7.7 Conclusion

This chapter explains how innovation impacts strategy development. An entrepreneurial orientation helps a firm develop and implement new innovations. Being the first mover can present advantages, but is not without the risk of competitors learning from the first mover and eventually beating them. Executives may also choose a more conservative route by establishing a foothold within an area that can serve as a launching point or by avoiding existing competitors overall by using a blue ocean strategy. There are four types of innovation: incremental, disruptive, architectural, and radical. New products typically follow a predictable product life cycle with four stages: introduction, growth, maturity, and decline. Firms often use incremental innovation to re-launch products with improved features, starting the product life cycle over again. New products and services must “cross the chasm” to get them into the mainstream. Firms may cooperate with competitors through joint ventures, strategic alliances, mergers, and acquisitions, or through co-location and co-opetition. Executives may also react to competitive attacks by using fighting brands. All of these efforts by firms are part of the strategic management process that executives must respond to if they want their companies to be successful.