TTMG 5001 Principles of Management for Engineers Section T Session - - PowerPoint PPT Presentation

TTMG 5001 Principles of Management for Engineers Section T

Session 7: October 26 Fall 2011

www.carleton.ca/tim www.carleton.ca/tim/tim.pdf

Michael Weiss

weiss@sce.carleton.ca Slide 2

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
• ver time
• identify constructs and and how constructs are assembled

weiss@sce.carleton.ca Slide 3

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 4

• 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
• f presentations is 2X better next time

weiss@sce.carleton.ca Slide 5

• 2. Questions

TTMG 5001 Assignments

• Literature review
• Gate 0

Gate 0

• Objectives
• Deliverables
• Relevance
• Literature review
• Contributions
• Theoretical framework
• Research method
• Data acquisition
• Data analysis
• References

weiss@sce.carleton.ca Slide 6

• 3. Summary
• Session 7 assigned articles
• Objectives
• Deliverables, contribution and relevance
• Lessons learned

weiss@sce.carleton.ca Slide 7

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 8

About the articles

• Provide one perspective on commercialization of

products and technology

• Three papers by the same group of authors, and
• ne paper that applies their perspective
• Identify perspective, its constructs, and the way

constructs are assembled

weiss@sce.carleton.ca Slide 9

About the articles (continued)

West (2007) Perspective Constructs Framework Application of PFI framework to OS Teece (1988), Teece et al. (1997), Pisano & Teece (2007) Does the innovator, imitator or

• wner of complementary assets

capture value? How can open source (OS) vendors capture value? Specific asset positions, appropriability regime, dominant design, ways to coordinate & combine, evolutionary path, industry architecture Complementary assets, value network, commoditization Buy or make framework and dynamic capabilities (known as Profit from Innovation or PFI), managing appropriability regime and industry architecture

weiss@sce.carleton.ca Slide 10

Objectives

Examines how firms can capture value by shaping appropriability regime and industry architecture Examines how firms create and capture value in environments of rapid change Examines why innovators fail to profit from their innovations while customers, imitators and suppliers do benefit West (2007) Examines business models used by OS vendors given its limited appropriability Pisano & Teece (2007) Teece et al. (1997) Teece (1988)

weiss@sce.carleton.ca Slide 11

Deliverables

• Framework for

managing the business environment

• Outline for a dynamic

capability approach that can explain how companies create and capture wealth

• Framework to decide

whether to buy or build

• Framework to explain

under what conditions the innovator, imitator and supplier profits West (2007)

• Identify modes for OS

business models

• Show role of

complementary assets Pisano & Teece (2007) Teece et al. (1997) Teece (1988)

weiss@sce.carleton.ca Slide 12

Contribution

Show how appropriability regime and industry architecture can be shaped to help innovators capture value from innovation (previously both were considered beyond the control of innovators) Pisano & Teece (2007) Identify that wealth creation and capture depend on ways of 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) Teece et al. (1997) Identifies the three constructs that decide who wins because

• f 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 (1988)

weiss@sce.carleton.ca Slide 13

Contribution (continued)

Shows how firms create value and network effects through an 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) West (2007)

weiss@sce.carleton.ca Slide 14

Relevant to researchers and students because*

West (2007) Provide interesting suggestions for future research Pisano & Teece (2007) Teece et al. (1997) Teece (1988) Provide good example of how frameworks are applied Provide good examples of how frameworks are built * Otherwise, the observations from the last session apply.

weiss@sce.carleton.ca Slide 15

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 16

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 17

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 18

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 19

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 20

Vertical and horizontal complements

Above Sold Below Sold OSS Core Complement OSS Sold Vertical Horizontal

weiss@sce.carleton.ca Slide 21

Commoditizing up the stack

Proprietary Commodity Hardware OS Middleware Application Microsoft Hardware OS Middleware Application Oracle Hardware OS Middleware Application IBM Hardware OS Middleware Application Services Amazon

weiss@sce.carleton.ca Slide 22

Value network

weiss@sce.carleton.ca Slide 23

• 4. Questions to which we want

answers

• How can open source projects be valued?
• How to create a successful coalition?
• When should product companies move into service

businesses, and how can they?

weiss@sce.carleton.ca Slide 24

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