Breakthrough invention Definition Source of competitive advantage Core

Breakthrough invention � Definition § § § Source of competitive advantage Core of entrepreneurship activity and wealth creation Basis of future technology, product and service Enhance social welfare Identifying strategies that can help to improve their record of breakthrough inventions can serve as internally generated opportunities for corporate reinvention, business growth, and new business development.

In this paper… � Breakthrough inventions are often likely to originate with entrants rather than incumbents. However, recent research suggests that established firms may actually be contributing breakthrough inventions to a far greater extent than is generally recognized. � The author examines the issue of how established firms create such breakthrough inventions and develop theoretical model that explains how established firms create fundamental technological breakthroughs

Basic premises of organizational learning 1. Organizational behavior is based on routine. 2. Routines are oriented to targeted outcomes. � Established routines lead to distinctive competence and specialization.

Firm’s survival and success 1. § 2. It must satisfy market demands or needs. Its ability to provide reliable high-quality outputs in an efficient and predictable fashion is likely to be key to its success and survival. § A firm must attempt to develop a competitive advantage A firm needs to develop a distinctive competence, a unique capability housed in the organization that differentiates it from its competitors. Ø Capability rigidity paradox

Obstacles of breakthrough invention 1. 2. 3. Ø Relying on mature technology Favoring the retention of specialization rather than experimentation Establishing bureaucratic procedures and structure that favors proximate domains of technology The dominance of single-loop learning.

http: //www. nwlink. com/~donclark/leadership/ooda_orientation%20. h

Discussion � What are the challenges of shifting from single loop learning to double loop learning? � How can an organization overcome the challenges?

Three traps Familiar trap Novel technology Maturity trap Emerging technology Propinquity trap Pioneering technology

1. Familiar trap � Familiar § § technology Builds cycle of experience and competence Yields more immediate returns. � Familiar INCREASED USAGE EXPERINECE WITH TECHNOLOGY trap § Mutual positive feedback between experience and competence make the familiar technologies preferable to the exploration of new ones. ENHANCED ABSORPTIVE CAPACITY AND INCREASED COMPETENCE

1. Novel technology � Definition § Technologies that are new to the organization � Benefits § § It provides the benefit of heterogeneity in its problemsolving arsenal. The stability of existing cognitive structures and causeeffect relationships is challenged. � Excessive § § exploration Source of confusion and information overload A firm's creation of breakthrough inventions is related to its exploration of novel technologies in a curvilinear manner.

2. Maturity trap � Maturity § technology Technologies that have been in existence for some time and are relatively well known and understood in the industry. � Advantages § § § of mature technology Offer greater reliability and reliable performance Likely to have highly developed value networks and extra -organizational assets Offer the benefits of legitimacy � Maturity § trap The assets and commitment favor the further development of mature technologies and lack of exposure to immature technologies.

2. Emerging technology � Definition § Leading edge technologies that are recent or new to the entire industry � Two 1. 2. mechanisms Perspective of unsolved problems Prospect of recombinatory solution � Excessive § § exploration Challenges organization's focus and resources A firm's creation of breakthrough inventions is related to its exploration of emerging technologies in a curvilinear manner.

3. Propinquity trap � Advantages § § § Less risky Provides some assurance Conserves cognitive effort and resources � Propinquity § § of propinquity technology trap Their propensity to search for solutions in the neighborhood of existing solutions. Caused by risk aversion, organizational routines, and bureaucratic convenience

3. Pioneering technology � Definition § Technologies that have no antecedents and focus on completely de novo solutions. � Excessive exploration Cognitive overload Curvilinear manner Financial and expenditure overload Positive relationship

Virtuous cycle of corporate entrepreneurship Breakthrough inventions Pursuit of novel, emerging and pioneering technologies Create wealth and surplus resource