Appropriating Value from Innovations

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From the course by University of Virginia

Business Growth Strategy

336 ratings

University of Virginia

Business Growth Strategy

336 ratings

Course 3 of 5 in the Specialization Business Strategy

Get the tools you need to analyze, evaluate and recommend specific actions organizations can take to grow their value and avoid common growth pitfalls. Learn to determine how best to build value, whether by scaling existing markets, entering established markets or creating new markets through innovation and acquisitions. Apply these concepts in case studies of industry leaders JetBlue, Starbucks, Intel Corporate Venturing and Tata Motors.

From the lesson

Growth through Innovation

Introducing new ideas, processes, and products that disrupt the market is another common growth strategy. In this module, we'll unlock the keys to innovation, from building an innovative capability to appropriating value from innovation to determining an innovation strategy. Using the Real Options Analysis tool, we'll show you how to grow through innovation and good practices for doing so. The Intel Corporate Venturing case provides an opportunity for you to practice this tool and apply course concepts to a real-world scenario.

Growing through Innovation7:15

Innovation Strategies3:26

Developing an Innovative Capability6:49

Keys to Innovation3:55

Organizing for Innovation6:47

Appropriating Value from Innovations2:01

Intellectual Property Protection7:08

Complementary Assets4:07

Determining an Innovation Strategy5:21

Module Lessons1:27

Meet the Instructors

Michael Lenox
Senior Associate Dean and Chief Strategy Officer
Darden School of Business
Jared Harris
Samuel L. Slover Research Chair in Business Administration
Darden School of Business

So we've discussed some of the key factors for growth through innovation.

We've discussed in quite detail now about how you

might develop a innovative capability within your organization.

But equally important once again is the ability to appropriate

the gains from innovation.

Consider the following, perhaps you have an innovation and

it creates a certain amount of value represented by the pie in this diagram.

At the end of the day, that value is shared with others.

It's shared hopefully with your customers, who gain more value from the innovation.

Perhaps with your suppliers and we should recognize, that maybe imitators and

competitors will also appropriate some of that value that you've created

as the innovator.

So the big question is, how big is the slice of pie as the innovator

that I capture when I create value?

So, what drives a firm's ability to appropriate value?

Well, I encourage you to think about two broad classes of considerations here.

The first is the strength of the intellectual property regime.

Your ability to protect your intellectual property.

Now, this depends on a number of factors which we'll talk about more later, but,

in general, you can think about things like the nature of the legal system.

Do I have a patent protection on this or a copyright?

But, also the nature of the technology and the market itself

which might provide protection beyond even a patent or some other legal protection.

The second thing we wanna think about are complementary assets.

These are these things necessary to exploit the innovation.

This could be marketing, distribution channels, maybe a complementary technology

that is require to make an advance with this innovation.

Who controls these complementary assets has a very big opportunity

to take a value from the innovation that's created.

So from the innovator's perspective,

you need to think about not only can you protect your intellectual property, but

do you have some control over these important complementary assets as well?

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