Welcome. This is our opportunity to discuss the Intel case that we asked you to prepare. Just a reminder that the expectation is that you've already read through the case and responded to the questions. And hopefully participated in the discussion forums about them. If you haven't done that yet, I actually ask you to pause the video now and do that. Because the purpose of these is to provide a debrief on this work, and this is an opportunity for you to go and apply some of the tools and skills that we have asked you to do within the case context. So again, the purpose of this debrief is not to give you the answers that we proposed to the questions we pose. But rather, it's an opportunity just think about where some of the challenges and the like you might face when going through the questions that we ask. So let's dive in. So the first question we ask, is how important is innovation in the microprocessor industry and why? Now this might seem like an obvious question and if you talk to managers in any number of sectors, they'll probably tell you innovation is always important. And I think that's true to some extent. However, the value of innovation is likely to vary across different industries. Some of them are hyper-competitive, in which innovation is critical, others maybe have longer life cycles and where innovation might be important, but not as critical as in other sectors. So how about the micro processor industry? Well not surprisingly, this is a sector where you have a very hyper-competitive environment to the extent that you're constantly pushing the boundaries of the technology. So the case talks about Moore's Law. This idea that every 18 months or so, we see a double lane in the processing power of microprocessors. And that this has played out literally over about the last 40 years, this so-called law. So, one can imagine, innovation is critical here to keep moving down that learning curve around microprocessors. Now, as the case sets up, it also raises the question of whether Moore's Law will eventually basically run out. And we won't be able to keep up that pace of innovation. And for a company like Intel, should they be diversifying into other lines business, innovating in other ways as well? So this leads to our second question which is, what are the core issues as Intel tries to foster an entrepreneurial climate and organization? I would ask the first question really here is, well what is an entrepreneurial climate? We can think about entrepreneurial climates as being ones in which you might create and exploit radical innovations, more radical types of new introductions. Entrepreneurs typically have a high tolerance for failure, often encourage free information flows. Ability to accept uncertainty and ambiguity and being, have a license to fail. Be willing to accept that there are going to be times in which you might not be successful. So, what about an innovative company like Intel? Don't they already have an entrepreneurial culture? And in many ways they do, but I think they also have many elements of a large successful company. In that, they have billion dollar businesses that they've created. So the idea of innovating in some new area that maybe is more, a smaller business might be something that just doesn't interest them as much. It might be the case that their culture is very R&D based, very scientific. And as a result, they might be very rigorous in terms of the way they approach innovation and not allow the diversity of thought and maybe experimentation that's necessary to be successful. So we go to our protagonist here, Peter Hickey, in his situation and ask well, what would you do? How would you begin to change the entrepreneurial culture within the company? And there's lots of interesting ideas and suggestions that people have. I would suggest you think about a few big areas. One are, what are the incentive systems that are in place for Intel? How do they think about incentivizing these more radical innovations, these creation of new product lines, and business units, and the like? The second thing to think about, this role of information. How do you encourage cross-disciplinary teams, cross-sharing of information within the organization? How do we think about that outside the boundaries of the organization? Perhaps there's a role for acquisitions and licensings at play here. Maybe they don't have to invent everything themselves. Maybe they can work with others to invent new ideas and new product lines. And this finally relates to the idea of, or role of, the organization. How do you organize yourself to be able to create these new businesses and new innovations? Do you create stand-alone divisions? Do you incorporate it into existing business units and the like? So that's on the innovation side. We also want to think about the appropriability side, as we talked in our lesson videos. This idea about how do you actually appropriate the value from the innovations you create. So, you need to have an appropriation strategy, I would argue, as you think about how to create this entrepreneurial culture. Is it around creating IP, intellectual property, in the form of patents and the like? Is that the way you're going to protect your advantage? Is it through some type of first mover advantage as a way to lock in some advantages you might have from innovation. Perhaps it's a complementary strategy where you're using other capabilities such as in manufacturing and distribution to win in an innovation battle. So again you want to think about both, how are you gonna be innovative, but also, how do you appropriate the gains from innovation? Last but not least, we ask this question about real options orientation, or real options reasoning and how that might impact this decision of how to organize going forward. So once again, the idea here is that there is value in optionality. In other words, having other paths to take. Other ways to create trajectories for your future innovation in and of itself has value. So how do you build in such optionality within your organization? Well we can think about stage gate processes and RND-ing, which allow you to have reviews, which may then allow you to say you know what. This path isn't working for us, we need to pursue an alternative path. Once again, this kind of open innovation mindset, that maybe you are forming alliances with a variety of different players to experiment and learn about different trajectories. Corporate venture capital, where companies takes equity stakes in entrepreneurial ventures as a way to help learn and advance those technologies. Intel actually has been a huge proponent and success with their own corporate venture capital program. So, while the case doesn't provide us with a way to do a real analytical real-options calculation. It really doesn't provide us the numbers to do that. I hope you can see how at least this idea of real-options reasoning can influence how you think about how you structure your strategy and innovation program. Let me just end by saying, when we think about a firm's overall innovation strategy. We wanna think once again about these two hows. How do we create innovations, and how do we appropriate the value to them? Because once again, it's the combination of the two that lead to innovation success ultimately in an organization.
