𝑠𝑠 : "the ability to be aware of one’s inner life—one’s emotions,
thoughts, behaviors, values, preferences, goals, strengths, challenges, attitudes, mindsets, and
so forth—and how these elements impact behavior and choices across contexts". It’s important
to understand your strengths and weaknesses and use that understanding to build your business.
Focus on your strengths, and surround yourself with people who counter your weaknesses.
𝑣. 𝐶𝑢𝑟𝑖𝑜𝑠𝑖𝑡𝑦 : keeping your mind open to new possibilities, listen to what others say, pay
attention to the world around you, seeking knowledge, and considering different points of view.
𝑣𝑖. 𝑂𝑝𝑡𝑖𝑚𝑖𝑠𝑚 : hopefulness and confidence about the future or the success of something.
You may overcome your challenges by seeing them as new opportunities to grow your business
and develop innovative and creative solutions.
𝑣𝑖𝑖. 𝑃𝑎𝑠𝑠𝑖𝑜𝑛 : That means that no matter what it takes, you're willing to put in the effort and
hard work required to nurture a business based on your interest because you love the idea and
want to make it your purpose.
𝑣𝑖𝑖𝑖. 𝐷𝑒𝑐𝑖𝑠𝑖𝑜𝑛 − 𝑚𝑎𝑘𝑖𝑛𝑔 : Committing to your choices allows you to adapt and change
courses quickly. Making a plan, narrowing down your options, and setting deadlines for
yourself can help you improve your decision-making skills.
𝑖𝑥. 𝐹𝑙𝑒𝑥𝑖𝑏𝑖𝑙𝑖𝑡𝑦 𝑎𝑛𝑑 𝑎𝑑𝑎𝑝𝑡𝑎𝑏𝑖𝑙𝑖𝑡𝑦 : allow you to change courses and make new decisions
quickly and effectively. Market and consumer needs change frequently, making it important
that you are willing to adapt your products and services to meet them.
𝑥. 𝑊𝑖𝑙𝑙𝑖𝑛𝑔𝑛𝑒𝑠𝑠 𝑡𝑜 𝑡𝑎𝑘𝑒 𝑟𝑖𝑠𝑘𝑠 : A business's future is uncertain. Outside factors may
impact your business at any given time. But by taking calculated risks, you may mitigate the
impacts outside factors have on your business. This means you measure the relationship
between the risk and potential reward before deciding.
𝑥𝑖. 𝑈𝑛𝑎𝑓𝑟𝑎𝑖𝑑 𝑜𝑓 𝑓𝑎𝑖𝑙𝑢𝑟𝑒: You must learn from challenges and allow them to make you
stronger. It’s essential to become comfortable with failureReassess your goals, think positively,
and remain focused on the future of your business.
𝑥𝑖𝑖. 𝐿𝑒𝑎𝑑𝑒𝑟𝑠ℎ𝑖𝑝: they inspire and encourage others and form deep bonds by developing a
collaborative and inventive workplace atmosphere.

𝑥𝑖𝑖. 𝑃𝑎𝑡𝑖𝑒𝑛𝑐𝑒 : his allows you to stay focused on your goals and not get distracted by other
things that may not be as important.

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

Ever meet someone so successful in their field of business that it seems like they were born to
do it? Some individuals make the entrepreneur life look so effortless that you start to wonder
if it's in their DNA.
I believe the simple answer to the age-old question is that entrepreneurs are made, not born.
Here's why.
𝐸𝑛𝑡𝑟𝑒𝑝𝑟𝑒𝑛𝑒𝑢𝑟 𝑖𝑠 𝑎𝑏𝑜𝑢𝑡 𝐸𝑥𝑝𝑒𝑟𝑖𝑒𝑛𝑐𝑒
Humans learn from past experiences, making them better able to control the outcome when
they experience situations a second time. We wouldn't even have many of the medicines we
use today if scientists hadn't tried and failed multiple times. The axiom "Experience is the best
teacher" is very accurate when you talk about entrepreneurship. Many entrepreneurs transition
from employees and the experience they bring with them gives them an edge in the business
world. Other entrepreneurs who didn't gain experience by working as an employee had to learn
through other forms of mentorship.
𝐸𝑛𝑡𝑟𝑒𝑝𝑟𝑒𝑛𝑒𝑢𝑟 𝑖𝑠 𝑎𝑏𝑜𝑢𝑡 𝑡ℎ𝑒 𝐾𝑛𝑜𝑤𝑙𝑒𝑑𝑔𝑒
Knowledge is acquired from education. "Education" does not necessarily mean formal as there
are people who have become successful in business without a formal education. So even though
some of these entrepreneurs lack degrees from schools, they have developed in-depth
knowledge through self-guided education. This knowledge helps them make better decisions
for their business and leads to them being sources of information for others.
𝐸𝑛𝑡𝑟𝑒𝑝𝑟𝑒𝑛𝑒𝑢𝑟 𝑖𝑠 𝑎𝑏𝑜𝑢𝑡 𝑡ℎ𝑒 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛
Innovation, is not something a person is born with; rather, it is a quality nurtured through
leveraging opportunities. What keeps most entrepreneurs in business is the ability to keep
developing new strategies. Without innovation, an entrepreneur will lose their touch, and that's
it for the business. Each year, for instance, Apple Inc. releases a new model of iPhone, iPad or
Mac. This means that the company has researchers working round the clock to be able to meet
consumer expectations. If the company failed the research, then new models would stop being
produced, which would lead to consumers losing interest in the new products and eventually,
the old products dying a natural death. This is how many companies fail and why innovation
is key to entrepreneurship.
In conclusion, success in any field of life is not due to inborn traits. Rather it is achieved through
experiences, knowledge and passion. The same goes for business. Entrepreneurs are not
marked from birth; they are people who made a series of good decisions in their businesses and
lives. Therefore, entrepreneurs are not born; they are made.

4. What are some typical traits of entrepreneurs?

5. Mention motives for a person to start their own business.

𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑠𝑒𝑐𝑢𝑟𝑖𝑡𝑦: Some entrepreneurs are driven by the desire to create a stable financial
future for themselves and their families.
𝐹𝑙𝑒𝑥𝑖𝑏𝑖𝑙𝑖𝑡𝑦 𝑎𝑛𝑑 𝑤𝑜𝑟𝑘 − 𝑙𝑖𝑓𝑒 𝑏𝑎𝑙𝑎𝑛𝑐𝑒: Some entrepreneurs seek the flexibility to set their
own schedules and work in a way that better suits their lifestyle.
𝑇ℎ𝑒 𝑤𝑖𝑠ℎ 𝑡𝑜 𝑚𝑎𝑘𝑒 𝑎 𝑑𝑖𝑓𝑓𝑒𝑟𝑒𝑛𝑐𝑒: Many entrepreneurs are motivated by a desire to make a
positive impact on their community or the world, whether through a specific product or service
or by creating a positive work environment.
𝐿𝑎𝑐𝑘 𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑚𝑒𝑛𝑡 𝑜𝑝𝑝𝑜𝑟𝑡𝑢𝑛𝑖𝑡𝑖𝑒𝑠:In some cases, starting a business is a response to a
lack of suitable employment options.
𝐵𝑢𝑖𝑙𝑑𝑖𝑛𝑔 𝑎 𝑑𝑟𝑒𝑎𝑚 𝑡𝑒𝑎𝑚 𝑎𝑛𝑑 𝑐𝑢𝑙𝑡𝑢𝑟𝑒: Some entrepreneurs are motivated by the desire to
build a specific type of work environment and team.
𝐴𝑑𝑑𝑟𝑒𝑠𝑠𝑖𝑛𝑔 𝑎 𝑔𝑎𝑝 𝑖𝑛 𝑡ℎ𝑒 𝑚𝑎𝑟𝑘𝑒𝑡: Identifying a need that is not currently being met can be
a strong motivator for starting a business.
𝐹𝑜𝑙𝑙𝑜𝑤𝑖𝑛𝑔 𝑎 𝑓𝑎𝑚𝑖𝑙𝑦 𝑡𝑟𝑎𝑑𝑖𝑡𝑖𝑜𝑛: Some entrepreneurs come from families with a history of
business ownership and are motivated to continue that tradition.
6. Mention 6 tests employed to measure Entrepreneurial Tendencies. State the characteristic
domains that are measured in each case.
1. 𝐸𝑛𝑡𝑟𝑒𝑝𝑟𝑒𝑛𝑒𝑢𝑟𝑖𝑎𝑙 𝐴𝑝𝑡𝑖𝑡𝑢𝑑𝑒 (𝑖𝑛ℎ𝑒𝑟𝑖𝑡 𝑎𝑏𝑖𝑙𝑖𝑡𝑦 𝑎𝑛𝑑 𝑠𝑘𝑖𝑙𝑙𝑠) 𝑇𝑒𝑠𝑡: this test assesses an
individual's potential for success in entrepreneurial roles by measuring their aptitude for
problem-solving, decision-making, and risk assessment.
2. 𝑆𝑘𝑖𝑙𝑙𝑠 𝐶𝑜𝑛𝑓𝑖𝑑𝑒𝑛𝑐𝑒 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦: This tool evaluates an individual's self-efficacy in various
entrepreneurial skills, such as sales, marketing, and finance.
3. 𝐺𝑒𝑛𝑒𝑟𝑎𝑙 𝐸𝑛𝑡𝑒𝑟𝑝𝑟𝑖𝑠𝑖𝑛𝑔 𝑇𝑒𝑛𝑑𝑒𝑛𝑐𝑦 (𝐺𝐸𝑇): The GET measures an individual's overall
propensity for entrepreneurial behavior by assessing their attitudes and beliefs about business
and risk-taking.
4. 𝐸𝑛𝑡𝑟𝑒𝑝𝑟𝑒𝑛𝑒𝑢𝑟𝑖𝑎𝑙 𝐺𝑢𝑖𝑑𝑎𝑛𝑐𝑒 𝑄𝑢𝑒𝑠𝑡𝑖𝑜𝑛𝑛𝑎𝑖𝑟𝑒: This tool explores an individual's
perceptions of their entrepreneurial abilities and their willingness to seek guidance and support.
5. 𝑀𝑒𝑎𝑠𝑢𝑟𝑒 𝑜𝑓 𝐸𝑛𝑡𝑟𝑒𝑝𝑟𝑒𝑛𝑒𝑢𝑟𝑖𝑎𝑙 𝑇𝑎𝑙𝑒𝑛𝑡𝑠 𝑎𝑛𝑑 𝐴𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 (𝑀𝐸𝑇𝐴): This test assesses
entrepreneurial creativity, opportunism, and proactivity, focusing on the ability to generate
innovative ideas and identify business opportunities.
6. 𝐸𝑛𝑡𝑟𝑒𝑝𝑟𝑒𝑛𝑒𝑢𝑟𝑖𝑎𝑙 𝐴𝑡𝑡𝑖𝑡𝑢𝑑𝑒 𝑂𝑟𝑖𝑒𝑛𝑡𝑎𝑡𝑖𝑜𝑛 (𝐸𝐴𝑂) Scale measures Achievement in
business, and Innovation in business.
𝑆𝑡𝑟𝑒𝑠𝑠 𝑎𝑛𝑑 𝐴𝑛𝑥𝑖𝑒𝑡𝑦: The constant pressure to succeed, manage finances, and deal with
uncertainty can lead to high levels of stress and anxiety.
𝐹𝑒𝑎𝑟 𝑜𝑓 𝐹𝑎𝑖𝑙𝑢𝑟𝑒: The desire for success can be overshadowed by the fear of failure, which
can be debilitating and prevent entrepreneurs from enjoying their work.
𝑀𝑒𝑛𝑡𝑎𝑙 𝐻𝑒𝑎𝑙𝑡ℎ 𝐼𝑠𝑠𝑢𝑒𝑠: Entrepreneurship can exacerbate existing mental health conditions or
trigger new ones, such as depression, anxiety, and loneliness.
𝐹𝑖𝑛𝑎𝑛𝑐𝑖𝑎𝑙 𝑅𝑖𝑠𝑘𝑠: The potential for financial loss is a major concern, as many entrepreneurs
risk their personal savings and investments.
𝑆𝑜𝑐𝑖𝑎𝑙 𝐼𝑠𝑜𝑙𝑎𝑡𝑖𝑜𝑛: The demands of entrepreneurship can lead to social isolation, as
entrepreneurs may have less time for friends and family.
𝐼𝑚𝑝𝑎𝑐𝑡 𝑜𝑛 𝐹𝑎𝑚𝑖𝑙𝑦: The pressures of entrepreneurship can also impact family life, leading to
stress and strain on relationships.
𝐶𝑜𝑚𝑝𝑒𝑡𝑖𝑡𝑖𝑜𝑛: Some entrepreneurial actions can stifle competition and hinder innovation,
leading to negative consequences for the market and consumers.

7. Briefly describe the theory of Effectuation. Mention its 4 principles.

Effectuation is a theory in entrepreneurship that describes how entrepreneurs build ventures
(risks) under conditions of high uncertainty, focusing on leveraging available means and
resources rather than predicting the future and setting predetermined goals.
It emphasizes a non-predictive, action-oriented approach where the future is shaped by human
action.
The five principles of effectuation are:
1. Bird-in-hand: Start with your means - who you are, what you know, and who you know.
2. Affordable loss: Focus on what you are willing to lose rather than potential gains, limiting
downside risk.
3. Lemonade: Embrace surprises and unexpected events as opportunities for learning and
innovation.
4. Crazy Quilt: Build partnerships and collaborations with stakeholders to co-create the future.
5. Pilot-in-the-plane: Emphasize control through action and focus on what you can influence,
rather than trying to predict the future.

9. Define the term intrapreneurship.

𝑰𝒏𝒕𝒓𝒂𝒑𝒓𝒆𝒏𝒆𝒖𝒓𝒔𝒉𝒊𝒑 refers to the practice of encouraging employees within a company to act
as entrepreneurs, developing new ideas and initiatives while remaining within the established
organization.

10. Describe the concept of open innovation.

𝑶𝒑𝒆𝒏 𝒊𝒏𝒏𝒐𝒗𝒂𝒕𝒊𝒐𝒏 is a business strategy that encourages companies to leverage both internal
and external ideas, knowledge, and resources to drive innovation.
This approach recognizes that valuable ideas and solutions can come from outside the
company, and that sharing knowledge and resources can accelerate the innovation process.

Unit III: Managing Innovation:

Human and social capital management, fostering innovation and entrepreneurship,
strengthening the national innovation system.

1. Distinguish between innovation management and management innovation.

Innovation management refers to the overall process of managing innovation within an

organization, encompassing everything from generating ideas to implementing them and
monitoring their progress.
Includes activities like idea generation, selection, development, implementation, and
commercialization.
Management innovation, on the other hand, is a specific type of innovation focused on the
invention and implementation of new management practices, processes, structures, or
techniques to achieve organizational goals.
Involves the creation and implementation of new management techniques, such as new
performance evaluation systems, organizational structures, or decision-making processes.
2. Innovation management is equivalent to change management in an organization. Argue
for or against this statement.
While innovation can be a driver of change, and change management can be a crucial
component of successful innovation, the two concepts are not equivalent.
𝑁𝑜𝑡 𝑎𝑙𝑙 𝑐ℎ𝑎𝑛𝑔𝑒 𝑖𝑠 𝑖𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑣𝑒: Implementing a new software program, for instance, might be
a change, but it's not necessarily an innovative one if that software is widely used elsewhere.
𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛 𝑐𝑎𝑛 𝑜𝑐𝑐𝑢𝑟 𝑤𝑖𝑡ℎ𝑜𝑢𝑡 𝑐ℎ𝑎𝑛𝑔𝑒 𝑚𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡: A company can innovate within its
existing structure without needing to implement a formal change management process,
particularly if the innovation is incremental or doesn't significantly alter existing workflows.
𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛 𝑐𝑎𝑛 𝑝𝑟𝑒𝑐𝑒𝑑𝑒 𝑐ℎ𝑎𝑛𝑔𝑒: Innovation often leads to a need for change, but change
management can be required for various reasons, including strategic shifts, market fluctuations,
or even simply implementing existing best practices in a new way.

However,
𝐵𝑜𝑡ℎ 𝑖𝑛𝑣𝑜𝑙𝑣𝑒 𝑡𝑟𝑎𝑛𝑠𝑖𝑡𝑖𝑜𝑛: Both innovation and change management involve guiding
individuals and organizations through a transition from one state to another.
𝐶ℎ𝑎𝑛𝑔𝑒 𝑚𝑎𝑛𝑎𝑔𝑒𝑚𝑒𝑛𝑡 𝑓𝑎𝑐𝑖𝑙𝑖𝑡𝑎𝑡𝑒𝑠 𝑖𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: A well-executed change management
process can create an environment where innovation is more likely to succeed by addressing
resistance, facilitating communication, and ensuring buy-in from stakeholders.
𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛 𝑑𝑟𝑖𝑣𝑒𝑠 𝑐ℎ𝑎𝑛𝑔𝑒: Innovation often requires organizations to adapt, leading to
changes in processes, structures, and even culture.

With the aid of diagrams, describe Rothwell’s 5 Generations of Innovation

1. Generation 1: Technology Push (1950s - 1960s)

Description: Innovation was primarily driven by scientific discoveries and technological
advancements. R&D departments focused on creating new technologies, and the market was
expected to adopt them.
Diagram: A linear model with R&D at the beginning, followed by production and then
marketing/sales.
Key Characteristics: Science-push, linear process, focus on technological capabilities.
2. Generation 2: Market Pull (1960s - 1970s)

Description: Innovation was driven by identified market needs and customer demands.
Companies focused on developing products that directly addressed these needs.

Diagram: A linear model with market research at the beginning, followed by R&D, production,
and marketing/sales.

Key Characteristics: Market-pull, linear process, focus on customer needs.

3. Generation 3: Coupling (1970s - 1980s)

Description: A more integrated approach that linked R&D and marketing. Recognized the need
for both technological advancements and market understanding to drive successful innovation.
Diagram: A model where R&D and marketing are linked, with feedback loops between them,
and then followed by production and sales.
Key Characteristics: Integration of R&D and marketing, feedback loops, more complex
process.
4. Generation 4: Integrated (1980s - 1990s)
Description: Further integration of all business functions, including R&D, marketing,
production, and even finance. Emphasis on streamlining processes and improving efficiency
across the entire value chain.
Diagram: A model with a central core representing integrated business functions, with inputs
from Research and Development R&D, marketing, and production, and outputs going to the
market.
Key Characteristics: Integration of all business functions, process-oriented, focus on
efficiency.

5. Generation 5: System Integration and Networking (1990s - Present)

Description: Focus on open innovation, strategic partnerships, and system integration.
Recognizes the importance of collaboration and knowledge sharing across organizational
boundaries.
Diagram: A network model with various interconnected nodes representing different
organizations (suppliers, customers, research institutions, etc.) and internal departments.
Key Characteristics:Open innovation, strategic partnerships, network-based, focus on external
collaboration.
2. What are the consequences of having only a partial view/understanding of the innovation
process? Give examples
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.

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

𝐹𝑎𝑖𝑙 𝑡𝑜 𝑃𝑟𝑒𝑑𝑖𝑐𝑡 𝐸𝑚𝑒𝑟𝑔𝑒𝑛𝑐𝑒 𝑎𝑛𝑑 𝐼𝑚𝑝𝑎𝑐𝑡: The S-curve doesn't tell us when a new technology
will emerge or how significant its impact will be. It only describes the trajectory of a
technology's performance once it's already in development.
𝐿𝑖𝑚𝑖𝑡𝑎𝑡𝑖𝑜𝑛𝑠 𝑜𝑓 𝐹𝑜𝑟𝑒𝑐𝑎𝑠𝑡𝑖𝑛𝑔: While S-curves can be used for forecasting, they are not
always accurate and may have limitations in predicting the exact timing and magnitude of
technological change.
𝐼𝑔𝑛𝑜𝑟𝑖𝑛𝑔 𝐸𝑥𝑡𝑒𝑟𝑛𝑎𝑙 𝐹𝑎𝑐𝑡𝑜𝑟𝑠: The S-curve model often focuses on internal factors like R&D
and performance improvements while overlooking external factors like market dynamics, user
adoption, and policy changes.
𝑃𝑜𝑡𝑒𝑛𝑡𝑖𝑎𝑙 𝑓𝑜𝑟 𝑀𝑖𝑠𝑖𝑛𝑡𝑒𝑟𝑝𝑟𝑒𝑡𝑎𝑡𝑖𝑜𝑛: S-curves can be misinterpreted as implying that a
technology will inevitably decline after reaching maturity, which may not always be the case.
A new S-curve can emerge, building on the foundation of the previous one.
𝐷𝑖𝑓𝑓𝑖𝑐𝑢𝑙𝑡𝑦 𝑖𝑛 𝐷𝑒𝑓𝑖𝑛𝑖𝑛𝑔 𝑆𝑡𝑎𝑔𝑒𝑠: Accurately defining the different stages of the S-curve
(introduction, growth, maturity, decline) can be subjective and challenging, especially in
complex technological ecosystems.

5. State the managerial issues that one might face when using S-curves to analyze
technological opportunities.
𝐷𝑖𝑓𝑓𝑖𝑐𝑢𝑙𝑡𝑦 𝑖𝑛 𝑔𝑎𝑡ℎ𝑒𝑟𝑖𝑛𝑔 𝑎𝑐𝑐𝑢𝑟𝑎𝑡𝑒 𝑑𝑎𝑡𝑎: Accurate S-curve analysis relies on reliable data
about past and current technology performance, R&D investment, and market adoption. This
data might not always be readily available, especially for emerging technologies.
𝑇𝑖𝑚𝑒 𝑎𝑛𝑑 𝑟𝑒𝑠𝑜𝑢𝑟𝑐𝑒 𝑖𝑛𝑡𝑒𝑛𝑠𝑖𝑣𝑒: Collecting and analyzing the data needed for S-curve analysis
can be time-consuming and resource-intensive, particularly for complex technologies.
𝑆𝑢𝑏𝑗𝑒𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝑖𝑛 𝑖𝑛𝑡𝑒𝑟𝑝𝑟𝑒𝑡𝑎𝑡𝑖𝑜𝑛: S-curve analysis can be subjective, and different managers
might interpret the same curve in different ways, leading to inconsistent strategic decisions.
𝐿𝑎𝑐𝑘 𝑜𝑓 𝑐𝑙𝑒𝑎𝑟 𝑔𝑢𝑖𝑑𝑎𝑛𝑐𝑒 𝑜𝑛 𝑖𝑛𝑣𝑒𝑠𝑡𝑚𝑒𝑛𝑡 𝑑𝑒𝑐𝑖𝑠𝑖𝑜𝑛𝑠: S-curves don't provide a definitive
answer on when to abandon one technology and invest in another. Managers need to consider
other factors beyond the S-curve when making such critical decisions.
𝑆𝑡𝑟𝑎𝑡𝑒𝑔𝑖𝑐 𝑏𝑙𝑖𝑛𝑑𝑛𝑒𝑠𝑠: Managers might become overly focused on the S-curve analysis and
neglect other crucial aspects of strategic planning, such as competitive analysis, market trends,
and customer needs.

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?
𝑆 − 𝐶𝑢𝑟𝑣𝑒𝑠: S-curves represent the relationship between a technology's performance or output
and the effort or resources invested in it. Initially, progress is slow, then accelerates, and
eventually plateaus as the technology matures.
𝐼𝑛𝑐𝑟𝑒𝑚𝑒𝑛𝑡𝑎𝑙 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: This type of innovation focuses on small, continuous
improvements to existing technologies, products, or processes. On an S-curve, incremental
innovation appears as a gradual, upward slope as improvements are made within the existing
technological framework.
𝐴𝑟𝑐ℎ𝑖𝑡𝑒𝑐𝑡𝑢𝑟𝑎𝑙/𝑀𝑜𝑑𝑢𝑙𝑎𝑟 𝐼𝑛𝑛𝑜𝑣𝑎𝑡𝑖𝑜𝑛: This involves changing the fundamental architecture
or modular structure of a product or system, leading to significant performance leaps. In terms
of S-curves, this can manifest as a steeper, more rapid increase in performance or a shift to a
new S-curve with a higher potential performance ceiling.
𝑹𝒂𝒕𝒊𝒐𝒔 𝒐𝒇 𝑻𝒆𝒄𝒉𝒏𝒐𝒍𝒐𝒈𝒊𝒄𝒂𝒍 𝑰𝒎𝒑𝒓𝒐𝒗𝒆𝒎𝒆𝒏𝒕:
Incremental: The majority of the improvement comes from refining and optimizing existing
components and processes within the established architectural framework.
Architectural/Modular: A larger proportion of the performance improvement stems from
redesigning the product's architecture or introducing new modules that leverage new
technologies or system interactions.
Example:
Consider hard drives. Incremental innovation might involve increasing the storage capacity of
individual disks or improving the read/write speed. Architectural innovation could involve a
shift to solid-state drives (SSDs), which have a fundamentally different architecture and offer
significant performance advantages over traditional hard drives.
Unit V: Capturing Value From Innovation:
Stakeholder mapping and management in Case Organization, Growth and embeddedness of
technology and firms, creating value collaboratively.
1. Describe the two aspects of capturing value from innovation.
1. Value Creation:
Focus: Developing something new and valuable. This could be a product, a service, a process,
or even a new business model.
Examples: Developing a new drug to treat a disease, Creating a more efficient manufacturing
process, Designing a user-friendly mobile app, Developing a new business model that disrupts
the existing market.
Goal: To identify and address unmet needs, improve existing solutions, or create entirely new
markets.
Key elements: Requires identifying opportunities, generating ideas, prototyping, testing, and
refining the innovation.
2. Value Capture:
Focus: Converting the created value into tangible benefits for the innovator, such as profit,
market share, or competitive advantage.
Examples: Setting a price for a new product that is higher than the cost of production but still
attractive to customers.
Building a strong brand reputation through marketing and customer service to gain a
competitive advantage.
Goal: To ensure that the innovator is able to benefit from the value they have created, rather
than having that value diluted or captured by others.
Key elements: Requires strategic decisions about pricing, marketing, distribution, intellectual
property protection, and building complementary assets.
In essence, value creation is about generating new solutions and opportunities, while value
capture is about ensuring that the innovator gets a fair share of the benefits derived from those
innovations. Both aspects are crucial for successful innovation and sustainable business
growth.
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.

𝑵𝒐𝒌𝒊𝒂 was the first to create a cellular network in the world. In the late 1990s and early 2000s,
Nokia was the global leader in mobile phones.
How they failed to innovate: The company overestimated the strength of its brand and believed
it could arrive late to the smartphone race and still win. In 2008, one year after the first iPhone
release, Nokia finally decided to compete with Android, but it was too late. Their products
weren't competitive enough.
𝒀𝒂𝒉𝒐𝒐, In 2005, Yahoo was one of the leading players in the online advertising market. But it
undervalued the importance of Search in favor of pursuing a presence in traditional media
outlets.
How they failed to innovate: Focusing more on media meant they neglected consumer trends
and needed to improve the user experience. Yahoo failed to develop a model to monetize
content "views," similar to Google
𝑺𝒐𝒏𝒚, a manufacturer of electronic products, changed how we listen to music with the
invention of the Walkman in 1979.
How they failed to innovate: Sony didn't adapt to technological innovations such as
digitalization, the shift towards software, and the growth of illegally downloadable music
online. Sony had the technology to launch a better product than the iPod, but it never happened.
The company was too afraid to test out something new, thinking it would threaten their
compatibilities on the market.
𝑲𝒐𝒅𝒂𝒌 is a technology company that dominated the photographic film market during most of
the 20th century.
How they failed to innovate: Even though they developed the world's first digital camera, the
management was so focused on the success of photography film that they missed the digital
revolution. They failed to keep innovating and filed for bankruptcy in 2012.
Even though 𝑴𝒐𝒕𝒐𝒓𝒐𝒍𝒂 kept producing various versions of its cellphone, they failed to see
that customers wanted innovation in software rather than hardware.
How they failed to innovate: Motorola's new products in the early 2000s lacked market
knowledge and weren't enough to grow the business. The products weren't user-friendly, and
Motorola missed the movement to 3G. Motorola didn't implement 21st-century communication
in its products, making it hard to compete with smartphones.

3. Give examples of companies that managed to create and capture value successfully.

𝑨𝒑𝒑𝒍𝒆: Apple's success lies in its ability to create innovative products like the iPhone, iPad,
and iMac, coupled with a strong focus on user experience and seamless integration across its
ecosystem. This creates value for consumers, who benefit from the functionality and design,
and for Apple, which captures value through strong sales and brand loyalty.
𝑨𝒎𝒂𝒛𝒐𝒏: Amazon has revolutionized retail by offering a vast online marketplace with
efficient logistics and competitive pricing. They have also diversified into cloud computing
(AWS), capturing value through a wide range of services and a robust infrastructure.
𝑵𝒆𝒕𝒇𝒍𝒊𝒙: Netflix's shift from DVD rentals to streaming video on demand (SVOD)
demonstrates a successful business model transformation. By offering a convenient and diverse
library of content, they've captured significant value through subscription revenue.
4. In the context of capturing value of innovation, briefly describe these strategies
a. Appropriability regimes
b. Architecture of the Industry

a. The appropriability regime refers to the protection afford to innovators through both
legal mechanisms (e.g., patents, trade secrecy, copyrights, and non-disclosure agreements) and
“natural” barriers to imitation (e.g., degree of difficulty in reverse engineering, and tacitness of
relevant technology).
a. Architecture of the Industry refers to the structure and relationships between different
players in an industry, including how they interact and divide labor. A key aspect is
understanding how firms can shape this architecture to their advantage, particularly in relation
to intellectual property and complementary assets, to maximize the benefits of their
innovations.

5. Why are appropriability regimes perceived to be stronger in software products than in

hardware (mechanical) products?

1. 𝐸𝑎𝑠𝑒 𝑜𝑓 𝑅𝑒𝑝𝑙𝑖𝑐𝑎𝑡𝑖𝑜𝑛 𝑎𝑛𝑑 𝐼𝑚𝑖𝑡𝑎𝑡𝑖𝑜𝑛:

Software: Software is inherently easy to copy and distribute, making it vulnerable to piracy and
unauthorized duplication. This makes it more challenging to protect software innovations
through traditional means like secrecy or first-mover advantage.
Hardware: Physical products, particularly mechanical ones, require more complex and often
costly manufacturing processes, making them harder to replicate quickly and on a large scale.
Reverse engineering a complex mechanical product also takes time and resources.
2. 𝐿𝑒𝑔𝑎𝑙 𝑃𝑟𝑜𝑡𝑒𝑐𝑡𝑖𝑜𝑛 𝑀𝑒𝑐ℎ𝑎𝑛𝑖𝑠𝑚𝑠:
A patent is a form of intellectual property that gives its owner the legal right to exclude others
from making, using, or selling an invention for a limited period
Software: While software can be protected by copyright and patent, these protections have
limitations. Copyright protects the code itself, but not the underlying functionality or ideas.
Patents, while more encompassing, can be difficult and expensive to obtain and enforce, and
can often be circumvented through clever design arounds.
Hardware: Patents are more commonly used and effective for protecting hardware inventions,
as they can cover the specific design and functionality of a product. However, patent litigation
can still be complex and costly.
3. 𝐶𝑜𝑚𝑝𝑙𝑒𝑚𝑒𝑛𝑡𝑎𝑟𝑦 𝐴𝑠𝑠𝑒𝑡𝑠:
Software: Software often relies on complementary assets like hardware platforms, operating
systems, and user interfaces, which may not be under the control of the software developer.
This can create challenges in capturing the full value of software innovations.
Hardware: Hardware products often have more control over the complementary assets required
for their use, such as manufacturing equipment, distribution channels, and specialized repair
facilities.
4. Tacit Knowledge and Learning:
Software: Software development often involves tacit knowledge (knowledge that is difficult to
articulate or codify), which can be harder to transfer and protect than explicit knowledge.
Hardware: Hardware development may involve more explicit knowledge that can be more
readily transferred and protected through documentation, patents, and other formal
mechanisms.
In summary, while both software and hardware products face challenges in appropriating the
full value of their innovations, software's ease of replication, the limitations of its legal
protections, and the reliance on complementary assets make its appropriability regime
generally perceived as weaker than that of hardware.

6. In weak appropriability regimes, innovators have had to rely on complementary assets.

Give such examples.

𝑀𝑎𝑛𝑢𝑓𝑎𝑐𝑡𝑢𝑟𝑖𝑛𝑔 𝐴𝑠𝑠𝑒𝑡𝑠: Having the ability to produce the innovation at scale and with the
required quality is essential. Without this, a firm might struggle to meet market demand or
maintain consistent product quality, making it vulnerable to competitors.
𝐷𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑁𝑒𝑡𝑤𝑜𝑟𝑘𝑠: Establishing a robust distribution network is crucial for reaching
customers. This includes physical channels (like retail stores or warehouses) and potentially
online platforms. Without effective distribution, even a superior product might not reach its
intended market.
𝑀𝑎𝑟𝑘𝑒𝑡𝑖𝑛𝑔 𝑎𝑛𝑑 𝑆𝑎𝑙𝑒𝑠: Effective marketing and sales are needed to create awareness of the
innovation and convince customers to purchase it. This includes advertising, promotion, and
building relationships with potential buyers.
𝑆𝑒𝑟𝑣𝑖𝑐𝑒 𝑎𝑛𝑑 𝑆𝑢𝑝𝑝𝑜𝑟𝑡: Providing excellent after-sales service and support can be a key
differentiator, especially for complex products. This can include technical support,
maintenance, and training. Strong service can build customer loyalty and reduce the risk of
switching to a competitor.
𝐻𝑢𝑚𝑎𝑛 𝑅𝑒𝑠𝑜𝑢𝑟𝑐𝑒𝑠: Having skilled personnel, including engineers, researchers, and sales
professionals, is crucial for both developing and commercializing the innovation.
𝐶𝑜𝑚𝑝𝑙𝑒𝑚𝑒𝑛𝑡𝑎𝑟𝑦 𝑇𝑒𝑐ℎ𝑛𝑜𝑙𝑜𝑔𝑖𝑒𝑠: Sometimes, an innovation requires complementary
technologies that are not part of the core invention but are necessary for it to function
effectively. Securing these technologies, either through development or partnerships, can be
vital.
𝐶𝑜𝑛𝑡𝑟𝑜𝑙 𝑜𝑣𝑒𝑟 𝐷𝑖𝑠𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝐶ℎ𝑎𝑛𝑛𝑒𝑙𝑠: Having exclusive or preferred access to key
distribution channels can create a significant barrier to entry for competitors.
7. However, sometimes, appropriability regimes are deliberately weakened as a value
capture stratergy. Discuss the case of Open Source Software.

1. 𝐿𝑖𝑚𝑖𝑡𝑖𝑛𝑔 𝑆𝑢𝑝𝑝𝑜𝑟𝑡 𝑎𝑛𝑑 𝐷𝑜𝑐𝑢𝑚𝑒𝑛𝑡𝑎𝑡𝑖𝑜𝑛: The open-source project might have limited or
no official support channels for the free version. Users might face difficulties finding solutions
to problems or getting timely assistance, especially for complex issues.
Documentation might be sparse or incomplete, making it harder for users to understand and
utilize the software effectively without external help. This creates an incentive for users to seek
out paid support or consulting services from the project's maintainers or third-party providers,
generating revenue for them.
2. 𝑅𝑒𝑠𝑡𝑟𝑖𝑐𝑡𝑖𝑛𝑔 𝐹𝑒𝑎𝑡𝑢𝑟𝑒𝑠 𝑜𝑟 𝑃𝑒𝑟𝑓𝑜𝑟𝑚𝑎𝑛𝑐𝑒: The free version might have certain features
disabled or limited in functionality compared to a paid version.
3. 𝐿𝑎𝑐𝑘 𝑜𝑓 𝐴𝑑𝑣𝑎𝑛𝑐𝑒𝑑 𝐹𝑢𝑛𝑐𝑡𝑖𝑜𝑛𝑎𝑙𝑖𝑡𝑦: The free version might lack advanced features that are
crucial for certain use cases, such as specific integrations, security protocols, or performance
optimizations. This forces users to rely on third-party tools or services to fill the gaps,
potentially increasing their overall costs and complexity.
By offering these features exclusively in the paid version, the project can capture value from
users who need them.
4. 𝐿𝑖𝑚𝑖𝑡𝑒𝑑 𝐶𝑜𝑚𝑝𝑎𝑡𝑖𝑏𝑖𝑙𝑖𝑡𝑦 𝑎𝑛𝑑 𝐼𝑛𝑡𝑒𝑔𝑟𝑎𝑡𝑖𝑜𝑛𝑠: The free version might have limited
compatibility with certain operating systems, hardware, or other software. This can restrict its
usability for some users and make it less attractive compared to a more versatile, paid version.
5. 𝑁𝑒𝑡𝑤𝑜𝑟𝑘 𝐸𝑓𝑓𝑒𝑐𝑡𝑠 𝑎𝑛𝑑 𝐸𝑐𝑜𝑠𝑦𝑠𝑡𝑒𝑚 𝐵𝑢𝑖𝑙𝑑𝑖𝑛𝑔: Open-source projects can leverage their
network effects to drive adoption and create a large user base.While the core functionality is
available for free, they might offer premium services or features that are tailored to specific
industries or use cases.
This allows them to capture value by providing specialized support, training, or custom
development services to users within their ecosystem.
6. 𝑂𝑝𝑒𝑛 𝐶𝑜𝑟𝑒 𝑀𝑜𝑑𝑒𝑙: This involves releasing a core set of functionalities as open-source
software while keeping more advanced or specialized features under a proprietary license.
This allows the project to benefit from community contributions and wider adoption while still
generating revenue from users who need those advanced features.
Examples include databases like MongoDB, where the core database is open-source, but
advanced features like security and performance monitoring are part of a paid offering.