M04_Dodgson, Gann, Salter - Ch4.pdf

OXFORD The Management of Technological Innovation Strategy and Practice Completely Revised and Updated Mark Dodgson David Gann Ammon Salter OXFORD UN IVE R.S ITY P RESS 4 Innovation Strategy Introduction Of all the aspects of MTI, innovation strategy is the most challenging. Firms ca~...

OXFORD The Management of Technological Innovation Strategy and Practice Completely Revised and Updated Mark Dodgson David Gann Ammon Salter OXFORD UN IVE R.S ITY P RESS 4 Innovation Strategy Introduction Of all the aspects of MTI, innovation strategy is the most challenging. Firms ca~ be very good at the various activities involved in MTI , such as R&D or operations, which are discussed later in the book. but this counts for little unless it is supported by a well-grounded innovation strategy that guides firms' choices, prioritizatio~S, ~nd sequences. There is little value in being highly efficient at developing or debvenng new products and services if they are the wrong products and services for the firm and its markets. Well-chosen new products and services deliver value. build the tech- nological base of the firm, develop its capabilities. improve its processes. and add to its reputation and brands. An innovation strategy helps firm s decide. in a cumula- tive and sustainable manner. about the type of innovation that best match corpo- rate objectives. It should react to the importance and chaUenges of MTI described in Chapter 1. reflect the contextual issues affecting MTI discussed in Chapter 2. and respond to the different features and aspects of technological innovation analysed in Chapter 3. This chapter defin es what an innovation strategy is. explaining why it is importan~. and how it relates to other aspects of corporate strategy in firms. Its primary focus IS the formulation of an innovation strategy through the innovative capabilities of search- ing and selecting. It discusses the limitations of trying to use conventional corporate strategy frameworks and tools to define and guide radical. emergent. and unstructured innovation processes. such as those often found in new technology-based firms and in technological entrepreneurship generaUy. The implementation of strategy. involving confi guring and deploying capabilities is explored more fully in subsequent chapters. In practice the formulation and implementation of strategy are undertaken iteratively and are intimately connected and informed by learning. The chapter begins by addressing the im~o~tance of formulating an innovation strategy. it then examines innovation ~trategles 10 p~actice by describing some types. This is foUowed by a discussion of search- Ing and selectmg capabilities. The chapter concludes with a review of the returns from innovation strategy. and consideration of the particular issues of innovation strategy iJ1 small and medium-sized firms.  INNOVATION STRATEGY 95 What is an innovation strategy? An innovation strategy guides decisions on how resources are to be used to meet a firm's objectives for innovation and thereby deliver value and build competitive advantage. Its crafting is supported by a number of innovative capabilities that steer the configu ra- tion and reconfiguratio n of a firm 's resources. It entails judgement about which kinds of innovation processes (discussed in Chapter 3) are most appropriate for the firm's circumstances and ambit ions. An innovation strategy identifies the technologies and markets the firm should best develop and exploit to create and capture value. It does so within the limits of the resources available to the firm to support current and future innovation efforts and its evolving corporate strategy, organization, and culture. When considering innovation strategy it is helpful to think of the military distinc- tion between strategy and tactics (although it would be unwise to take the analogy too far-strategy is not warfare). In military parlance, 'tactical' refers to the specific means by which battles are won. 'Strategic' refers to how wars arc won: whether, where, and when to fight battles; preparing for war by understanding the nature of external threats and opportunities; and ensuring that sufficient resources and capabilities are collected, organized, and deployed in a timely manner in order to succeed. Within an innovation perspective, tactical issues relate to how firms manage R&D activities, develop new products and services. and improve operations. At a higher level. strate- gic matters include analysis of the firm 's competitive and technological environment, and assessment of its external challenges and opportunities and where its distinctive advantages lie. It involves prioritizing and developing the right technological innovations by ensuring that appropriate resources, capabilities, and processes are used to their best effect in delivering value. As with the understanding of the nature of corporate strategy vis-a.-vis innovation strategy. it is not concerned with individual issues, but with comprehensive and coherent approaches to how business issues fit together (Hambrick and Frederickson 2001). Innovation strategy is different to mainstream business st rategy because it needs to comprehensively accommoda te uncertainty. As such, and as discussed later. many common approaches to business strategy are inappropriate for innovative businesses. Continuing the military analogy, innovation strategies cannot simply follow an army field manual of prescriptive plans, but must function within Clausewitz's 'fog of war' with uncertainty about your own capabilities, and the capabilities and intent of adver- saries. Some uncertainty (unknowable futures) is always present in strategic manage- ment of incremental innovation, but is a major strategic factor in radical innovation. Conventional strategy analysis tools such as Porter's five forces industry analysis (see discussion later) are useful for low levels of uncertainty but as uncertainty increases, the key elements of successful strategy become search and responsiveness, helping fir~s to react to unforeseen events (Courtney, Kirkland. and Viguerie 1997). Under conditIOns 96 INNOVATION STRATEGY Innovation strategy Innovative In novation capabilit ies p rocesses Resources for innovatio Figure 4.1. A simple model of innovation strategy of high uncertainty. the use of many common strategy tools can be misleading and even dangerous.. Figure 4.1 shows a simple model of four interrelated elements involved in innovation strategy, including: The enacted strategy itself, including its targets and 'fit' with overall company strategy, existing innovation efforts, and the context in which it operates. The identified targets are the technologies and markets that managers believe will create and deliver best value for their firms. The resources available for innovation: the assets a firm owns and to which it has preferential and secured access. The innovative capabilities that guide and enable those resources to be assessed, configured. and reconfigured. The innovation processes used to deliver results: the combinations of management and organization around R&D. new product and service development. operations. and commercialization that deliver innovation. Innovation strategy helps to focus attention on how these resources, capabilities. and processes are best developed and deployed to meet corporate objectives. There are often more opportunities for innovation than resources available. and choices have to be made. Choices should to be linked to anticipated economic benefits and the ability to appropriate return. from innovation (see Chapter 9). They need to fit with overall corporate strategy. deciding whether or not innovation targets com· plement the firm's available resources and existing innovation portfolio and whether ambitions match its organizational structure and culture. The choices made should include attention to issues of timing: whether, for example. a firm aims to be a proactive  INNOVATION STRATEGY 97 innovator or to be a reactive follower. These decisions help prioritize resource allocation, providing a focus for marshalling and integrating different components of innovation processes and guiding them towards specific markets and customers within the compet- itive environment. RESOURCES FOR INNOVATION A firm's resources used in innovation strategy include: Financial resources and appetite for and tolerance of risk. Human resources and their capacities for innovation. Technological resources, both physical (plant and equipment ) and intellectual (knowledge, patents, trademarks). Marketing resources (ownership and market penetration of brands, access to lead customers. knowledge of markets). Organizational resources (the routines. procedures, practices, and policies within the firm , which, when combined, craft processes). Networking resources (partners, suppliers, customers, communities within which the firm operates. and the level of adhesion and trust within them). INNOVATIVE CAPABILITIES There is a growing literature in the field of corporate strategy on the topic of 'dynamic capabilities', defined as the 'capacity of an organization to purposefully create, extend, or modify its resource base' (Helfat et al. 2007: 4). Innovative capabilities are similarly defined in this book as bundles and patterns of skills used by firms to formulate and implement an innovation strategy involving the creation. extension, and modification of those resources used for innovation. Numerous dynam ic capabilities of firm s are identified in the literature; here we consider fou r-searching, selecting. configuring, and deploying (Helfat et al. 2007)-that focus specifically on supporting innovation. Inilovative capabilities include: Searching-seeking and assessing market and technology opportunities and con- sidering the threats changes in markets and technologies pose. Selecting-choosing amongst future options. based on an evaluation of available resources. the probability of value creation. and the results of search activities. Configuring~nsuring the coordination and integration of innovation efforts. Oeploying--delivering internally generated and acquired innovations on time and to budget, and protecting and delivering value from innovation. 98 INNOVATION STRATEGY There is also a 'meta level' encompassing innovative capability: Learning-improving the performance of innovation processes through experI - mentation and experience. INNOVATION PROCESSES In novation strategy involves deciding upon the most appropriate innovation processes fo r the fi rm's context and targets--whether these processes are relatively simple or complex (see the discussion later and Chapter 3 on the various generations of innovation process). An innovation strategy helps firm s decide on the right things to do; their innovation processes help them do things in the right ways (see Box 4.1 ). Subsequent chapters of this book examine the various elements of the innovation process, including the development and maintenance of supportive networks and commu nities, technolog- ical collaboration, R&D, creating new products and services, operations, and generating economic return s through commercialization. Box 4.1 Dancing elephants Evt:n the largest and most cumbersome organizations can respond to changes in strategy. in his auto- biography, Lou Gerslner, form er CEQ of IBM, describes how IBM undertook a fundamental strategic repositioning in the 19905. The title of his book, Who &lys Eleplumts Om't Dana?, alludes to the way that even the largest, monolithic organizations can change strategies in a dramatic and effective fashion. in 1993, IBM was in deep trouble. Its annual net losses had reached a record 58 billion. The computer market was focused primarily on desktops and it was extremely competitive. Gentner joined IBM in 1993 and, with a strong customer-oriented background. he decided to focus on business applications across the enterprise. With help from his colleagues, he recognized thai one of 18M 's enduring strengths was its ability to provide integrated solutions for rustomers, representing a total package of support, not individual parts or components. IBM successfully transfonned itself into an integrated business solutions company, combining its strengths in solutions, services, products, and technologies. It sold its PC business and bought a major consulting finn. IBM accomplished a complete transformation in its strategy. Sweden's Ericsson is another example of a large company that radicaUy changed its strategy (Davies 2003). During the 19705 and 19805 Ericsson was known as a broad-based manufacturer of public telecoms equipment. During the 1990s it focused on the mobile communications market and was so successful that by 1999, 40 per cent of the world's subscribers were connected to Ericsson systems. During the mid- Ims. Ericsson manufactured and sold mobile handsets, mobile subsystems and systems, radio bast stations, mobile switches, operating systems, and customer databases. In 1996, Ericsson's Corporate Executive Committee completed the largest planning study in the company's history. It pointed to the trends of deregulation and greater competition in telecoms forcing suppliers to get closer to customers. Telecom operators were demanding supplien assume greater responsibility for network design, build, and operation.. A5 ~ result of this incr~ awaIftlcss, Ericsson's strategy changed fundamentally from manufacturing mto higher value-added SeTV1Ces, systems integration, and operations. ~e company ~ow offers 'tumkey' solutions to design, build. and operate mobile phone networks (Da~es 2003).. It IS a ~mplete supplier and integrator of mobile systems. It also has a global services bUSiness, o~g seTVI~ and.business consuJting to support CUSlomen' network operations. It has outsourced Its products, mcluding achange equipment, 3G radio bast stations. and mobile handsets to other sllpplien such as F1utronics and its joint venture, Sony-Ericsson.  INNOVATION STRATEGY 99 Why is innovation strategy important? The reasons why innovation is a strategic management issue is because it is intimately linked to the capacity of the firm to deliver value: Creating and appropriating returns from innovations is a key source of competitive advantage for a firm. Complex. risky. and expensive activities. such as R&D, product and services innovation design , operations. networking, and coUaboration. can hamper a firm 's competitive position and may result in piecemeal, short-term focused. and poten- tially conflicting outcomes unless they are guided by choices that build synergies and grow expertise cumulatively. Globalization of technology and markets, with many potential new customers. sup- pliers, partners, and competitors in different parts of the world, requires companies to take a strategic approach to their innovation activities to provide focus within an ever-expanding set of opportunit ies and threats. Organizational structures and innovation processes that firms adopt to encourage technological innovation need to relate to the corporate strategy pursued by the firm, and vice versa; for example, R&D can be organized according to whether the firm aims to support an innovation leader or follower position. Unless firms can articulate their long-term strategic aims for innovation. it is difficult for them to communicate with and benefit from public-sector science and technology policies in areas such as basic science. regulation. and standards creation. They are also less likely to be able to build long-term technological col- laborations with partners or to find patient investors (see the discussion later and Chapter 9). A firm that identifies innovation as a strategic activity is more likely to attract creative workers in search of exciting opportunities in the 'war over talent'. Innovation strategy in practice There are no blueprints for innovation strategy. Managers need to nurture the most meaningful app roaches to strategizing for the specific circumstances within which they conduct their business. Innovation strategy development and use can vary markedly depending upon whether the firm is new or weil established. large or small. centralized or dispersed in its organization, deals in simple or complex products and services. Operates within weD-defined or uncertain technological and market circumstances. wi th a major or minor impact on society. safety. and the environment. It also varies according 100 INNOVATION STRATEGY to the characteristics of the sectors and innovation systems in which it operates. The challenge for managers is to appreciate and work within the opportunities and c~n­ straints of being able to create and implement innovation strategy in their own spectfic circumstances, which, as we have seen in previous chapters, are often complex and uncertain. In some firms, strategy is not written down, remaining implicit in the ideas of a few senior managers, and only partially communicated to staff, customers, and suppliers. In other firms, strategy is set out and documented explicitly, and communicated overtly within and outside the business. E.'q)licit strategies for innovation describe objectives and targets and the specific resources, capabilities, and processes required to meet them. Such deliberate strategies are more commonly a feature of well-established sectors and stable business environments. Strategies that are less specific and more emergent are more commonplace in rapidly changing or emerging sectors and markets, in the context of radical innovation, or in the early stages of a product life cycle where there is a high degree of uncertainty. In all cases sound, enacted innovation strategies usually possess the following features: Statements on the role of innovation in meeting corporate strategic objectives, creating and delivering value, and building sustainable competitive advantage. As accurate as possible an understanding of market trends and technological and competitive circumstances and their impact on innovation positions. Articulation of the firm's innovation ambitions and long-term objectives. Recognition of gaps between current performance and future expectations in rela- tion to innovation. Plans for developing and mobilizing resources and innovative capabilities in a timely manner. Appreciation of the most appropriate innovation processes for meeting objectives. An innovation strategy usually involves a mix of approaches. Parts of the business, for example. may have a relatively straightforward innovation process, involving simple research-push or responding to customer demands. Other parts of the business may be far more complex and difficult to manage: for example, being a user of the fifth- generation process described in Chapter 3. It is important to recall that complexity of innovation strategy is defined here by the number of influential parties contributing to it and the emergent , unpredictable properties of outcomes. A 'simple' innovation process driven by huge investments in in-house science, for example, may turn out to be extraor- dinarily complicated, difficult, and risky (see Box 6. 2) , Greater complexity in innovation strategy definition is often found in large multidivision businesses where the develop- ment and implementation of strategy requires coordination if not consensus among corporate, divisional, and functional activities, as is demonstrated in Chapter 5 on R&D.  INNOVATION STRATEGY 101 Box 4.2 The move from technology strategy to innovation st rategy Reco~ition of the ~road corporate context within which innovation takes place is acknowledgexf in tht MTI h.terat~rt. wh'~ ~as evolved o.vtr the past twenty years from analysis of 'technology' Slrat~ to analr.:'s of innovation strattgy. TIus partly reflects the change in focus 10 looking al broader asp«ls th~ Just technology, and partly a change in terminology-looking al the same things (technology) usmg a different language and se1 of dimensions. A number of books and articles in the 1980, and mid- 1990s examined technology SlJ"ategy from an organizational or operational perspective (PQrter 1985; leece 1987; Dodgson 1989; Pavitt 1990; Loveridge and Pitt 1990; Granstrand, Hakansson, and Sjolander 1992; Dussauge, Hart, and Ramanantsoa 1993; Goodman and Lawless 1994; Coombs 1994; Brown 19%). During the 1990s and 2000s. business schools adopted innovalion as a core field of study because of its impact on competitive advantage. The focus on technological innovation extended beyond operations and engineering management and organizational mailers to encapsulate associated changes in busints:s models and corporate strategies (Burgdman et al. 1995; Dodgson 2000; Tidd, Sessant. and Pavitt 2005; Schilling 2005; Chesbrough 2(03). During this time. innovation strategy becamt a more widely used and understood term. and Ita.s b«ome encompassed by subjects such as marketing. II ntvtrtheltss relains its antecedenls in being concerned primarily with technological innovation and the conditions thai encourage its effective management. Whether an innovation strategy is explicit or implicit. broad or detailed. prescriptive or emergent. and whatever its objectives and timing, its formulation and application are bounded by the firm's culture. norms, and values. Strategy emerges from and is implemented within organizations that possess distinct beliefs and routines and. there- fore. needs to fit with them. The continued success of 3M is attributed to its culture of supporting innovation. seen in the deeply engrained traditions and customs revealed in the following statement from its Chairman, William McKnight in 1948: As our business grows. it becomes increasingly necessary to delegate responsibility and encourage men and women to exercise their initiative. This requires considerable tolerance. Those men and women to whom we delegate authority and responsibility. if they are good people, are going to want to do their jobs in their own way.... Mistakes will be made.... Management that is destructively critical when mistakes are made kills initiative. And it's essentialtnat we have many people with initiative if we are to continue to grow. Given the high degree of failure in in novat ion, discussed in Chapter 7, a culture tolerant of failure and encouraging of learning from failure is a distinctive capability. Developing an innovation strategy contributes to strengthening a firm's knowledge about customers and markets. science and technology. regulatio ns, competition, sup- pliers. and available finance. This knowledge in itself helps to improve awareness of what can and what cannot be embraced and underpins the innovative capabilities that shape and guide the formulation of an innovation strategy and the selection and use of appropriate innovation processes. The remainder of this chapter describes the types of innovation strategies firms can pursue. with analysis of the kinds of innovative capabilities needed by firms. A number of tools and techniques can assist firms in 102 INNOVATION STRATEGY defining their innovation strategies and building their innovative capabilities and these are described, together with a commentary on how to use them, and their likely benefits and limitations. Box 4.3 Insights from corporate strategy and planning There are several schools of thought on strategy and the ability to make meaningful choices about the future, ranging from those that think planning is a futile activity to those that believe that future events can be shaped, managed, and measured. It is generally useful for managers to assess the level of uncertainty surrounding their decision-making so they can tailor strategy accordingly. Courtney, Kirkland, and Viguerie (1997) identify four levels of uncertainty which affect the ability to develop meaningful strategy: Level 1. Clear enough evidence about likely future markets and competitive environments for new technology is available, and standard analytical tools can be used with confidence. Level 2. A number of alternative futures exist. These can be described in scenarios, and decisions can be made about the alternatives to which one might respond. Level 3. A wide range of possible future outcomes exists and it is not possible to develop discrete scenarios with any degree of certainty. Managers glean whatever evidence may be available and make decisions based on past experience and their personal judgements. Level 4. There is real ambiguity about the future creating high levels of uncertainty, so managers base their decisions mainly on qualitative judgements. Uncertainty and ambiguity in many innovation activities can lead to the view that it is not possible to produce a systematic strategy with clarity of purpose. This position uses what might be described as a judgment-based approach to strategy. It is adaptive, focusing on experts' intuition to make adjustments to strategic orientations and operations in pursuit of results. In such case, the degrees of uncertainty surrounding the fum's operating environment are typically at Level 3 or 4. In the early stages of more radical innovation, the nature of uncertainty arising from unpredictable events can result in the best-laid plans failing. In such circumstances, why try to plan and develop strategies for the future? Attempts to use formal measurement tools and techniques (described later), can cause complications in the form of irrelevant data and mistaken diagnoses, and lead to what is often described as analysis paralysis. Under such conditions it may be better to leave decision-making to the judgement and experience of experts responsible for different parts of the innovation process with a loose set of orientations and guiding principles, thereby reducing the extent to which they are conceptualized in detail. Hirschman and Lindblom (1962) conclude that in many uncertain projects there is little point in detailed ex ante planning and at best we can develop the science of 'muddling through' (Lindblom 1959). Problems with this 'Ieave-it-to-the-experts' approach are that a lack of articulation reduces the possibility of engagement of a wider group of stakeholders (see Chapter 5 and the earlier discussion on why innovation strategy is important), and transparency and accountability in decision-making. Another problem with the 'adaptive' approach is that managers can sometimes abandon any attempt at analytical rigour, resulting in misinformed judgements and decisions (Courtney, Kirkland, and Viguerie 1997). Firms can deal with high levels of uncertainty by keeping their options open, investing in flexibility, allowing quick adaptation to opportunities, whilst still demanding rigorous processes for option of development and management. At the other end of the spectrum lies the 'measure-and-act', rational approach to strategy and planning, or what Whittington (1993) calls the 'Classical' approach, which encompasses much of Michael Porter's work on strategy. It is intellectually linked with the study of economics and the military, based on a belief that managers can make rational choices in response to technical opportunities and social. economic, and environmental needs. The use of resources can be optimized to provide the best overall solution based on current knowledge and past experience. Application of this approach to innovation strategies sees the systematic definition of goals, with a schedule of resources and plans for the use of capabilities and processes needed to achieve them. This technocratic approach is often found in operations and engineering management using tools and techniques for measuring and improving performance against clearly defined benchmarks'3nd milestones. It is appropriate to use such techniques where capital investment is intense-putting the firm at risk financially speaking, market uncertainty is  INNOVATION STRATEGY 103 low, and risk can be contained, such as in incremental innovation and continuous improvement. Radical innovation is often inherently more multidimensional and uncertain, creating instability with unique and novel outcomes that conflict with such exercises of technical rationality (Lester and Piore 2004). There are, nevertheless, some circumstances where firms have the confidence of their market position and technological capability through detailed analysis to make 'big bets' on future developments with the aim of shaping the market to benefit from FMA (Courtney et al. 1997; see Box 4.4). Another approach, associated with management scholars such as Mintzberg (1994), argues that strategy is emergent, evolving from decisions that are crafted as internal and external events unfold. This rational-adaptive approach accepts uncertainty and the difficulty of measurement, but believes in the possibility of developing plans and using techniques to collect evidence where it is practical to do so. This position is closely related to what Whittington calls the 'Processual' approach, which recognizes that in practice, strategy is a messy process of learning, failing, and compromising, emphasizing the crafted nature of strategy within a firm's particular circumstances. An approach to innovation strategy formed fro m a combination of good judgement and practical techniques for gathering and analysing evidence is likely to be the most fruitful way forward in many situations, particularly where there are high degrees of uncertainty, as long as it leads to relatively rapid decision-making. Types of innovation strategy.gescribing different types of innovation strategy is an inevitably crude exercise. In reality firms rarely comply with ideal types. They display different features in different usinesses at different times. As we show shortly, strategies evolve between types. Never- ~eless, there are some broad categories of innovation strategy that can be described and -ed for analytical purposes, although it is important to remember their limitations. One of the most useful distinctions is between firms that seek first-mover and fast-follower advantages-see Box 4.4. Courtney, Kirkland, and Viguerie (1997) offer three basic positions that firms might adopt in uncertain conditions in the light of analysis of the industries within which they perate and the choices they make about timing: 1. Taking big bets, investing heavily in a single new area or development with the prospect of major returns. This may occur in emergent technologies where there are very high levels of uncertainty, or where an existing firm has strong tech- nologicalleadership and wishes to capitalize on first-mover or very fast-follower advantages. 2. Hedging bets, investing in a number of different options where there are expected to be reasonable returns. This may occur in firms operating in relatively stable markets, able to benefit from fast-follower positions. 3. Wait and see, adopting a 'watching brief' to keep options open or maintain a position in a market whilst others bear greater risks by taking a lead in develop- ments of uncertain new technologies. This option is usually taken by firms that follow behind industry leaders and fast followers, but have the ability to benefit by delivering cost-savings by producing cheaper goods and services. 104 INNOVATION STRATEGY Bo" 4.4 flrst-mover/fast-follower advantages Lead rimes 0Vff competitors or FMA can provide k~ strategic advantages and means for firms to capture returns to innovation. lnnovations may provide temporary monol;lOlies to firms first into the market. First movers may be able to gain extra market share and capture high returns before the entry of competing products or services (Liebmnan and Montgomery 1998; Suaret and Lanl.Olla 2(05). They may also shape their customers' expectations of the fonn and function of a product or service, thereby influencing cost structures. In some industries, being first may allow the innovation to lock in customers to products or services and make it expensive for customers to switch to th~ of competitors. It may enable the firm to gain a head start over competitors in building up manufacturing, distribution, and provision of sales support. Many successful firms specialize in being fast followers, able to learn from the experiences of the first generation of innovators and quickly follow behind them in the market (Schnaars 1994). Indeed, the names associated with numbers of well-known products are not those of the innovators: ballpoint pens. for example, were not developed by Bic, but by Reynolds and Eversharp; and 35-mm cameras were developed by Contrax and Exacta, not Nikon and Canon (Schnaars 1994). There are some advantages in being a first mover, especially in capturing market share, but FMA vary across industries and geographic markets. These advantages also dissipate ovtt time, but they can be enhanced by longer lead times before competitive entry. In particular, time of entry appears to be less important than access to complementary assets when assessing the potential of FMA to capture returns to an innovation (see Chapter 9). Timing of entry in a market often depends on the existing resources and capabilities of the firm. Firms with many complementary assets may delay entry into a market for years and then successfully enter and overcome incumbents. This delay aDows them to learn from the failures of others and wait until the market settles to the point that entry is likely to be highly rewarding. An example of delayt.d entry can be sun in Dell's move into print.ers. Originally Dell did not offer printers on its highly successful website. However, it eventually began offering Lexmark printers-renamed as Dell prinlers-as part of itscompuling sales package. This allowed it to utilize its extensive website to sell a wider range of products and capture a major mare or the printer market. Another option ror large 6rms is simply to acquire the first mover. An example of this approach can be seen in News International's purchase of MySpace in 2006. MySpace was one of the first successful social networking sites and its acquisition enabled News intemationallo gain FMA. A number of studies have developed more detailed typologies of technology and inno- vation strategy (Freeman and Soete 1997; Goodman and Lawless 1994). Here we distin- guish proactive strategies, involving technological and market leadership with a strong research orientation, which are often pursued by firms that enjoy returns from FMA and are prepared to take big bets; active strategies, which involve defending existing technologies and markets, but with the preparedness to respond quickly once markets and technologies are proven and where bets are hedged; reactive strategies. which are usually pursued by 'foUower' and 'imitative' firms who respond slowly to innovation and play the cost-cutting game; and passive strategies in which firms only engage in innovation once it is demanded by customers and is risk free-see Table 4.1. Examples of firms using proactive strategies include DuPont and Apple. DuPont has had over 200 years of technology leadership, including the development of ceUophane (1923); nylon (1935); Teflon (1938); Lycra (1962); Dymel (which replaced chlorofluo- rocarbons, 1990); and solae (soy protein, 2(01), Apple has produced the Macintosh and the iPod, and its offensive strategy was encapsulated in a statement by Steve Jobs in an  INNOVATION STRATEGV 105 Table 4.1. Some ideal type innovation strategies Proactive Active Reactive Passive Objectives Te