Economics of Innovation and Digital Management
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Questions and Answers

What are the main research interests of Riccardo Rialti, Ph.D.?

Digital Transformation; Digital Marketing Strategies; Big Data Analytics; SMEs

What is the focus of the course on economics of innovation and digital management at the macro level?

  • Impact of innovation on industries at a national level (correct)
  • Theory and academic papers
  • Guest speakers
  • How companies are creating value

    • Innovative companies are increasingly digitally-driven which influences their strategies.

    True

    What type of exam is conducted for evaluation where there are 15 closed-ended questions worth 2 points each?

    <p>written test</p> Signup and view all the answers

    What are the three defining characteristics of a start-up?

    <ol> <li>&lt; 10 years, 2) Feature (highly) innovative technologies and/or business models, 3) Have (strive for) significant employee and/or sales growth</li> </ol> Signup and view all the answers

    What are some challenges that start-ups typically face? (Select all that apply)

    <p>Acquisition of staff</p> Signup and view all the answers

    Seed stage of start-up development is when founders have already generated revenue.

    <p>False</p> Signup and view all the answers

    The Valley of Death is a critical phase in new ventures when substantial work has begun but no sufficient _________ has been generated.

    <p>revenue</p> Signup and view all the answers

    Match the source of financing with its type:

    <p>Savings of the founders = 1 Business angels = 4 Bank loans = 7</p> Signup and view all the answers

    What is the definition of innovation?

    <p>Innovation is generally understood as the commercial introduction of a new or significantly improved product or service.</p> Signup and view all the answers

    How can innovations be classified according to nature?

    <p>Both product/service and process</p> Signup and view all the answers

    Process innovation happens when a firm performs an existing business process in a radically different way that results in something highly beneficial to those who perform the process, those who rely on the process or both. ______ innovations include both new products and new uses for existing products.

    <p>Product</p> Signup and view all the answers

    What are the 4Ps of Innovation?

    <p>The 4Ps of Innovation refer to Product, Process, Position, and Paradigm.</p> Signup and view all the answers

    Closed Innovation is intended to yield immediate profit.

    <p>False</p> Signup and view all the answers

    Match the following terms with their descriptions:

    <p>Open Innovation = Innovation model that involves collaboration with external partners Closed Innovation = Innovation model that relies solely on internal resources</p> Signup and view all the answers

    Define Frugal Innovation.

    <p>Frugal Innovation is the redesigning of products, services, systems, and business models to reduce complexity, costs, while providing high user value for low-income customers.</p> Signup and view all the answers

    What is a service according to Vargo and Lusch (2004)?

    <p>Services are the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself.</p> Signup and view all the answers

    What are the characteristics of services according to Shostack (1977)?

    <p>Intangibility</p> Signup and view all the answers

    Innovation in services is peculiar due to its high ________ content.

    <p>information-intangible</p> Signup and view all the answers

    Users play a central role in service innovations.

    <p>True</p> Signup and view all the answers

    What is the solution to the commodity trap according to Chesbrough?

    <p>Open Service Innovation</p> Signup and view all the answers

    What does the Service-Dominant Logic perspective focus on?

    <p>Value co-creation with customers and stakeholders.</p> Signup and view all the answers

    Which of the following dimensions are included in the new framework of Service-Dominant Logic perspective? Select all that apply

    <p>Service ecosystems</p> Signup and view all the answers

    Service innovation based on Service-Dominant Logic perspective does not involve asymmetric information flows. (True/False)

    <p>True</p> Signup and view all the answers

    Value chain is the coordinated series or sequence of functional activities necessary to transform inputs into _________ that customers value.

    <p>finished goods or services</p> Signup and view all the answers

    How can digital technologies such as artificial intelligence and cloud computing be characterized?

    <p>Digital technologies are characterized by accessibility, ease-of-deployment, scalability, and ubiquity.</p> Signup and view all the answers

    What role do basic technologies play in digital transformation projects?

    <p>Basic technologies are the pillars of digital transformation projects as they enable the functioning of other technological tools within the company.</p> Signup and view all the answers

    What are the characteristics of basic technologies? (Select all that apply)

    <p>Deriving from past technological eras</p> Signup and view all the answers

    What is the main purpose of IT infrastructure in the context of basic technologies?

    <p>IT infrastructure brings together many basic technologies to create a foundation for digital operations.</p> Signup and view all the answers

    ___ and Actuators are considered basic technologies.

    <p>Sensors</p> Signup and view all the answers

    What is the primary importance of mobile technologies?

    <p>Mobile technologies enable users to access information and services on-the-go.</p> Signup and view all the answers

    Communication and Networking represent the base for Industrial Internet of Things (IIoT).

    <p>True</p> Signup and view all the answers

    What are the consequences of digital transformation for the value chain?

    <p>Product innovation, embodied in the outputs of an organization (goods or services) and Process innovation, innovations in the way an organization conducts its business (e.g. techniques of producing or marketing goods and services)</p> Signup and view all the answers

    What is one reason for the limited impact of digitalization on innovation in small and medium-sized enterprises (SMEs)?

    <p>In-house R&amp;D activities weaken the impact of digitalization</p> Signup and view all the answers

    What is the relevance of cloud computing?

    <p>Cloud computing allows for scalable, cost-effective data storage and processing.</p> Signup and view all the answers

    Which of the following are types of data analytics? (Select all that apply)

    <p>Descriptive analytics</p> Signup and view all the answers

    Match the following concepts with their descriptions:

    <p>Integration = Production as service Servitization = Life long partnership Expertise as service = Product related consulting</p> Signup and view all the answers

    What is the basic concept of blockchain technology?

    <p>The fundamental concept of blockchain is to create a secure, transparent, and decentralized ledger for transactions.</p> Signup and view all the answers

    What does SMEs stand for?

    <p>Small and medium-sized enterprises</p> Signup and view all the answers

    Research and Transfer Institutes (RTIs) play no role in digitalizing SMEs in Industrial Districts.

    <p>False</p> Signup and view all the answers

    What is the role of 'gatekeepers' in the local dissemination of knowledge?

    <p>The gatekeepers have an ability to access external knowledge and construct a conversion process which deciphers external knowledge and turns it into something locally understandable and useful.</p> Signup and view all the answers

    What is mentioned as important mechanisms for the dissemination of Industry 4.0 knowledge in traditional industrial districts?

    <p>Absorbing and matching internal and external sources of knowledge</p> Signup and view all the answers

    In the Trajectory of diffusion and dissemination of I4.0 knowledge, during the pioneering phase (2015-2016), BIESSE launched the project ______ (IoT and sensors).

    <p>SOPHIA</p> Signup and view all the answers

    What are the roots of the Vinalopo footwear district?

    <p>Traditional footwear artisans (espadrilles) in late 19th century</p> Signup and view all the answers

    What are some of the technologies mentioned as part of the Vinalopo footwear district?

    <p>All of the above</p> Signup and view all the answers

    Virtual prototypes reduce the cost of manufacturing physical prototypes.

    <p>True</p> Signup and view all the answers

    ______ manufacturing of footwear lasts for footwear prototyping or for shoes prototyping permits having the exact prototype.

    <p>Additive</p> Signup and view all the answers

    Match the Industry 4.0 adoption strategies with their descriptions:

    <p>Digital awareness = Initial stage of understanding digital technologies Digital enquirement = Exploration of tech solutions for smart districts Digital collaboration = Accompanied exploration of digital benefits in business processes Digital transformation = Implementation of digital solutions for production and strategy</p> Signup and view all the answers

    What kind of technologies did Del Brenta shoe district focus on for product development?

    <p>Computer Numerical Control (CNC) milling machines, 3D printers, 3D scanners</p> Signup and view all the answers

    Study Notes

    Course Overview

    • The course covers the economics of innovation and digital management.
    • It is taught by Riccardo Rialti, Ph.D. at the University of Siena.

    Content

    • The course provides an overview of the impact of innovation on economic activities.
    • It examines how innovation has affected industries at national and international levels.
    • It focuses on how digital technologies are changing how companies create value.
    • It covers how companies are becoming digitally-driven and need to rethink their strategies, processes, and organizational structures.

    Learning Objectives

    • Understand new I4.0 technologies shaping modern businesses.
    • Learn how digitalization is affecting different industries.
    • Be able to participate in digital transformation teams within businesses.

    Course Structure

    • Lessons comprise in-class discussions, guest speakers, and cases.
    • The course includes readings, group assignments, and a written exam.

    Evaluation and Exam

    • The evaluation consists of two group assignments (30% each) and a written exam (40%).
    • The first group assignment is a short essay on digital transformation within a large manufacturing company.
    • The second group assignment is a business idea generation project.
    • The written exam consists of 15 closed-ended questions.

    Guest Speakers

    • There are three guest speakers scheduled for the course.
    • The topics include digital marketing foundations, leading digital transformation projects, and digital transformation strategies in luxury.

    Group Project Work

    • The group project work involves developing digitally-embedded products.
    • The project should include a presentation with 25 slides covering various aspects of the product.

    Industry 4.0

    • Industry 4.0 is characterized by the use of digital technologies such as artificial intelligence, business analytics, cloud computing, and the Internet of Things (IoT).
    • It involves the integration of these technologies to create new business models and opportunities.
    • Industry 4.0 is driven by the need for companies to innovate and stay competitive in a rapidly changing business environment.

    Digital Technologies

    • Digital technologies include artificial intelligence, business analytics, cloud computing, and the Internet of Things (IoT).
    • These technologies are characterized by accessibility, ease of deployment, scalability, and ubiquity.
    • They are enabling companies to create new business models and opportunities.

    Additive Manufacturing

    • Additive manufacturing is a type of production process that involves the creation of products layer by layer.
    • It is also known as 3D printing.
    • Additive manufacturing is becoming increasingly popular due to its ability to create complex geometries and short production times.

    Adaptive Robots

    • Adaptive robots are a type of robot that can learn and adapt to new situations.
    • They are used in various industries such as manufacturing, healthcare, and logistics.
    • Adaptive robots are becoming increasingly popular due to their ability to improve efficiency and productivity.

    Virtualization Technologies

    • Virtualization technologies include augmented reality (AR), mixed reality (MR), and virtual reality (VR).
    • They are used to create immersive and interactive experiences.
    • Virtualization technologies are becoming increasingly popular in various industries such as education, healthcare, and entertainment.

    Data Analytics

    • Data analytics is the process of extracting insights and patterns from data.
    • It involves the use of various techniques such as descriptive, diagnostic, predictive, and prescriptive analytics.
    • Data analytics is becoming increasingly important for businesses as it enables them to make informed decisions and improve their operations.

    Artificial Intelligence

    • Artificial intelligence (AI) is the development of computer systems that can perform tasks that typically require human intelligence.
    • AI involves the use of machine learning algorithms and natural language processing.
    • AI is becoming increasingly popular in various industries such as healthcare, finance, and customer service.

    Blockchain

    • Blockchain is a decentralized, digital ledger that records transactions across multiple computers.
    • It is used to create a secure and transparent record of transactions.
    • Blockchain is becoming increasingly popular in various industries such as finance, supply chain management, and cybersecurity.### Blockchain Networks
    • Private blockchains are not decentralized, closed, and secure databases that grant access to a few participants.
    • They are used for running nodes, making transactions, and authenticating settings.
    • Public blockchain networks are different from private blockchain networks.

    Permissioned Blockchain Network

    • A permissioned blockchain is a mix of private and public blockchain networks.
    • It allows anyone to join the network after their identities have been sufficiently verified.
    • The purpose of a permissioned blockchain is to grant special permissions to each participant.
    • This allows participants to perform specific functions and handle specific processes.

    Digital Transformation

    • Digital transformation is fundamental for companies to remain competitive.
    • The integration of digital technologies has proven to enhance business performance.

    Start-ups

    • A start-up is defined by 3 characteristics:
      • Less than 10 years old
      • Highly innovative technologies and/or business models
      • Significant employee and/or sales growth
    • Start-ups face several challenges, including:
      • Sales and customer acquisition
      • Product development
      • Processes and internal organization
      • Growth and internationalization
      • Raising capital
      • Cash flow and liquidity
      • Profitability
      • Acquisition of staff
      • Team development
    • Start-ups can overcome the "Valley of Death" through financing and collaboration.

    Financing

    • There are several sources of financing, including:
      • Savings of the founders
      • Family and friends
      • Governmental subsidies/funding
      • Business angels
      • Venture capital
      • Incubators and accelerators
      • Bank loans
    • Financing can help start-ups overcome the "Valley of Death".

    Established Firms

    • Large businesses have a higher capability of obtaining financing for R&D projects.
    • However, they also have a loss of managerial control, lower incentives for individual scientists, and bureaucracy.
    • Agile leadership can help mitigate these costs.

    Innovation

    • Innovation is the commercial introduction of a new or significantly improved product or service.
    • Innovations can also be for non-commercial applications, such as for better public services or for addressing social needs.
    • Innovation can be classified according to:
      • Nature (product/service, process)
      • Intensity (incremental, radical)
      • Effect on competences
      • Destination (modular, architectural)

    Technology and Innovation

    • Technology can advance through innovation, which is "produced" within the system, subject to economic incentives.
    • Endogenous growth theory suggests that innovation is the output resulting from inputs, such as physical capital, human capital, R&D, and economies of scale.
    • Economic agents are motivated by selfish considerations of advancement.
    • Technology is non-rivalrous, but knowledge is often produced under conditions of "open source".### Internalist vs. Externalist Theories of Technological Change
    • Internalist theory: evolutionary process, past influences the future, and technological change is determined by internal factors.
    • Externalist theory: technological change is determined by economic needs.

    Social Constructionist Theory

    • Technology is the result of political processes and cultural transformations.
    • Lobbies, classes, and groups of interests play a crucial role in shaping technology.

    Types of Knowledge

    • Prescriptive knowledge (technology): focuses on how to do something.
    • Propositional knowledge (science): focuses on understanding nature.

    Innovation and Efficiency

    • The degree of inefficiency of the innovative process can be reduced by trying fewer options.
    • Modern economic growth was allowed by the division of knowledge (specialization).
    • Total social knowledge equals the union of all individual pieces of knowledge.

    Technology in a Malthusian Economy

    • Pre-1800 society was able to develop many techniques without understanding why they worked.
    • There was progress before the First Industrial Revolution, but most gains were attributed to the growth of commerce and markets.
    • Most inventions were introduced by artisans, but could they alone generate the Industrial Revolution?

    Research and Development (R&D)

    • R&D is the set of innovative activities undertaken by corporations or governments to develop new services or products.
    • R&D constitutes the first stage of development of a potential new service or product.
    • There are two primary models of R&D departments: staffed by engineers or industrial scientists.

    Open vs. Closed Innovation

    • Closed Innovation: a company generates, develops, and commercializes its own ideas.
    • Open Innovation: a company uses external ideas and partnerships to accelerate innovation.

    Frugal Innovation

    • Frugal innovation is the redesigning of products, services, systems, and business models to reduce complexity and costs while enhancing functionality.
    • Frugal innovation targets marginalized contexts, i.e., social scenarios within specific geographical boundaries where people have low income, capabilities, and freedom.
    • Examples of frugal innovation include the Chotukool, a low-cost refrigerator designed for Indian households.

    Service Sector

    • Services are the application of specialized competences (knowledge and skills) through deeds, processes, and performances for the benefit of another entity or the entity itself.
    • Services have four characteristics: intangibility, inseparability, heterogeneity, and perishability.
    • The service sector is wide and varies across countries.

    Classifying Services

    • Services can be classified into different categories, such as education and healthcare, banks and insurances, public administration, and more.
    • Lovelock proposes a classification of services based on the recipient of the service, such as people processing, possession processing, and mental stimulus processing.

    Innovation in Services

    • Innovation in services is peculiar and has different characteristics than innovation in manufacturing.
    • According to Sirilli and Evangelista (1998), innovation in services involves co-terminality, high information-intangible content, human resources, and organizational factors.
    • Classifying innovation in services is difficult, but many classifications exist, such as major service innovations, major process innovations, product line extension, and more.

    Open Service Innovation

    • Open Service Innovation is a solution to the commodity trap, which is caused by the diffusion of production and ideas, manufacturing activities moving to low-cost countries, and shorter product life cycles.
    • According to Chesbrough, Open Service Innovation involves considering your company as a business open to services, inviting clients to co-create, considering Open Innovation, and modifying your business model.

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    Learn about the economics of innovation and digital management with Riccardo Rialti, PhD. Explore the concepts and principles of innovation and digital management.

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