BU111 Lecture Notes - Lecture 17: Disruptive Innovation, Risk Aversion

• School: WLU
• Department: Business
• Course: BU111
• Professor: Sofy Carayannopoulos

Document Summary

Ignore new technologies that do not initially meet needs of mainstream customer. Organizational processes weed out ideas that don"t address current customer needs. Organization structure and capabilities slow response time/ability different routine means inefficiency because it is not habitual and it slows you down: avoid small, uncertain, unfamiliar markets. Greater risk of being criticized if you fail managerial risk aversion. Managerial biases are to go where things are familiar and certain where disruptions start: challenge value of existing capabilities and/or structure, disruptive technologies have expertise that existing companies do not have. Radical innovation demands knowledge that current companies in industry don"t have. Technological knowledge required to exploit it is different from existing knowledge, so existing knowledge will be obsolete. Results in product so superior that existing products are uncompetitive. Also challenges the structure of the existing organization way activities are normally organized in the industry.