Question 1 Business strategy

The need for an innovation strategy depends on the innovativeness of the business strategy of the
firm. Some producers have been experimenting with improved umbrella designs but SENZ
Umbrellas has a distinctive shape resembling an airplane wing.

a. Miles and Snow (1978) distinguish four types of business strategy related to innovation
mentioned in the book. Based on the information provided in the case materials indicate which
business strategy SENZ adopts. (5 points)
b. According to the modularity matrix (Henderson & Clark, 1990) what type of innovation is the
SENZ umbrella? Provide two arguments for your answer. (8 points)
c. The design of SENZ’s products resembles an airplane wing. Does it have a good chance of
becoming dominant? Provide two arguments for your answer. (8 points)
d. Two types of innovations can generate the leap from one phase of technology life cycyle model
to the next one: a sustaining or a disruptive innovation. Is the SENZ umbrella a sustaining or a
disruptive innovation? Provide two arguments for your answer. (8 points)

Answers:
a. prospector strategy: aimed at being first in the market with new technology; innovation is a
well developed function in the firm, the firm is highly future oriented and moves into new
markets and technology (5 points);

b. architectural: (2 points)
1. the core components (reinforced vs overturned) – aerodynamic shape, unique design (3 points)
2. the relationships between the core components (changed vs unchanged) – reversed mechanism,
rib construction, materials (3 points)

c. no, two conditions are not met: (2 points)

1. dominant design has the biggest user base (‘installed base’) in the fluid phase; (3 points)
2. no single party has the intellectual property rights on a dominant design (3 points)

d. sustaining: ( 2 points)
1. creates a major improvement in the existing performance attributes but does not create a new
market based on addressing preferences for new attributes; (3 points)
2. it is not aimed at the low end of the market or at new customer groups at the bottom of the
market. (3 points)

Wrong answer (disruptive) but with solid arguments (2 points)

Question 2 Entrepreneurship
Startups are a major source of innovation. Sometimes the idea itself is a reason to start the company
but the founders have to set up an organization themselves, create a team and find external
investors.

a. Start-ups need resources, so fundraising is an important activity (Chapter 9). Which three
alternatives have the SENZ entrepreneurs considered in order to get additional funds? Provide one
argument for each alternative. (9 points)
b. In the situation when resources are limited, the four principles of effectuation (Sarasvathy, 2008)
apply. Name three principles and illustrate each principle with an example from the case. (9
points)
c. Incubators have several aims mentioned in the book (Chapter 9). Name two of these aims and
give an example for both of them based on the information provided in the case materials. (6
points)

Answers:
a. loans– 3F (Family, Friends and Fools), banks; (1 point)
Correct argument for loans (2 points)
business angels – former entrepreneurs who have earned sufficient money to invest in new firms;
(1 point)
Correct argument for business angels (2 points)
venture capitalists – profit seeking, investing higher amounts of money in in a portfolio of startups
according to a preset strategy and criteria; (1 point)
Correct argument for venture capitalist (2 points)
crowdfunding (1 points)
Correct argument for crowdfunding (2 points)
Max. 9 points

b. affordable loss (1 point) (limit risk by spending only what you can afford to lose);
Correct example (2 points) e.g. initial investment of only 6000 euro, low cost production in China
crazy quilt (collaborate with your self-selected stakeholders so people and organizations you can
trust); (1 point)
Correct example (2 points) e.g. collaboration with MEXX and other fashion brands, New Venture
competition
lemonade principle (embrace bad news and surprises that arise from uncertain conditions, and try
to use them to create new opportunities); 1 point
Correct example: 2 points e.g. legal battle, copy cat products
pilot-in-the-plane (believe that the future is neither found not predicted, but rather made) (1 point)
Correct example: 2 points e.g. founding team, vision/mission
Max. 9 points

c. AIMS: facilitate the start-up process and activities (1 point)

AIM: support the transfer of knowledge (1 point)
Examples: stimulate the regional economy by facilitating entrepreneurship; support students who
want to become entrepreneurs; commercialize IP; offer facilities such as cheap office space; offer
coaching and support services; organize fundraising events. (2 points each – max 4)
Question 3 IP protection
SENZ Umbrellas planned to introduce a completely new design that would revolutionize the
traditional umbrella.

a. There are four alternative ways of protecting innovations mentioned in the book (Chapter 4)
which can support the innovation strategy. Name two ways that SENZ is using to protect the
innovation and explain them in your own words. (6 points)
b. The entrepreneurs were well aware that copycat products could quickly enter the market. What
are two advantages and two disadvantages of open-source approach according to the book? (6
points)
c. Some of SENZ’s competitors, like Fulton Titan umbrella, have patented their umbrella
constructions. SENZ received a patent for its design. Describe in your own words the two types of
patenting discussed in the book. (4 points)
d. Chapter 4 discusses three conditions that have to be met for a patent to be granted. Name the
three conditions and illustrate for each condition how it applies to the SENZ umbrella. (3 points)

Answers:
a. Patenting (1 point)
(2x) of Original an Mini (the most well-known types of IP rights to exclude others from explointing
the invention), (2 points)
trademark (1 point)
Senz (signs or expressions, that have some distinctive character, that identify the origin of a product
or service); examples: construction and design - eye savers, a larger range of vision, aerodynamic
shape, rib construction, materials (high-grade aluminum, reinforced fiberglass), reversed
mechanism (2 points)

b. advantages: open-source is an alternative to intellectual property protection to create a large

installed base for a product (to win a design battle) and invite other firms to offer add-ons or
complementary products;
1 correct advantage (e.g. creating a large installed base for a product, become a dominant design,
invite other firms to offer add-ons or complementary products) (1 point)
2 correct advantages (creating a large installed base for a product, become a dominant design, invite
other firms to offer add-ons or complementary products) (3 points)
disadvantages: revealing of technology can lead to: loosing competitive advantage, more intensive
competition, less profit (6 points)
1 correct disadvantage (loosing competitive advantage, more intensive competition, less profit) 1
point)
2 correct disadvantages (loosing competitive advantage, more intensive competition, less profit) 2
points

c. Utility patent utility patents protect product and process inventions (2 points)
design patent; design patents do not protect any functionality, only appearance and visual shape of
an object (2D or 3D) (2 points)

d. novelty (cannot be a copy or too similar to previous inventions) (1 point)

usefulness (has to be useful) (1 point)
non-obviousness (should not be easy to invent a similar device) (1 points)
Question 4 International innovation strategies
Production in different locations poses challenges to innovation activities. SENZ wanted to be able
to work with relatively top-end retailers with high margins in order to penetrate the market, and at
the same time, production was mainly outsourced to cheap manufacturing partners in China.

a. In module 1 of the MOOC the challenges and paradoxes of innovation are explained. Which
three paradoxes does SENZ face? Illustrate each paradox with an example from the case. (6
points)
b. Bartlett and Ghoshal (1997) describe four strategies that international businesses can apply.
Name the four strategies and give an example of what each of these strategies would look like for
SENZ. (8 points)
c. Which of these four business strategies does Hess have in mind for Senz? Provide one
argument for your answer. (4 points)
Answers:
a.
capability (creativity, implementation) – the character of innovation activities in different phases:
idea development phase and inplementation phase, (1 point)
Correct example of capability (1 point)
collaboration (consensus, divergence); (1 point)
Correct example of collaboration (1 point)
uncertainty (risk, losses) – the tension between uncertainty generation and reduction,
Correct example of uncertainty (1 point)
innovativeness (incremental, radical) + example (1 point, this answer was not mentioned in the
MOOC)

b. see a description of these on p. 226/227 of the book:

centre-for-global strategy (a firm targets its innovation and new business development to the
global market, the same goods and serviced are developed to be used across the globe), (1 point)
Correct example (1 point) e.g. global operations of MNC (Nestle, Coca-Cola, Apple, Samsung, etc.)
globally linked (the firm commercialized its products or services worldwide but it makes use of
sources in different parts of the world), (1 point)
Correct example (1 point) e.g. production outsourced to different regions/countries
locally leveraged (a firm develops a product or service for a specific market, and if it becomes
successful in this market, the firm adapts it for another market),
Correct example (1 point) e.g. local production for each market
local-for local (firms develop dedicated products, services or business models in every country) (8
points)
Correct example (1 point) e.g. specific, locally developed products offered exclusively for a given
market

c. Globally linked. (1 point)

The idea is to outsource production costs in China whereas the head office is in the Netherlands (3
points)

Wrong strategy but with solid argument (2 points)