TTMG 5001 Principles of Management for Engineers Section T Session 7: October 26 Fall 2011 Michael Weiss www.carleton.ca/tim www.carleton.ca/tim/tim.pdf
Session 7 objectives Upon completion of the session, you will know about • another perspective that can help us make decisions on how to commercialize new products and new technology • the perspective’s constructs and how constructs are assembled • application of the perspective to open source strategies and you will be able to • identify objectives, deliverables, contribution and relevance of commercialization research • recognize how knowledge produced by one or two authors evolves over time • identify constructs and and how constructs are assembled weiss@sce.carleton.ca Slide 2
Agenda 1. Presentations of assignment 1 2. Questions about • Two TTMG 5001 assignments • Gate 0 for TIM 3. Professor’s summary of assigned readings 4. Questions to which we want answers and comments weiss@sce.carleton.ca Slide 3
1. Presentations of assignment 1 • Assignment 1 presentations will take place during Session 8, Nov 2 in room 4359 ME • Make available slides to be presented before 5 p.m. on Nov 1; professor will post slides by 6 p.m. • Topics have been posted on TTMG 5001 web site • Nov 2 presentations will not be graded, but Nov 23 presentations of assignment 1 will be graded • Each presentation is restricted to 10 minutes max, how time is used is up to the group • Stick to the template provided • We will prepare a list of what needs to be done so quality of presentations is 2X better next time weiss@sce.carleton.ca Slide 4
2. Questions TTMG 5001 Assignments Gate 0 • Objectives • Literature review • Deliverables • Gate 0 • Relevance • Literature review • Contributions • Theoretical framework • Research method • Data acquisition • Data analysis • References weiss@sce.carleton.ca Slide 5
3. Summary • Session 7 assigned articles • Objectives • Deliverables, contribution and relevance • Lessons learned weiss@sce.carleton.ca Slide 6
Session 7 assigned articles • Teece, D. J. 1988. Capturing value from technological innovation: integration, strategic partnering, and licensing decisions. Interfaces, 18(3): 46-61. • Teece, D. J., Pisano, G. & Shuen, A. 1997. Dynamic capabilities and strategic management. Strategic Management Journal, 18(7): 509-533. • Pisano, G., & Teece, D. J. 2007. How to capture value from innovation: shaping intellectual property and industry architecture. California Management Review, 50(1): 278-296. • West, J. 2007. Value Capture and Value Networks in Open Source Vendor Strategies. Hawaii International Conference on System Sciences (HICSS), IEEE, 176-185. weiss@sce.carleton.ca Slide 7
About the articles • Provide one perspective on commercialization of products and technology • Three papers by the same group of authors, and one paper that applies their perspective • Identify perspective, its constructs, and the way constructs are assembled weiss@sce.carleton.ca Slide 8
About the articles (continued) Teece (1988), Teece et al. West (2007) (1997), Pisano & Teece (2007) Perspective Does the innovator, imitator or How can open source (OS) owner of complementary assets vendors capture value? capture value? Constructs Specific asset positions, Complementary assets, value appropriability regime, dominant network, commoditization design, ways to coordinate & combine, evolutionary path, industry architecture Framework Buy or make framework and Application of PFI framework to OS dynamic capabilities (known as Profit from Innovation or PFI), managing appropriability regime and industry architecture weiss@sce.carleton.ca Slide 9
Objectives Teece (1988) Teece et al. (1997) Pisano & Teece (2007) Examines why Examines how firms Examines how firms can innovators fail to profit create and capture capture value by from their innovations value in environments of shaping appropriability while customers, rapid change regime and industry imitators and architecture suppliers do benefit West (2007) Examines business models used by OS vendors given its limited appropriability weiss@sce.carleton.ca Slide 10
Deliverables Teece (1988) Teece et al. (1997) Pisano & Teece (2007) • Framework to decide • Outline for a dynamic • Framework for whether to buy or build capability approach managing the business that can explain how environment companies create and • Framework to explain capture wealth under what conditions the innovator, imitator and supplier profits West (2007) • Identify modes for OS business models • Show role of complementary assets weiss@sce.carleton.ca Slide 11
Contribution Teece Identifies the three constructs that decide who wins because (1988) of the introduction of an innovation: complementary assets, ability to protect technology, and stage relative to the dominant design (previously it was not clear why innovators failed to appropriate value from innovations) Teece et al. Identify that wealth creation and capture depend on ways of (1997) coordinating and combining the firm’s positions on difficult-to- trade assets and complementary assets, and the evolutionary path it pursues (previously a framework for explaining value creation and capture was not known) Pisano & Show how appropriability regime and industry architecture Teece can be shaped to help innovators capture value from (2007) innovation (previously both were considered beyond the control of innovators) weiss@sce.carleton.ca Slide 12
Contribution (continued) West Shows how firms create value and network effects through an (2007) inherent openness that attracts complementors, users and rivals to their value network (previously we did not know how to use complementary assets in mature industries) weiss@sce.carleton.ca Slide 13
Relevant to researchers and students because* Teece Teece et Pisano & West (2007) (1988) al. Teece (1997) (2007) Provide good examples of how Provide good example of how frameworks are built frameworks are applied Provide interesting suggestions for future research * Otherwise, the observations from the last session apply. weiss@sce.carleton.ca Slide 14
Lessons learned – General • You can contribute to the literature in various ways: describe frameworks (Teece, 1988; Teece et al., 1997; Pisano & Teece, 2007), identify links not previously made (Teece, 1988; West, 2007); and show how a framework can be applied to answer questions (West, 2007) weiss@sce.carleton.ca Slide 15
Lessons learned – Teece (1988) • Three factors determine who captures value from innovation: _____________, ______________, and stage relative to ________________ • There is a recipe to decide whether to build or buy • Firm boundaries are an important determinant of innovation (how so?) • Ownership of _____________ assets improves the likelihood of capturing value • Strong appropriability regimes are rare, and when they exist they do increase the likelihood of capturing value weiss@sce.carleton.ca Slide 16
Lessons learned – Teece (1997) • According to the resource based perspective, the entry approach is: i) identify your company’s unique resources, (ii) decide in which markets those resources can earn the highest returns, (iii) decide whether the returns from those assets are most effectively utilized • According to the dynamic capabilities perspective, a company’s ability to appropriate value depends on (i) the way the company coordinates and combines, (ii) the company’s positions on difficult-to-trade assets and complementary assets, and (iii) the path the company has decided to evolve • A company’s ability to appropriate value decreases when (i) the market for the innovation is _________ (dynamic!), (ii) the innovation is _________ to imitate, or (iii) knowledge from one setting to the next is __________ to replicate weiss@sce.carleton.ca Slide 17
Lessons learned – Pisano & Teece (2007) • Appropriability regime and industry architecture are strategic choices for managers • Weakening of appropriability regimes can be beneficial to companies with strong downstream asset positions (eg IBM in case of Linux) • Firms can shape industry architecture by creating alliances (coalitions) to invest in common platforms, if they are not strong enough individually • The more complex and high-value the final product becomes, the more important is ___________ weiss@sce.carleton.ca Slide 18
Lessons learned – West (2007) • Open source firms face inherent limits on their ability to ________ returns from technological innovation • Identifies two basic modes for open source business models: ____________ and ___________, where firm controls (does not control) the source code • There are three types of complements: adding to the stack by _________, _________, or _________ • An open source license is a __________________ that attracts investment by the value network weiss@sce.carleton.ca Slide 19
Vertical and horizontal complements Vertical Horizontal Sold Above Complement Core OSS OSS Sold Below Sold weiss@sce.carleton.ca Slide 20
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