Strategic Management of Technological Innovation Strategic Management of Technological Innovation Fifth Edition Melissa A Schilling New York University STRATEGIC MANAGEMENT OF TECHNOLOGICAL INNOVATION, FIFTH EDITION Published by McGraw-Hill Education, Penn Plaza, New York, NY 10121 Copyright © 2017 by McGraw-Hill Education All rights reserved Printed in the United States of America Previous editions © 2013, 2010, and 2008 No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning Some ancillaries, including electronic and print components, may not be available to customers outside the United States This book is printed on acid-free paper DOC/DOC ISBN 978-1-259-53906-0 MHID 1-259-53906-7 Senior Vice President, Products & Markets: Kurt L Strand Vice President, General Manager, Products & Markets: Michael Ryan Vice President, Content Production & Technology Services: Kimberly Meriwether David Managing Director: Susan Gouijnstook Director: Michael Ablassmeir Brand Manager: Laura Hurst Spell Director, Product Development: Meghan Campbell Marketing Manager: Casey Keske Director, Content Production: Terri Schiesl Program Manager: Faye M Herrig Content Project Manager: Jeni McAtee, Karen Jozefowicz Buyer: Laura Fuller Cover Image: Andrey Prokhorov/Getty Images Compositor: SPi Global Printer: R R Donnelley All credits appearing on page or at the end of the book are considered to be an extension of the copyright page Library of Congress Cataloging-in-Publication Data Names: Schilling, Melissa A., author Title: Strategic management of technological innovation / Melissa A Schilling, New York University Description: Fifth edition | New York, NY : McGraw-Hill Education, [2017] Identifiers: LCCN 2015043171 | ISBN 9781259539060 (alk paper) Subjects: LCSH: Technological innovations—Management | New products—Management | Strategic planning Classification: LCC HD45 S3353 2017 | DDC 658.4/012—dc23 LC record available at http://lccn.loc.gov/2015043171 The Internet addresses listed in the text were accurate at the time of publication The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites mheducation.com/highered About the Author Melissa A Schilling, Ph.D Melissa Schilling is a professor of management and organizations at New York University’s Stern School of Business Professor Schilling teaches courses in strategic management, corporate strategy and technology, and innovation management Before joining NYU, she was an Assistant Professor at Boston University (1997–2001), and has also served as a Visiting Professor at INSEAD and the Bren School of Environmental Science & Management at the University of California at Santa Barbara She has also taught strategy and innovation courses at Siemens Corporation, IBM, the Kauffman Foundation Entrepreneurship Fellows program, Sogang University in Korea, and the Alta Scuola Polytecnica, a joint institution of Politecnico di Milano and Politecnico di Torino Professor Schilling’s research focuses on technological innovation and knowledge creation She has studied how technology shocks influence collaboration activity and innovation outcomes, how firms fight technology standards battles, and how firms utilize collaboration, protection, and timing of entry strategies She also studies how product designs and organizational structures migrate toward or away from modularity Her most recent work focuses on knowledge creation, including how breadth of knowledge and search influences insight and learning, and how the structure of knowledge networks influences their overall capacity for knowledge creation Her research in innovation and strategy has appeared in the leading academic journals such as Academy of Management Journal, Academy of Management Review, Management Science, Organization Science, Strategic Management Journal, and Journal of Economics and Management Strategy and Research Policy She also sits on the editorial review boards of Academy of Management Journal, Academy of Management Discoveries, Organization Science, Strategy Science, and Strategic Organization Professor Schilling won an NSF CAREER award in 2003, and Boston University’s Broderick Prize for research in 2000 v Preface Innovation is a beautiful thing It is a force with both aesthetic and pragmatic appeal: It unleashes our creative spirit, opening our minds to hitherto undreamed of possibilities, while simultaneously accelerating economic growth and providing advances in such crucial human endeavors as medicine, agriculture, and education For industrial organizations, the primary engines of innovation in the Western world, innovation provides both exceptional opportunities and steep challenges While innovation is a powerful means of competitive differentiation, enabling firms to penetrate new markets and achieve higher margins, it is also a competitive race that must be run with speed, skill, and precision It is not enough for a firm to be innovative—to be successful it must innovate better than its competitors As scholars and managers have raced to better understand innovation, a wide range of work on the topic has emerged and flourished in disciplines such as strategic management, organization theory, economics, marketing, engineering, and sociology This work has generated many insights about how innovation affects the competitive dynamics of markets, how firms can strategically manage innovation, and how firms can implement their innovation strategies to maximize their likelihood of success A great benefit of the dispersion of this literature across such diverse domains of study is that many innovation topics have been examined from different angles However, this diversity also can pose integration challenges to both instructors and students This book seeks to integrate this wide body of work into a single coherent strategic framework, attempting to provide coverage that is rigorous, inclusive, and accessible Organization of the Book The subject of innovation management is approached here as a strategic process The outline of the book is designed to mirror the strategic management process used in most strategy textbooks, progressing from assessing the competitive dynamics of the situation, to strategy formulation, and then to strategy implementation The first part of the book covers the foundations and implications of the dynamics of innovation, helping managers and future managers better interpret their technological environments and identify meaningful trends The second part of the book begins the process of crafting the firm’s strategic direction and formulating its innovation strategy, including project selection, collaboration strategies, and strategies for protecting the firm’s property rights The third part of the book covers the process of implementing innovation, including the implications of organization structure on innovation, the management of new product development processes, the construction and management of new product development teams, and crafting the firm’s deployment strategy While the book emphasizes practical applications and examples, it also provides systematic coverage of the existing research and footnotes to guide further reading Complete Coverage for Both Business and Engineering Students vi This book is designed to be a primary text for courses in the strategic management of innovation and new product development Such courses are frequently taught in both business and engineering programs; thus, this book has been written with the needs of business and Preface vii engineering students in mind For example, Chapter Six (Defining the Organization’s Strategic Direction) provides basic strategic analysis tools with which business students may already be familiar, but which may be unfamiliar to engineering students Similarly, some of the material in Chapter Eleven (Managing the New Product Development Process) on computer-aided design or quality function deployment may be review material for information system students or engineering students, while being new to management students Though the chapters are designed to have an intuitive order to them, they are also designed to be self-standing so instructors can pick and choose from them “buffet style” if they prefer New for the Fifth Edition This fifth edition of the text has been comprehensively revised to ensure that the frameworks and tools are rigorous and comprehensive, the examples are fresh and exciting, and the figures and cases represent the most current information available Some changes of particular note include: Six New Short Cases Tesla Motors The new opening case for Chapter Three is about Tesla Motors In 2015, Tesla Motors was a $3.2 billion company on track to set history It had created two cars that most people agreed were remarkable Consumer reports had rated Tesla’s Model S the best car it had ever reviewed Though it was not yet posting profits (see Exhibits and 2), sales were growing rapidly and analysts were hopeful that profits would soon follow It had repaid its government loans ahead of the major auto conglomerates Most importantly, it looked like it might survive Perhaps even thrive This was astonishing as there had been no other successful auto manufacturing start up in the United States since the 1920s However, getting the general public to adopt fully electric vehicles still required surmounting several major hurdles A Battle Emerging in Mobile Payments Chapter Four now opens with a case describing the mobile payment systems that are emerging and competing around the world In the developing world, mobile payment systems promise to help bring the unbanked and underbanked access to fast and efficient funds transfer and better opportunities for saving In the developed world, competing mobile payment standards were b attling to achieve dominance, and threatening to obviate the role of the major credit card companies—putting billions of dollars of transaction fees at stake Reinventing Hotels: citizen M Chapter Six opens with a case about how Michael Levie, Rattan Chadha, and Robin Chadha set out to create a fundamentally different kind of hotel Levie and the Chadhas dramatically reduced or eliminated key features typically assumed to be standard at upscale hotels such as large rooms, in-house restaurants, and a reception desk, while increasing the use of technology at the hotel and maintaining a modern and fresh aesthetic This enabled them to create a stylish hotel that was significantly less expensive than typical upscale hotels This case pairs very well with the new Research Brief in Chapter Six on Blue Ocean Strategy The Mahindra Shaan: Gambling on a Radical Innovation Chapter Seven opens with a case about the decision of Mahindra & Mahindra to make a very unusual tractor Mahindra & Mahindra had long made traditional tractors and focused on incremental innovation However, in the late 1990s, Mahindra’s management decided to try to find the way to meet the needs of smaller farmers, who could not afford a regular tractor They ended viii Preface up creating the Shaan, a tractor/transporter hybrid that could serve for farming, personal transportation, and for transporting goods (a job small farmers performed in the off season to earn additional income) Developing the tractor was a major break with their traditional innovation choices, and this case details how they were able to get this unusual project approved, and nurture it through the new product development process Ending HIV? Sangamo Biosciences and Gene Editing Chapter Eight opens with a case ripped straight from the headlines—the development of ways to alter a living person’s genes to address critical ailments Sangamo Biosciences has developed a way to edit a person’s genes with Zinc Finger Nucleases (ZFNs) This innovation has the potential to eliminate monogenic diseases such as hemophilia or Huntington’s disease Even more intriguingly, Sangamo was exploring a way to use ZFNs to cure HIV by giving people a mutation that renders people naturally immune to the disease In the case, Sangamo must decide how to address this huge—but incredibly risky— opportunity It already has partnerships with major pharma companies for some of its other projects, but it is unclear whether the pharma companies would want to participate in the HIV project, and whether Sangamo would want to go this route Managing Innovation Teams at Disney Chapter Twelve now opens with a case about how Disney creates and manages the teams that develop animated films Disney, and Pixar (from whom it acquired several of its current innovation practices) are world renown for their ability to develop magically innovative animated films This opening case highlights the roles of having a small team size, being collocated, and instilling a culture of brutally honest peer feedback Cases, Data, and Examples from Around the World Careful attention has been paid to ensure that the text is global in its scope The opening cases feature companies from India, Israel, Japan, The Netherlands, Kenya, and the United States, and many examples from other countries are embedded in the chapters themselves Wherever possible, statistics used in the text are based on worldwide data More Comprehensive Coverage and Focus on Current Innovation Trends In response to reviewer suggestions, the new edition now provides more extensive discussions of topics such as crowdsourcing and customer co-creation, patenting strategies, patent trolls, Blue-Ocean Strategy, and more The suggested readings for each chapter have also been updated to identify some of the more recent publications that have gained widespread attention in the topic area of each chapter Despite these additions, great effort has also been put into ensuring the book remains concise—a feature that has proven popular with both instructors and students Supplements The teaching package for Strategic Management of Technological Innovation is available online from the book’s Online Learning Center at www.mhhe.com/schilling5e and includes: ∙ An instructor’s manual with suggested class outlines, responses to discussion questions, and more ∙ Complete PowerPoint slides with lecture outlines and all major figures from the text The slides can also be modified by the instructor to customize them to the instructor’s needs ∙ A testbank with true/false, multiple choice, and short answer/short essay questions ∙ A suggested list of cases to pair with chapters from the text Acknowledgments This book arose out of my research and teaching on technological innovation and new product development over the last decade; however, it has been anything but a lone endeavor I owe much of the original inspiration of the book to Charles Hill, who helped to ignite my initial interest in innovation, guided me in my research agenda, and ultimately encouraged me to write this book I am also very grateful to colleagues and friends such as Rajshree Agarwal, Juan Alcacer, Rick Alden, William Baumol, Bruno Braga, Gino Cattanni, Tom Davis, Sinziana Dorobantu, Gary Dushnitsky, Douglas Fulop, Raghu Garud, Deepak Hegde, Hla Lifshitz, Tammy Madsen, Rodolfo Martinez, Goncalo Pacheco D’Almeida, Jaspal Singh, Deepak Somaya, Bill Starbuck, and Christopher Tucci for their suggestions, insights, and encouragement I am grateful to executive brand manager Mike Ablassmeir and marketing manager Casey Keske I am also thankful to my editors, Laura Hurst Spell and Diana Murphy, who have been so supportive and made this book possible, and to the many reviewers whose suggestions have dramatically improved the book: Joan Adams Baruch Business School (City University of New York) Cathy A Enz Cornell University Shahzad Ansari Erasmus University Robert Finklestein University of Maryland–University College B Rajaram Baliga Wake Forest University Sandra Finklestein Clarkson University School of Business Sandy Becker Rutgers Business School Jeffrey L Furman Boston University David Berkowitz University of Alabama in Huntsville Cheryl Gaimon Georgia Institute of Technology John Bers Vanderbilt University Elie Geisler Illinois Institute of Technology Paul Bierly James Madison University Sanjay Goel University of Minnesota in Duluth Paul Cheney University of Central Florida Andrew Hargadon University of California, Davis Pete Dailey Marshall University Steven Harper James Madison University Robert DeFillippi Suffolk University Donald E Hatfield Virginia Polytechnic Institute and State University Deborah Dougherty Rutgers University ix 306 Part Three Implementing Technological Innovation Strategy Preannouncements and Press Releases A firm that aggressively promotes its products can increase both its actual installed base and its perceived installed base Even products that have relatively small installed bases can obtain relatively large mindshares through heavy advertising Since perceived installed base may drive subsequent adoptions, a large perceived installed base can lead to a large actual installed base Such a tactic underlies the use of “vaporware”—preadvertised products that are not actually on the market yet and may not even exist—by many software vendors By building the impression among customers that a product is ubiquitous, firms can prompt rapid adoption of the product when it actually is available Vaporware may also buy a firm valuable time in bringing its product to market If other vendors beat the firm to market and the firm fears that customers may select a dominant design before its offering is introduced, it can use vaporware to attempt to persuade customers to delay purchase until the firm’s product is available The Nintendo 64 provides an excellent example In an effort to forestall consumer purchases of 32-bit systems, Nintendo began aggressively promoting its development of a 64-bit system (originally named Project Reality) in 1994, though the product would not actually reach the market until September 1996 The project underwent so many delays that some industry observers dubbed it “Project Unreality.” Another interesting vaporware example was Nintendo’s rewritable 64M disk drive Though the product was much hyped, it was never introduced Major video game producers also go to great lengths to manage impressions of their installed base and market share, often to the point of exaggeration or deception For example, at the end of 1991, Nintendo claimed it had sold million units of the SNES to the U.S market, while Sega disagreed, arguing that Nintendo had sold 1 million units at most Nintendo also forecast that it would sell an additional 6 million units by the end of 1992 (actual installed base of Super Nintendo systems in the United States reached just over million units in 1992) By May 1992, Nintendo was claiming a 60 percent share of the 16-bit market, and Sega was claiming a 63 percent share Similar tactics were deployed in the battle for the 32/64-bit market For example, in October 1995, Sony announced to the press that it had presold 100,000 consoles in the United States, to which Mike Ribero, Sega’s executive vice president for marketing and sales, countered that Sony’s figures were deceptive, arguing that many preorders would never materialize into actual purchases.11 Reputation When a firm is poised to introduce a new technological innovation, its reputation for both technological and commercial competence will critically influence the market’s expectation about its likelihood of success.12 Customers, distributors, and complementary goods producers will use the firm’s track record for technological innovation as an indicator of the new product’s functionality and value The firm’s prior commercial success acts as an indicator of the firm’s ability to build and manage the necessary support network around the new technology (distribution, advertising, alliances) to create the necessary momentum in the installed base–complementary goods cycle When Sega entered the video game market, it had the benefit of having several highly successful arcade games to its credit (both Atari and Nintendo had also been arcade game producers before developing home video games) The company had a reputation for Chapter 13 Crafting a Deployment Strategy 307 Research Brief Creating an Information Epidemic Some individuals, by virtue of their natural proclivities and talents, can initiate a cascade of information that travels with startling momentum through a population Such individuals can have a remarkable effect on marketplace behavior Gladwell identifies three distinct types of individuals who have such a disproportionate amount of influence: connectors, mavens, and salespersons.a Connectors are individuals who tend to form an exceptionally large circle of acquaintances Sociologists have found that if a random sample of people is asked to identify the individuals they know on a first-name basis, connectors will identify many times the number of people an average person identifies.b These people may have an exceptionally high social drive; they also tend to have a knack for remembering people’s names and keeping track of social details such as birthdays However, it is not just the quantity of acquaintances that distinguishes connectors Connectors also tend to have a diverse array of affiliations They may belong to a number of different kinds of clubs, associations, or other social institutions They belong to multiple social worlds Thus, connectors can bring together people who would otherwise be unlikely to meet Mavens are individuals who are driven to obtain and disseminate knowledge about one or more of their interests Economists have widely studied “market mavens,” otherwise known as “price vigilantes.” These individuals will closely track the prices charged by various retailers (or other market outlets) and will vociferously complain if they find something inappropriate, such as a promotion that is misleading.c Other mavens may take great pride in always knowing the best restaurants or hotels, or they may be avid readers of Consumer Reports Mavens not only collect information, but they are also keenly interested in educating others They will frequently volunteer information and derive great pleasure out of helping other consumers Finally, salespersons are those individuals who are naturally talented persuaders Such individuals are gifted at providing verbal responses that their listener is likely to find compelling They may also have an acute ability to send and respond to nonverbal cues, enabling them to influence other people’s emotional response to something These individuals can infect others with their mood!d Any of these individuals is capable of sparking an information epidemic While a connector with a valuable piece of information is likely to expose a great number and diversity of people, the maven is likely to convey the information to fewer people but in more detail, making it more convincing The salesperson may not expose as many people as the connector and may not be driven to acquire and disseminate the volumes of information that the maven transmits, but the people the salesperson does transmit information to are likely to find it irresistible Some individuals possess more than one of these traits simultaneously, making them a veritable typhoon of influence in the marketplace a Adapted from M Gladwell, The Tipping Point (Boston: Little, Brown and Company, 2000) b A L Barabasi, Linked: The New Science of Networks (Cambridge, MA: Perseus Books, 2002) c L F Feick and L L Price, “The Market Maven: A Diffuser of Marketplace Information,” Journal of Marketing 51 (1987), pp 83–97 d E Hatfield, J T Cacioppo, and R L Rapson, Emotional Contagion (Cambridge: Cambridge University Press, 1994); and H Friedman et al., “Understanding and Assessing Nonverbal Expressiveness: The Affective Communication Test,” Journal of Personality and Social Psychology 39, no (1980), pp 333–51 developing exciting games, and this reputation may have facilitated customer acceptance of its 16-bit challenge to Nintendo’s 8-bit dominance By contrast, when Sony entered the video game market, it did not have the arcade background that underscored the other primary competitors However, it did have a wealth of technological expertise as a consumer electronics manufacturer and exceptional brand equity in electronic products Furthermore, Sony had demonstrated its ability to win a format war through its successful introduction of the CD format (with Philips) that supplanted vinyl records and analog cassettes 308 Part Three Implementing Technological Innovation Strategy Similarly, reputation was probably Microsoft’s greatest strength in the battle for dominance over 128-bit video game systems Microsoft’s near monopoly in the personal computer operating system market was achieved through its unrivaled skill in using network externalities to its advantage Microsoft had skillfully leveraged its controlling share in PC operating systems into domination over many categories of the software market, obliterating many would-be competitors Microsoft’s reputation sent a strong signal to distributors, developers, and customers that would shape their expectations for its future installed base and availability of complementary goods Microsoft’s success was not assured, but it was a powerful force to be reckoned with Credible Commitments A firm can also signal its commitment to an industry by making substantial investments that would be difficult to reverse For example, it was well publicized that Sony spent more than $500 million developing the PlayStation, in addition to manufacturing the system and establishing an in-house games development unit By contrast, 3DO’s cumulative research and development costs at the launch of its multiplayer were less than $37 million, and the company utilized a strategy whereby all console and game production was performed by third parties Thus, 3DO may not have signaled the market that it had enough confidence in the platform to bear the brunt of the capital risk Summary of Chapter A firm can use its launch timing strategy to take advantage of business cycle or seasonal effects, to influence its positioning vis-à-vis competitors, and to ensure that production capacity and complementary goods are sufficiently available at time of launch The launch timing decision must also consider the need to harvest cash flows from existing product generations versus the advantages of willingly cannibalizing existing products to preempt competitors 3 Successful deployment requires striking a careful balance between making a system open enough to attract complementary goods providers (and/or other producers if that is desirable) and protected enough to ensure that product quality, margins, and compatibility can be sustained Common pricing strategies for technological innovations include market skimming and penetration pricing While the first attempts to maximize margins earned on early sales of the product, the second attempts to maximize market share Pricing strategies should consider the firm’s ability to earn profits from sales of complementary goods or services—if profits from complements are expected to be high, lower prices on the platform technology may be warranted Firms can manipulate the customer’s perception of the product’s price (and the timing of cash flows) through the timing of when the price is paid Intermediaries provide a number of valuable roles in the supply chain, including breaking bulk, transporting, carrying inventory, providing selling services, and managing customer transactions Sometimes a firm can accelerate distribution of its innovation by forging relationships with distributors, bundling the good with others that have a wider installed Chapter 13 Crafting a Deployment Strategy 309 base, sponsoring large customer groups, or providing sales guarantees to distributors or complements producers Marketing methods vary in attributes such as cost, reach, information content, duration of exposure, flexibility of message, and ability to target particular segments of the market When designing the marketing plan, the firm must take into account both the nature of the innovation (e.g., Is it complex? Are benefits easy to observe?) and the nature of the customer (e.g., Does the customer require in-depth technical detail? Is the customer likely to be influenced by brand images and/or reputation? How much uncertainty is the customer likely to tolerate?) Marketing strategies can influence the market’s perception of how widely used the product is or will be, and thus can influence the behavior of customers, distributors, and complementary goods producers Preannouncements, the firm’s reputation, and credible commitments can all influence the market’s assessment of the product’s likelihood of success Discussion Identify one or more circumstances when a company might wish to delay introducing its product Questions What factors will (or should) influence a firm’s pricing strategy? Pick a product you know well What intermediaries you think are used in bringing this product to market? What valuable services you think these intermediaries provide? What marketing strategies are used by the producers of the product you identified for Question 3? What are the advantages and disadvantages of these marketing strategies? Suggested Further Reading Classics Corey, E R., F V Cespedes, and V K Rangan, Going to Market: Distribution Systems for Industrial Products (Boston: Harvard Business School Press, 1989) Gladwell, M., The Tipping Point (Boston: Little, Brown and Company, 2000) Mohr, J J., S Sengupta, and S F., Slater, Marketing of High-Technology Products and Innovations, 3rd ed (Upper Saddle River, NJ: Prentice Hall, 2009) Moore, G., Crossing the Chasm: Marketing and Selling Technology Products to Mainstream Customers (New York: HarperCollins, 1991) Rogers, E M., Diffusion of Innovations, 5th ed (New York: Free Press, 2003) Schilling, M A., “Technological Leapfrogging: Lessons from the U.S Videogame Industry,” California Management Review 45, no (2003), pp 6–32 Recent Work Aral, S and D Walker, “Creating Social Contagion through Viral Product Design: A Randomized Trial of Peer Influence in Networks,” Management Science 57 (2011), pp 1623–1639 310 Part Three Implementing Technological Innovation Strategy Chen, Y., and J Xie, “Online Consumer Review: Word-of-mouth as a New Element of Marketing Communication Mix,” Management Science 54 (2008), pp 477–91 Hinz, O, B Skiera, C Barrot, and J U Becker, “Seeding Strategies for Viral Marketing: An Empirical Comparison,” Journal of Marketing 75, no (2011), pp 55–71 Liu, H., “Dynamics of Pricing in the Video Game Console Market: Skimming or Penetration Pricing?” Journal of Marketing Research 47 (2010), pp 428–443 Reinders, M J., R T Frambach, and J P L., Schoormans, “Using Product Bundling to Facilitate the Adoption Process of Radical Innovations,” Journal of Product Innovation Management 27 (2010), pp 1127–1140 Endnotes J Johng, Y Kang, M A Schilling, J Sul, and M Takanashi, “Honda Insight: Personal Hybrid,” New York University teaching case, 2003 Lynley, M “Dropbox now has more than 400 million registered users,” www.techcrunch.com (2015), June 24th Schilling, “Technological Leapfrogging”; and M A Schilling, “Winning the Standards Race: Building Installed Base and the Availability of Complementary Goods,” European Management Journal 17 (1999), pp 265–74 D Machan, “Great Job—You’re Fired,” Forbes 158, no (1996), pp 145–46 Reinders, MJ, Frambach, RT, and Schoormans, JPL “Using Product Bundling to Facilitate the Adoption Process of Radical Innovations,” Journal of Product Innovation Management 27 (2010):1127–1140 6 O Hinz, B Skiera, C Barrot, and J U Becker, “Seeding Strategies For Viral Marketing: An Empirical Comparison,” Journal of Marketing 75 (2011) (November), pp 55–71; see also M Bampo, M T Ewing, D R Mather, D Stewart and M Wallace, “The Effects Of Social Structure Of Digital Networks On Viral Marketing Performance,” Information Systems Research 19 (2008) (3), pp 273–90 P Kotler, Marketing Management (Upper Saddle River, NJ: Prentice Hall, 2003) See also Y Chen and J Xie, “Online Consumer Review: Word-Of-Mouth As A New Element Of Marketing Communication Mix,” Management Science 54 (2008), pp 477–91 E M Rogers, Diffusion of Innovations, 3rd ed (New York: Free Press, 1983) J Mohr, Marketing of High-Technology Products and Innovations (Upper Saddle River, NJ: Prentice Hall, 2001) 10 G Moore, Inside the Tornado (New York: Harper Business, 1995) 11 M E McGann, “Crossing Swords,” Dealerscope Consumer Electronics Marketplace 37, no 10 (1995), pp 63–65; and Schilling, “Technological Leapfrogging.” 12 R K Chandy and G Tellis, “The Incumbent’s Curse? Incumbency, Size, and Radical Product Innovation,” Journal of Marketing 64, no (2000), pp 1–18 Index A Aaker, D A., 106 Abernathy, W J., 62, 64, 66 Absorptive capacity explanation of, 72 prior learning and, 72–73 research and development and, 28 Achrol, R S., 232 Acs, A J., 232 Adler, P S., 233 Adopters, 303–305 Advertising, 301–303 Affordable luxury, 110 Agarwal, R., 105 Agglomeration economies, 35 Ahlstrom, D., 10 Ahuja, G., 41 Aiken, M., 280 Aiman-Smith, Lynda, 247 Alden, David, 236 Alden, Paul, 236 Alden, Rick, 235, 238, 239, 240 Alderucci, D., 206 Aldrich, H E., 128 Ali, A., 261 Allen, K R., 151 Allen, Paul, 95 Allen, T J., 279, 280 Allers, K., 160 Alliance contracts, 177 Alliances, 162 Almeida, P., 41, 42, 180 Alter, A E., 263 Amabile, T M., 39, 40 Ambidextrous organizations, 220–222 America Online, 300 Amicone, Michael, 187 Amram, M., 150 Ancona, D G., 270, 279, 280 Ander, R., 65 Anderson, E., 263 Anderson, N., 279 Anderson, P., 62, 64, 66, 234, 270 Anderson, Tom, 90 Ansari, A., 263 Apple, 67, 78, 163, 164, 169, 173, 184–186, 221, 241 Applied research, 26 Appropriability, 188 Aquino, E C., 263 Aral, S., 310 Arbouw, A R., 261 Architectural control explanation of, 201 incentives for, 204 Architectural innovation, 50–51 Argote, L., 87, 88 Argyres, N., 104, 224, 231, 234 Arnold, M., 18 Arora, A., 231 Arrow, K J., 10 Arthur Keown, J., 180 Arthur, W B., 87, 88, 106, 207, 261 Ashkenas, R., 232 Asmus, D., 262 Astebro, T B., 206 Atari, 283 Audretsch, D B., 232 Autonomous teams, 272–273 B Baba, Y., 41 Backward compatible, 294–295 Balakrishnan, M., 70 Balanced scorecard, 124–125 Balasubramanian, S., 118 Baldwin, C Y., 234 Baloff, N., 88 Bamford, J., 181 Bampo, M., 310 Barabasi, A L., 307 Barbas, C F III, 160 Barczak, G., 263, 281 Barfoot, Chuck, 25 Bargaining power, 113–114 Barney, J., 127 Barney, J B., 206 Barron, F., 39 Barrot, C., 310 Bartlett, C A., 128, 181, 220, 227, 229, 230, 234 Basic research, 26 Basu, R., 247 Baum, J A., 233 Baum, J A C., 180 Baumol, W., 206 Baumol, W J., 10 Bayh-Dole Act (1980), 29 Beauchamp, T., 127 Beauregard, M R., 40 Becker, D., 291 Becker, J U., 310 Becker, S W., 65 Beinhocker, E D., 87 Belenzon, S., 231 Bell, Alexander Graham, 24 Belliveau, P., 281 Bell Laboratories, 148, 202 Benaroch, M., 151 Bender, J., 23 Benner, J M., 233 Berger, M., 280 Berggren, E., 261 Berman, S L., 127 Berne Union for the Protection of Literary and Artistic Property (Berne Convention), 196 Bessant, J., 150 Beta testing, 246 Bettenhausen, K L., 280 Bier, I., 263 Biese, M., 41 Bigelow, L., 104, 231 Bijker, W E., 64 Binns, A., 127 Biotechnology industry, 257 Birou, L., 263 Black, James, 244 Blazevic, V., 262 Bleeke, J., 182 Boden, M., 39 Boeing, 142, 225–226, 248 Bollinger, B., 87 Bonaccorsi, A., 262 Borgatti, S., 232 Boudreau, J., 47 Boulding, W., 105 Bound, J., 205, 207, 232 Bourke, J., 110 Bower, J L., 233 Bowie, N., 127 Bowman, E H., 150, 151 Bradbury, D., 22 Bradsher, K., 181 Brandenberger, A., 88, 290 Brandenburger, A M., 127 Brand loyalty, 93–94 311 312 Index Breschi, S., 42 Brewer, M., 180 Bridges, W P., 231 Brinkley, J., 207 Brin, Sergey, 211 Brooks, S., 179, 207 Brown, J S., 234 Brown, R., 65 Brown, S., 11, 280, 281 Bruce, Ian, 24 Brunner, D., 150 Brussels Convention Relating to the Distribution of Program- Carrying Signals Transmitted by Satellite, 196 Brynjolfsson, E., 234 Bundling, 300 Burgelman, R., 128 Burley, J., 11 Burnet, Frank MacFarlane, 23, 40 Burns, T., 230 Burt, R S., 41 Bushnell, Nolan, 283 Butler, J E., 262 Buyer switching costs, 94–95 Buyer Utility Map, 77, 78 Byrne, J A., 151 C Cacioppo, J T., 307 Calabrese, T., 180 Caldwell, D F., 270, 279, 280 Call options, 138–139 Cannibalization, 293 Canon, 121, 163 Capability complementation, 165 Capability transfer, 165 Capital rationing, 131 Cardinal, L., 217, 233 Carley, M., 206 Carnevalli, J A., 261, 263 Carpenter, Jake Burton, 25 Carter, C R., 261, 262 Carter, T., 106 Casadesus-Masanell, R., 87 Casually ambigious resources, 118 Catmull, E., 266, 267 Center-for-global strategy, 227 Centralization, 216–217 Cespedes, F V., 309 Chadha, Rattan, 109 Chadha, Robin, 109 Chakrabarti, A K., 231, 232, 262 Chandler, A., 230 Chandy, R K., 263, 310 Chan Kim, W., 77, 78 Chan, T., 151 Chao, L P., 263 Chapter openers citizenM, 109–110 deployment strategy, 283–291 digital music distribution, 183–187 Given Imaging, 15–17 Google, 211–212 HIV, 153–160 Mahindra Shaan, 129–131 mobile payments, 67–70 Skullcandy, 235–240 social networking, 89–92 Tesla, 43–46 Walt Disney Company, 265–267 Charge-coupled devices (CCDs), 15, 16 Charnes, A W., 151 Chen, D., 92 Chen, E L., 105 Chen, Y., 309, 310 Chesbrough, H., 39, 179, 232, 234, 261 Chesbrough, H.W., 181 Chiu, R., 291 Chou, C., 291 Chowdhury, J., 231, 233 Christen, M., 105 Christensen, C M., 64, 66, 233 Christenson, C., 151 Chrysler, 223, 248, 268 Churbuck, D., 232 Church, A H., 40 citizenM, 109–110 Clark, K B., 65, 66, 143, 150, 151, 207, 234, 260, 262, 263, 281 Clausing, D., 263 Clayton, L D., 280 Coates, D., 128 Cohen, M A., 279 Cohen, W., 42 Cohen, W M., 41, 88, 231, 232 Coleman, H J., 232 Collaboration strategies advantages of, 163–164 method to choose, 170–172 overview of, 160 partner selection and, 173–174, 177 reasons to avoid, 161–162 types of, 164–170 Collaborative networks explanation of, 32–33 strategic positions in, 175–176 technological spillovers and, 37 technology clusters and, 34–37 Collective research organizations, 170, 172 Collins, B E., 279 Colombo, M., 41 Commandeur, H R., 261 Competence-destroying innovation, 49–50 Competence-enhancing innovation, 49–50 Complementary goods entry timing and, 100 explanation of, 73, 80 technology value and, 201 Complementary metal oxide semiconductors (CMOS), 16 Complementors, 27 Complements, 114–115 Complex, 35 Component innovation, 50–51 Computer-aided design (CAD), 256 Computer-aided manufacturing (CAM), 256 Condon, S., 23 Conjoint analysis, 145, 146 Connectors, 307 Conner Peripherals, 300 Consignment, 301 Contract book, 275 Contract manufacturing, 169 Cooper, R., 260, 263 Cooper, R G., 151, 250, 262, 263 Cooper, W., 151 Copeland, M V., 47, 226 Copyrights See also Intellectual property explanation of, 189, 195–196 international protections for, 196 Core competencies dynamic capabilities and, 121 explanation of, 119 identification of, 119–121 risks associated with, 120–121 Corey, E R., 309 Corning, 166, 252 Corsig, A., 244 Cotterel, A., 232 Courtyard by Marriott, 146 Covin, J G., 233 Coyeh, L Y., 263 Crafts, N., 11 Crawford, M C., 261 Creativity See also Innovation explanation of, 20 individual, 20 organizational, 20–21 translated into innovation, 22–24, 26–27 Cringely, R., 200 Crisp, C B., 281 CRISPR technology, 156–157 Cristiano, J J., 263 Cross-functional teams, 268 Crowdsourcing, 248–249 Crump, J G., 182 Csaszar, FA., 216, 233 Cugnot, Nicolas Joseph, 54 Index 313 Cummins, C., 205, 207, 207, 232 Customers bargaining power, 113–114 entry timing and preferences of, 99 new product development and, 246, 248 role of, 141 Cusumano, M A., 87, 258 D Daewoo, 173 Daft, R L., 65, 231, 233 Dahlin, K B., 206 Damanpour, F., 231, 280, 281 Danneels, E., 150 Darr, E D., 88 Das, T K., 182 Data envelopment analysis (DEA), 147–148 Davenport, T H., 213 David, P A., 104, 105 Davy, Humphry, 55 Day, D., 247 Day, G S., 106 Debye, P., 24, 40 Decision making, 216, 218 Decker, S., 206, 207 DeFillippi, R J., 128 DEKA Research, 96, 255 de Laat, P B., 206 Dell Computer, 218 Delmastro, M., 41 Delphi Automotive, 168 Demand-pull model, 27 De Meyer, A., 262 Denton, Mike, 225–226 Deployment strategies distribution and, 297–301 launch timing and, 292–293 licensing and compatibility and, 294–295 marketing and, 301–308 overview of, 291–292 pricing and, 295–297 Design for manufacturing (DFM), 254–255 Design patents, 189 Desimone, “Desi,”, 219–220 Devaney, M., 262 Development, 26 Development cycle time, 242 Devine, D J., 280 Dewar, R.D., 65 DeWolfe, Chris, 90 Dhebar, A., 261 Digital music distribution, 183–187 Dignan, L., 61 DiMasi, J A., 11, 105 Ding, M., 150 Direct sales, 297–299 Disaggregated organizations, 215 Discontinuous technologies, 53 Discounted cash flow methods explanation of, 133, 135 internal rate of return, 133, 137 net present value, 135–137 Discounted payback period, 136–137 Disintermediation, 298 Distribution direct vs intermediaries, 297–299 strategies to accelerate, 299–301 Diversity, on teams, 269 Dodgson, M., 41 Doerr, John, 23 Dominant design explanation of, 70, 71 government regulation and, 75–76 learning effects and, 71–73 network externalities and, 73, 75 winner-take-all markets and, 76 Donaldson, T., 127 Dorotic, M., 263 Dorsey, Jack, 90 Dosi, G., 64, 88, 128 Dougherty, D., 231, 233 Doz, Y., 165, 166, 180, 181 Doz, Y L., 180, 234 Drew, C., 226 Dropbox, 296–297 Drug development, 153–154 Duhigg, C., 181 Dunford, B B., 280 Dushnitsky, G., 135 Dutton, J., 88 Dutton, J E., 65 Dvorak, August, 95 Dvorak keyboard, 94–95 Dyer, J H., 42 Dynamic capabilties, 121 E Early followers, 93 Eberhard, Martin, 43–45 Eccles, R., 42 Edgett, S J., 151 Edison, Thomas Alva, 24, 55 Edmondson, A C., 267, 279 Efficiency frontier, 147 Einstein, Albert, 24 Eisenhardt, K M., 11, 128, 262, 280, 281 Eisenmann, T R., 92 Eliashberg, J., 150, 279 Eli Lilly, 175 Elkin, T., 291 Enabling technologies entry timing and, 100 explanation of, 96 Eng, A., 25 Entrants, 93, 113 Entry barriers, 100–101, 113 Entry timing explanation of, 93 factors influencing, 99–103 first-mover advantages and, 93–95 first-mover disadvantages and, 95–98 strategies to improve, 103 Epple, D., 88 Equity ownership, 177 Ericsson, 163 Ernst, D., 182 Ernst, H., 281 Esmundo, M., 65 Espino, R L., 263 Essner, D., 207 Ethiraj, S., 65 Ettlie, J E., 231 European Union (EU), 75 Evanisko, M., 280 Evans, 128 Evans, P., 128 Evan, W., 127 Ewing, M T., 310 Exit barriers, 113 External analysis Porter’s five-force model for, 111–114 stakeholder analysis for, 115 Externalities, F Facebook, 90 Faden, L B., 105 Failure modes and effects analysis (FMEA), 255–256 Fang, C., 231, 233 Fanning, Shawn, 184 Farmos Group Limited, 304 Fawcett, S., 263 Federal Communications Commission (FCC), 75, 94 Feick, L F., 307 Feinstein, B., 92 Ferdowsi, Arash, 296 Ferguson, C., 105 Ferguson, C H., 207 Filatotchev, I., 182 Financing sources, for new technology ventures, 134–135 First movers advantages of, 93–95 disadvantages of, 95–98 explanation of, 93 Fischer, W A., 232 314 Index Fisher, W.W., 206 Five-force model (Porter), 111–114 Fleming, L., 65, 150 Flextronics, 169 Folta, T B., 139, 150 Formalization, 217 Foster, R., 65 Foster, R N., 262 Fragmentation, control over, 204 Fraley, R T., 179 Frambach, R T., 310 Frankel, D., 291 Franke, N., 263 Franklin, Benjamin, 24 Fraunhofer IIS, 183–184 Freeman, C., 41, 262 Freeman, R E., 127 Freemium, 296 Frensch, P A., 40 Friedman, H., 307 Friedman, T L., 10 Friendster, 89–90 Friesen, P H., 280 Fuel cells, 97 Fulton, R., 36 Functional teams, 271–273 G Gabbay, S., 39 Gadkari, G., 23 Gage, Tom, 44 Gaj, T., 60 Gallon, M., 128 Gambling on a Radical Innovation, 129–131 Garman, A R., 261 Garud, R., 65, 207 Gaskin, S., 106 Gassman, O., 276, 277 Gates, Bill, 95 Gattiker, T F., 261, 262 Gavetti, G., 128 Gawer, A., 87, 206 Geibel, Jonathan, 265–267 General Electric (GE), 166 General Motors, 173 Geroski, P A., 65 Gersbach, C A., 60 Ghoshal, S., 180, 227, 229, 230, 234 Gibson, C B., 281 Gilad, Shachar, 187 Gilder, G., 232 Gilfillan, S C., 36, 41 Gillette, Walt, 142–143, 162 Gillingham, K., 87 Gilmore, J., 264 Girolami, Paul, 244 Given Imaging, 15–17 Gladwell, M., 65, 307, 309 Glaxo Holdings, 244 Globally linked strategy, 228 Gluck, F W., 262 Glukhovsky, A., 18 GO Corporation, 102 Go/kill decision points, 250 Goldense, B L., 264 Golder, P., 95, 105, 217 Golder, P N., 104, 105, 233, 234 Goldhar, J D., 233 Gomes-Casseres, B., 181 Gompers, P A., 135 Gong, Feng, 16 Google, 21, 79, 89–92, 211–213, 297 Gorski, C., 40 Goto, A., 42 Gotsopoulos, A., 105 Governance, 174, 177 Governments regulation of technologies by, 75–76 research funded by, 29–32 start-up funds from, 134 Govindarajan, V., 70 Gowan, Michael, 187 Graham, M B., 128 Graham, Stuart, 193, 206 Greene, J., 291 Greenfeld, Karl Taro, 187 Green, S., 247 Greenspan, Brad, 90 Greis, N P., 232 Griffin, A., 231, 232, 247, 261, 263, 281 Griffin, J., 262 Griffin, R W., 40 Griliches, B H., 232 Griliches, Z., 205, 207, 207 Grodal, S., 105 Gross domestic product (GDP), 2–4 Grove, Andy, 56, 212 Grove, A S., 61 Groysberg, B., 22 Guare, John, 89 Guetzkow, H., 279 Gulati, R., 182 Gumbus, A., 125 Gunter, L., 151, 180 Gurbaxani, V., 234 Guzzo, R A., 280 H Hadju, J., 290 Hagedoorn, J., 41, 179 Hage, J., 280 Hagel, J., 232, 234 Hagerdoon, J., 180 Hall, B., 135 Hall, B H., 205, 207, 207, 232 Halperin, M R., 232 Hamel, G., 119, 120, 127, 128, 165, 166, 169, 180, 181 Hamilton, W., 150 Hansen, M T., 42, 279 Hansen, V., 41 Hardy, Q., 206 Hargadon, A., 36 Hargadon, A B., 41 Harrigan, K R., 181 Harrison, D A., 280 Hartung, A., 92 Hatch, N W., 87 Hatfield, E., 307 Hauser, J R., 261, 263 Hayes, R., 262 Heavyweight teams, 272, 273 Hedlund, G., 234 Heeley, M B., 233 Hegde, Deepak, 193, 206 Heinekamp, E., 40 Helft, M., 70 Helin, A I., 151 Henderson, R., 42, 65, 66, 87, 207 Henry G Grabowski, 11, 160 Henry VI, 188–189 Herper, M., 160 Hersher, R., 160 Herstatt, C., 249, 262 Hess, A M., 127 Hesseldahl, A., 291 Hesterly, W., 232, 234 Hewlett-Packard, 164 Hi5, 91 Hill, C W L., 179, 181, 182, 207, 281 Hilti AG, 249 Hinsz, V B., 279 Hinz, O., 310 Hise, P., 226 Hisey, P., 291 Hitt, L M., 234 Hitt, M A., 128, 179, 181, 207, 233 HIV, 153–160 Hoegl, M., 281 Hoetker, G., 234 Hoffman, J., 160 Holmes, J., 181 Holmes, S., 226 Homophily, 269 Honda, 48, 296 Horley, A., 262 Horsch , R B., 179 Horseley, A., 41 Hoskisson, R., 179, 207 Ho, T., 279 Houston, Drew, 296 Hout, T M., 10 Hoyer, W D., 263 Hrebiniak, L G., 128 Index 315 Hugger, G., 160 Hughes, Chris, 90 Hughes, T P., 40, 64 Hulsheger, U R., 279 Hung, Y C., 281 Hunter, 144 Huntington’s disease (HD), 154 Hurry, D., 150–151 Huston, L., 181 I Iansiti, M., 257, 279 IBM, 57, 74, 95, 164, 169, 175, 200, 268, 275, 294 Icarus Paradox, 215 Iddan, Gavriel, 15, 16, 18, 20 Idea collection systems, 21 Ideas, 20 IKEA, 222, 223 Imai, K., 41 Immunity to HIV, 158–159 Increasing returns, 77, 101 Incremental innovation, 48–49 Incubators, 29, 31, 32 Incumbent inertia, 96 Information epidemic, 307 Information technology, 224 Innovation across boarders, 226–229 alliances to work on, 27–28 architectural vs component, 50–51 in collaborative networks, 32–37 competence-enhancing vs competence-destroying, 49–50 creativity and, 20–26 dominant design and, 70–76 early adoption of, 102 elements of, 4–5 entry timing and, 99–103 explanation of, external vs internal sourcing of, 28 government-funded research for, 29–32 importance of, 1–2 inventors and, 22–24 network externality value and, 77–81 product vs process, 48 radical vs incremental, 48–49 reputation of, 306–308 by research and development in firms, 26–27 societal impact of, 2–3 sources of, 19 strategic management of, 6–9 technological spillovers and, 37 technology cycles and, 57, 61–63 technology S-curves and, 51–57 timeline of significant, university-based, 29 by users, 24–25 Innovation protections advantages of, 200–204 appropriability as, 188 copyrights as, 188, 195–196 effectiveness of, 197–200 overview of, 187 patents as, 188–194 trademarks and service marks as, 188, 194–195 trade secrets as, 196–197 Innovation strategy formulation development of dynamic capabilities for, 121 external analysis for, 111–115 identifying core competencies for, 119–121 internal analysis for, 115–117 strategic intent and, 121, 123, 125 tools for, 111 Installed base, 73 Intel, 49, 50, 53, 60, 95, 137–138, 217 Intellectual property See also Copyrights; Patents; Trademarks advantages of protections for, 200–204 effectiveness of protections for, 197–200 explanation of, 187 Intermediaries, 297–299 Internal analysis, 115–117 Internal rate of return (IRR), 133, 137 International innovation organization of, 226–229 virtual teams and, 276–277 Intranet, 21 InvaPharm LLC, 167 Inventors, 22–24 Ireland, R D., 128, 179, 207 Isaac, M., 70 Ishii, K., 263 iTunes, 185–186 Iyer, B., 213 J Jack, David, 244 Jackson, S E., 280, 281 Jacobides, M., 87 Jacobson, “Jake,”, 219 Jaffe, A., 37, 39, 205, 207, 232 Jaffe, A B., 42, 206 Jain, S., 207 Janis, I L., 280 Java, 207 Jefferson, Thomas, 189 Jelinek, M., 221, 222, 229, 234 Jervis, P., 262, 280 Jervis, V T B., 41 Jick, T., 232 Jindra, B., 182 Jobe, L.A., 179 Jobs, Steve, 78, 169, 221 Johne, F A., 262 Johng, J., 180, 310 John Kensinger, W., 180 John Martin, D., 180 John of Utynam, 188–189 Johnson & Johnson, 95 Joinson, C., 281 Joint ventures, 164, 167, 171 Jones, A., 206 Jones, C., 232 Jones, D T., 10 Jones, G., 179 Jones, T M., 127 Jordan, B D., 150 Joseph, A., 11 Joseph A DiMasi, 160 JVC, 166 K Kahn, K B., 261, 263 Kale, P., 181, 182 Kalwani, M U., 105 Kambil, A., 234 Kamen, Dean, 23, 255 Kamienski, P W., 263 Kang, N H., 180 Kang, Y., 180, 310 Kanter, R M., 182 Kaplan, Robert, 124, 125 Kaplan, S., 66, 87 Kapoor, R., 65 Karau, S J., 279 Karl, S., 207 Katila, R., 105 Katz, M., 87, 88, 101 Kauffman, R., 151 Kavadias, S., 261 Kelley, T., 39 Kennedy, C., 244 Kent, J., 70 Kerr, S., 232 Kessler, E H., 231 Keuffel & Esser, 50 Khan, B Z., 40 Kharbanda, M., 232 Kichuk, S L., 270, 281 Kildall, Gary, 74, 75 Kim, A., 118 Kimberly, J R., 280 Kim, W C., 88, 122, 123, 127 Kimzey, C H., 261 King, A., 128 Kirby, Bruce, 24 316 Index Kirby, J., 22 Kirkman, B L., 281 Kittner, J., 207 Kleinschmidt, E J., 150, 151, 260, 263 Klepper, S., 232 Klevorick, A., 205, 207 Knowledge brokers, 36–37 Kodak, 49 Kogut, B., 42, 150 Koput, K W., 39, 179 Korzeniowski, P., 75 Kotha, S., 127 Kotler, P., 310 Krafft, M., 263 Krapfel, R., 261 Krause, D., 261 Kristinsson, K., 279, 280 Kuczmarski, T D., 264 Kuffel & Esser, 50 Kulatilaka, N., 150 Kumaraswamy, A., 207 Kumar, K., 280 Kumar, S., 263 Kuperman, J., 106 L LaBahn, D., 261 Lampert, C M., 41 Langford, J W., 263 Lanphier, Edward, 153 LaPlante, A., 263 Lapre, 88 Lapre, M., 87 Late entrants, 93 Launch timing, 292–293 Lawson, B., 261 Lazarsfeld, P F., 280 Leadership, 274 Lead users, 248 Learning curve, 71–73 Lee, H., 10 Lee, J., 231, 233 Leenders, R., 39 Lefton, T., 291 Lehr, Lou, 218, 219 Lei, D., 181, 233 Lei, L., 118 Leonard-Barton, D., 128 Leonard, D., 233 Lerner, J., 206, 231 Levie, Michael, 109 Levi, M., 47 Levine, Dan, 237, 238, 240 Levin, R., 205, 207, 232 Levinthal, D., 65 Levinthal, D A., 41, 88, 231, 233 Levy, F K., 87 Liao, P., 207 License, 167 Licensing benefits of, 171–172 deployment strategy and, 294–295 explanation of, 165, 167–169 Licensors, 167, 168 Lieberman, M., 105 Lieberman, M B., 104 Liebeskind, J P., 180 Lievens, A., 262 Lightweight teams, 272, 273 Liker, J K., 263 Lilien, G L., 105 Lindsay, James Bowman, 55 Link, A N., 180 Linton, J D., 148, 151 Lipparini, A., 262 Liu, H., 309 Local-for-local strategy, 227 Local leveraged strategy, 227 Loch, C H., 261, 262 Loctite, 24 Loddenkemper, C., 160 Loosely coupled organizations, 223–226 Lubart, T I., 39, 40 Lukas, B., 231, 233 Lynley, M., 310 Lyons, B., 125 M MacCormack, A., 150, 257, 279 Machan, D., 310 MacKinnon, D W., 39 Madique, M., 128 Madrid Agreement Concerning the International Registration of Marks, 194 Madrid Protocol, 194 Madsen, T., 234 Mahajan, V., 151 Mahindra Shaan, 129–131 Mahoney, J., 233, 234 Mahr, D., 262 Maidique, M A., 262 Majchrzak, A., 279, 281 Malhotra, A., 279, 281 Malone, T W., 234 Mansfield, E., 10, 41, 65 Manufacturers’ representatives, 297 Manyika, J., 213 Marangoni, A., 87 Marco, A., 206 Marino, K., 128 Marketing advertising and, 301–303 promotions and, 302 publicity and, 302 public relations and, 302 to shape perceptions and expectations, 305–308 tailored to intended adopters, 303–305 Markham, S., 247 Markham, S K., 10 Marriott, 146 Martin, J A., 128 Massey, A P., 281 Mather, D R., 310 Mattrick, Don, 289 Mauborgne, R., 77, 78, 88, 122, 123, 127 Mavens, 307 Mayer, Marissa, 212 May, K E., 280, 281 Mazer, R., 70 McColl-Kennedy, J R., 127 Mcdermott, R E., 40 McDonough, E F., 281 McEvily, B., 280 McEwen, Dorothy, 74 McGann, M E., 310 McGrath, R., 180 McKay, C, 70 McKelvey, B., 128 McKnight, William, 219 McPherson, S O., 281 Mecham, M., 226 Mechanistic structure, 218, 220–222 Melcer, R., 179 Melner, S B., 280 Menon, A., 231, 233 Meron, Gavriel, 16, 18 Merton, R K., 280 Michael, G., 105 Michael Porter, 127 Michaelsen, L K., 280 Michaels, R E., 10 Microsoft, 28, 60–61, 74–75, 84, 99, 167–168, 184, 198–201, 258, 288, 289, 292, 296, 300, 308 Miguel, P C., 261, 263 Mikulak, R J., 40 Miles, M P., 233 Miles, R., 232 Milgram, Stanley, 89 Miller, A T., 150 Miller, C W., 281 Miller, D., 280 Miller, K D., 139, 150 Millson, M R., 264 Mills, Tim, 16 Milovich, Dimitrije, 25 Miner, A., 233 Min, S., 105 Mistral, Even, 25 Mitchell, G., 150 Mitchell, W., 101 Mix Master Mike, 236, 237 Mobile payments, 67–70 Index 317 Modarress, B., 263 Modular innovation, 50 Modularity, 222–223 Moeslein, K M., 150 Mohammed, A., 220 Mohr, J., 309, 310 Momenta, 102 Monogenic diseases, 153–155 Monopoly costs, 85–86 Monopoly rents, 94 Monsanto, 161 Montgomery, D., 105 Montgomery, D B., 104 Montoya, M M., 281 Moore, G., 53, 309, 310 Moorman, C., 233 Morabito, J., 148, 151 Moran, P., 180 Morris, C., 105 Morris, C R., 207 Mosakowski, E., 234 Moskovitz, Dustin, 90 Motorola, 163 Mowery, D C., 180 MP3, 183–184 M-Pesa, 69 Mucha, Z., 106 Muir, N K., 280 Mukherjee, A., 88 Mukherjee, A S., 87 Mullin, J., 207 Musk, Elon, 43–45 MySpace, 90, 91 N Nacher, T., 261 Nagata, A., 42 Nagji, B., 150 Nalebuff, B J., 127 Nanda, A., 128, 181 Napster, 184–185 Narayanan, V K., 181 National Cash Register (NCR), 21, 255 National Center for Manufacturing Sciences (NCMS), 170 National Payments Corporation of India (NPCI), 68–69 Near Field Communication (NFC), 67 Nelson, R., 10, 42, 205, 207 Nembhard, I M., 279 Net present value (NPV), 135–137 Netscape, 167–168 Network externalities design dominance in markets with, 82–84 explanation of, 73, 75 value of innovation and, 77–81 New Corporation, 90 New Life Scientific, 167 Newman, L I., 87 New product development crowdsourcing and, 248–249 customer involvement in, 246, 248 objectives of, 241–242 project championing and, 245–246, 247 sequential vs partly parallel, 243, 245 supplier involvement in, 248 tools to improve, 249–257 tools to measure, 257–260 New product development teams boundary-spanning activities in, 270 composition of, 268–270 management of, 274–278 size of, 268 structure of, 271–273 New, W., 206 NeXT Incorporated, 78 Neyer, A., 150 Nickerson, J A., 104, 151 Nijssen, E J., 261 Nintendo, 80–81, 203, 284–294, 296, 300, 301, 306, 307 Nobeoka, K., 42 Nohria, N., 42 Nokia, 163 Nonaka, I., 262 Norton, D., 124, 125 Not-invented-here syndrome, 226 O Obama, Barack, 169 Oberholzer-Gee, F., 206 O’Brien, J M., 291 O’Keefe, R D., 231, 262 Oligopolistic industries, 112 Oliver, A L., 180 Olshavsky, R.W., 10 Olson, Mike, 25 Open Mobile Aliance (OMA), 163 Open source software, 198 Opler, T., 217, 233 O’Reilly, C., 220, 231, 233 O’Reilly, C A., 279, 280 Organic structures, 218, 220, 221 Organizations ambidextrous, 220–222 collective research, 170 creativity in, 20–21 disaggregated, 215 external analysis for, 111–115 internal analysis, 115–117 loosely coupled, 223–226 mechanistic vs organic structure in, 218, 220–222 modularity and, 222–223 reputation of, 102–103 research and development by, 26–27 size of, 214–215, 218, 220 strategic intent of, 121, 123, 125 structural dimensions of, 216–222 Original equipment manufacturers (OEMs), 199–200, 298 Ostergaard, C R., 279, 280 Outsourcing, 168–170, 172 Owan, H., 151 Owen-Smith, J., 39 Oxley, J E., 180 P Pacheco-de-Almeida, G., 261 Page, Larry, 211 Palm Computer, 102 Parallel development processes, 103 Paris Convention for the Protection of Industrial Property, 191 Partial development process, 243, 245 Patent Cooperation Treaty (PCT), 192–193 Patents See also Intellectual property applications for, 190, 191 explanation of, 189, 190 international protections for, 191–193 types of, 193 Patterson, John, 21 Pegoraro, Rob, 187 Pellerin, C., 181 Penetration pricing, 295 Penrose, E T., 127 Perkel, J M., 160 Perlitz, M., 151 Personal digital assistants (PDAs), 96, 102 Peske, T., 151 Pharmaceutical industry innovation in, 4–5 licensing in, 171–172 Phelps, C., 39, 92, 106, 179, 181 Philips, 79–80, 203, 241 Philips, J L., 280 Pietras, T., 182 Pinch, T J., 64 Pisano, G P., 181 Piskorski, M K., 92 Plant patents, 189 Platform projects, 143–144 Ployhart, R., 87 Pogue, D., 70 Poppen, Sherman, 25 Porter, M A., 127 Porter, M E., 42, 66, 114, 115, 127 Porter’s five-force model, 111–114 Potter, A., 261 Poulsen, Josh, 237 Powell, W W., 39, 179 PPD, 175 Prahalad, 128 318 Index Prahalad, C K., 119, 120, 127, 128, 169, 180, 181 Preston, L., 127 Price, L L., 307 Pricing, 295–297 Priem, R L., 280 Primack, D., 92 Process innovation, 48 Procter & Gamble, 95 Product innovation, 48 Product life cycle, 242 Products, modular, 222–223 Project champions, 245–246, 247 Project maps, 143–145 Project valuation methods conjoint analysis as, 145, 146 data envelopment analysis as, 147–148 development budget and, 131–132 overview of, 131 qualitative, 140–145 quantitative, 133–140 Promotions, 302 Proprietary technologies, 161–162 Publicity, 302 Public relations, 302 Q Q-sort method, 145 Qualitative methods aggregate project planning framework as, 143–145 to analyze new projects, 140–145 Q-sort for, 145 screening questions as, 141–143 Quality function deployment (GFD), 252–254 Qualls, W., 10 Quantitative methods to analyze new projects, 133–140 disadvantages, 140 discounted cash flow methods, 133, 135–137 real options, 138–140 Quasiformal structures, 222 QWERTY keyboard, 94–95 R Radical innovation, 48–49 Rahm, D., 41 Raj, S P., 264 Ramsey, M., 47 Rangan, V K., 309 Rappa, M A., 65 Rapson, R L., 307 Raskin, Jef, 221 Reagans, R., 279, 280 Real options, 138–140 Recording Industry Association of America (RIAA), 184–186 Reed, R., 128 Reinders, M J., 310 Reiss, R., 40 Relational governance, 177 Renauer, C., 160 Renstrom, R., 226 Research applied, 26 basic, 26 cooperative, 170 Research and development (R&D) in ambidextrous organization, 220–221 centralization of, 216–217 collaborative, 32–37 entry timing and costs of, 96 explanation of, 26 government-funded, 29–32 industries by intensity, 131, 132 innovation by, 26–27 international, 228 new products and, 243, 245, 268 organization size and, 214, 215 project mapping and, 143–145 real options and, 138 in universities, 29 Research organizations, collective, 170, 172 Resource fit, 173 Resources casually ambigious, 118 entry timing and, 94 socially complex, 118 tacit, 118 Retailers, 297 Rhodes, E., 151 Ribero, Mike, 306 Rifkin, J., 97 Riger, K., 160 Riley, C., 18 Rios, LA., 231 Rivalry, industry, 112 Roberts, Alan, 24 Roberts, E., 41, 262, 280 Roberts, E B., 270 Roberts, J., 207 Robertson, A B., 41, 262 Robinson, M., 181 Robinson, W., 105 Rochford, L., 280 Rogers, E., 64, 65 Rogers, E M., 56, 309, 310 Rogers, M., 56, 233 Rogers, S B., 179 Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, 196 Ronson, W T., 105 Roos, D., 10 Root-Bernstein, R S., 40 Rosen, B., 279, 281 Rosenkopf, 41 Rosenkopf, L., 180 Ross, S A., 150 Rotemberg, J., 232 Rothaermel, F., 127 Rothaermel, F T., 179 Rothwell, R., 27, 39, 41, 261, 262 Roy, R.R., 65 Rubenstein, A H., 262 Rudden, E., 262 Rudelius, W., 280 Rugman, A M., 234 S Sakai, K., 180 Sakkab, N., 181 Salas, E., 280 Salespersons, 307 Salgado, J F., 279 Saloner, G., 232 Salunke, S., 127 Sampson, R., 179 Samsung, 1–2, 67 Sanchez, R., 233, 234 Sandberg, Birgitta, 304 Saverin, Eduardo, 90 Sawyer, J E., 40 Sawyer, R K., 39 Saxenian, A., 42 Saxenian, Annalee, 35 Scapa, Eitan, 15 Schepers, J., 263 Scherer, F M., 101, 232 Schilling, M A, 10, 11, 23, 25, 39, 41, 65, 87, 88, 92, 106, 151, 176, 179, 180, 181, 182, 187, 206, 207, 226, 231–234, 261, 281, 290, 291, 309, 310 Schmalensee, R., 232 Schmenner, R W., 261 Schmidt, Eric, 211–213 Schneider, T., 160 Schoenfeld, B., 110 Schofield, Jack, 187 Schoonhoven, C., 221, 222, 229, 234 Schoormans, JPL, 310 Schrank, R., 151 Schreier, M., 263 Schumpeter, J., 66 Schumpeter, J A., 10, 214, 231 Schwartz, E I., 23, 105, 236, 263 Schwartz, N L., 231 Science parks, 29, 31, 32 Science-push approach, 27 Scott, A J., 181 Index 319 Screening questions, to analyze new projects, 141–143 Scrofani, J., 179, 207 Scuria-Fontana, C., 65 S-curves explanation of, 51–52 limitations of, 57 as prescriptive tool, 56–57 in technological improvement, 52–54 in technology diffusion, 54–56 Seamans, R., 87 Sega, 80, 203, 284–287, 290–296, 300, 306 Segil, L., 182 Selby, R W., 258 Selen, W J., 263 Sengupta, S., 309 Shah, S K., 25 Shamsie, J., 106 Shanley, M., 106 Shapira, P., 39 Shapiro, C., 87, 88, 101 Shaw, M E., 106, 279 Shaw, S A., 106 Sheahan, M., 135 Sheff, D., 290 Shepherd, D A., 106 Sholes, Christopher, 94 Short Message Service (SMS), 69 Shuldiner, A T., 128 Shulman, L E., 128 Shuster, I., 23 Siebdrat, F., 281 Siekman, P., 181 Siemens, 169 Siggelkow, N., 233 Silverman, A., 41 Silverman, A B., 206 Silverman, B S., 180 Silverstein, J., 264 Simon, H., 65 Simon, H A., 11 Sims, Tom, 25 Sinakin, Y D., 291 Singer, M., 232 Singh, H., 181, 182 Singh, S., 118 Singh, S S., 263 SixDegrees.com, 89 Skiera, B., 310 Skullcandy, 235–240 Skunk works, 221 Smith, B., 180 Smith-Doerr, L., 39, 179 SmithKline Beecham, 244 Smith, W., 233 Smith, W K., 127, 231 SNECMA, 166 Snelson, P A., 262 Snowboarding, 25 Snow, C., 232 Snow, C C., 128 Social loafing, 268 Socially complex, 118, 188 Social networking, 89–92 Softcard, 67 Sokoloff, K I., 40 Solectron, 169 Soloway, T., 244 Solow, Robert Merton, 2, Somaya, D., 206 Somermeyer, S., 281 Sony, 27, 49, 79–80, 99, 184, 186, 203, 286–293, 295, 296, 300, 306–308 Sorenson, O., 42, 65 Souder, W B., 151 Souder, W E., 262 Spence, M., 104, 105 Sponsorships, 300–301 Sprengel, Herman, 55 Stage-gate processes, 250–252 Stahl, H., 41 Stakeholder analysis, 115 Stalk, 128 Stalker, G M., 230 Stalk, G., 10, 128 Stanaro, R., 244 Standardization, 217–218 Steensma, K., 180, 181, 232–234 Stephan, J., 182 Stereolithography apparatus (SLA), 238 Sterman, J D., 87 Sternberg, R J., 39, 40 Stevens, G., 11 Stewart, D., 310 Stillman, H., 128 Stock, G N., 232 Stormer, C., 182 Storper, M., 181 Strategic alliances benefits of, 170–171 distributors and, 300 explanation of, 165–167 Strategic fit, 173 Strategic intent, 121, 123, 125 Strategic management, of technological innovation, 6–9 Stross, Randall, 187 Stuart, T., 42, 176 Suarez, F F., 105 Substitutes, threat of, 114 Suggestion boxes, 21 Su Han Chan, 180 Sul, J., 180, 310 Sungwook, M., 105 Sun Microsystems, 207 Super Audio CD technology, 80 Suppliers bargaining power of, 113–114 new product development and, 248 Sutton, R., 36 Sutton, R.T., 41 Swain, C Paul, 16, 18 Sweet, C., 47 Switching costs, 114 Szulanski, G., 42 T Tabrizi, B N., 262 Tacit, 35, 188 Takanashi, M., 180, 310 Takeuchi, H., 262 Taligent, 164 Tata Motors, 223 Teague, P E., 181 Team charter, 274–275 Team New Zealand, 257 Teams See also New product development teams administration of, 274–275 autonomous, 272–273 composition of, 268–270 cross-functional, 268 functional, 271–273 heavyweight, 272, 273 leadership on, 274 lightweight, 272, 273 management of, 274–278 size of, 268 structure of, 271–273 virtual, 275–277 Technological spillovers, 37 Technologies diffusion of, 54–56 discontinuous, 53 enabling, 96, 100 government regulation of, 75–76 industry opposition to solesource, 203 proprietary, 161–162 value of new, 77–81 Technology clusters advantages and disadvantages of, 35 explanation of, 34 geographic, 36–37 Technology cycles, 57, 61–63 Technology diffusion advantages of, 201–204 explanation of, 54–56 Technology trajectory, 47 Technology transfer offices, 29 Teece, D., 180, 232, 234 Teece, D J., 205 Tellis, G., 95, 105, 310 Tellis, G J., 104 Teng, B., 182 Teng, B S., 182 Terrell, K., 291 Terwiesch, C., 262 320 Index Tesla, 43–46 Tesluk, P E., 281 Thiel, E., 160 Third generation (3G) telephony, 49 Thomas, A., 88 Thomas, D A., 22 Thomas, R., 244 Thomas, R J., 40 Thompson, J D., 231 Thomson, 166 Thomson Multimedia, 183 Three-dimensional printing, 257 3M, 219–220 Timmermans, B., 279, 280 Toole, A A., 39 Townsend, J., 41, 262 Toyota, 1, 2, 144 Trachtenberg, J., 291 Trademarks See also Intellectual property explanation of, 188, 194 international protections for, 194–195 Trade secrets, 196–197 Trajtenberg, M., 42 Transnational approach, 229 Treacy, M., 233 Tripsas, M., 25, 66, 87, 128 Tucci, C., 128 Tucci, C L., 128 Tuff, G., 150 Turner, N., 291 Tushman, M., 62, 66, 220, 231, 233 Tushman, M L., 64, 127, 233, 234, 270 Twitter, 91 U Ulrich, D., 232 Uniform Trade Secret Act, 196 United Parcel Service (UPS), 48 Universities, research in, 29 UNIX, 202, 204 Urban, G L., 106 Usher, A P., 39 U.S Patent and Trademark Office, 191, 194 Utility patents, 189 Utterback, J M., 62, 64, 66 Uzzi, B., 280 V Valdes-Dapena, P., 263 Value components of, 80–81 creation of, 121 network externality, 77–80 stand-alone, 77 Value-added resellers, 298 Value chain example of, 117–118 explanation of, 115, 116 Van Hooland, B., 262 Van Wassenhove, L N., 87 Vaporware, 80 Varian, H., 87 Vasco, C E., 11 Veiga, Alex, 187 Veit, S., 75 Velasquez, M., 25 Venture capital, 134–135 Vermeulen, F., 110, 140 Vertical integration, 114 Vidal, P., 87 Video game industry, 283–291, 306 Viral marketing, 302 Virtual teams explanation of, 275 international, 276–277 management of, 275, 277–278 Vogt, Hans, 24 Von Hippel, E., 39, 40, 42, 249, 262 Vonortas, N S., 180 von Stamm, B., 150 von Zedtwitz, M., 276, 277 W Waclawski, J., 40 Wade, J., 88 Wagonfeld, A B., 22 Walker, D., 310 Walker, J., 18 Wallace, M., 310 Walmart, 112–113 Walsch, S T., 148, 151 Walsh, J., 42 Walt Disney Company, 265–267 WAP Forum, 163 Warner Music, 185 Wassenhove, 88 Wassenhove, L., 88 Watson, W., 280 Weber, Bob, 25 Weber, J., 226 Weerawardena, J., 127 Weinrech, Andrew, 89 Weiss, G W., 181 Welch, Jack, 144 Westerfield, R W., 150 Westerman, G., 231 Whalen, B J., 74 Wheelwright, S., 128 Wheelwright, S C., 143, 150, 151, 260, 263, 281 Wheelwright, S G., 262 White, C C., 263 White, J B., 47 Whitney, K., 280, 281 Wholesalers, 297 Wholly open systems, 198–200 Wholly proprietary systems, 198–200 Wicks, A., 127 Wiersema, F., 233 Wiesner, W H., 270, 281 Wilcox, J., 291 Wildstrom, S H., 291 Wilemon, D., 264, 281 Williams, A., 47 Williams, K D., 279, 280 Williamson, O E., 182 Williams, R R., 24 Willig, R D., 232 Wind, Y., 151 Winner-take-all markets, 76, 85 Winter, S., 205, 207 Womack, B., 206 Womack, J P., 10 Woodman, R W., 40 Wood, R C., 231 World Intellectual Property Organization, 194 World Intellectual Property Organization Copyright Treaty, 196 Wulf, J., 231 Wyatt, E., 206 X Xerox, 121, 214 Xie, J., 309, 310 Y Yahoo, 121 Yelle, L E., 87 Yoffie, D B., 87 Yoon, E., 105 Yoshida, Junko, 187 Yoshino, Hiroyuki, 162 Young, H C., 262 Young, J S., 232 Youtie, J., 39 Z Zaheer, S., 234 Zander, U., 42 Zantac, 244 Zemsky, P., 261 Zenger, T R., 232, 234 Zhu, F., 87 Zinner, D., 150 Zirger, B J., 262 Zuckerberg, Mark, 90 Zucker, L., 180 Zuckerman, E., 279 .. .Strategic Management of Technological Innovation Strategic Management of Technological Innovation Fifth Edition Melissa A Schilling New York University STRATEGIC MANAGEMENT OF TECHNOLOGICAL. .. journals such as Academy of Management Journal, Academy of Management Review, Management Science, Organization Science, Strategic Management Journal, and Journal of Economics and Management Strategy... of Technological Innovation 1 The Impact of Technological Innovation on Society 2 Innovation by Industry: The Importance of Strategy 4 The Innovation Funnel The Strategic Management of Technological