by innoWerft | Apr 4, 2025 | Glossary entry
The innovator's dilemma describes a phenomenon in which successful companies ignore new, disruptive innovations or take them up too late so as not to jeopardise their existing business model. The term goes back to Clayton Christensen and explains why market leaders are often displaced by smaller, more innovative competitors. The internal conflict between short-term success and long-term innovative ability is at the centre of the dilemma.
by innoWerft | Apr 4, 2025 | Glossary entry
The Blue Ocean Strategy describes a strategic approach in which companies create new, previously untapped markets instead of competing in saturated markets ("red oceans"). The aim is to create a unique offering through innovation and differentiation that makes the competition irrelevant. Successful blue ocean strategies rely on creative thinking, customer focus and questioning existing industry logic.
by innoWerft | Apr 4, 2025 | Glossary entry
The Red Ocean Strategy describes competitive strategies in existing, often highly competitive markets. Companies attempt to gain market share through price competition, efficiency improvements and incremental product enhancements. As demand is limited and many suppliers offer similar services, this results in intense cut-throat competition - metaphorically speaking, a "blood-red ocean". This contrasts with the Blue Ocean Strategy, in which new, untapped markets are created in order to avoid competition.
by innoWerft | Apr 4, 2025 | Glossary entry
First mover advantage refers to the strategic advantage that companies can gain if they are the first to launch a new product or innovation on the market. This advantage can take the form of brand awareness, customer loyalty, technological expertise or barriers to market entry for successors. However, success is not guaranteed - high development costs, technological uncertainties or early wrong decisions can quickly relativise the advantage.
by innoWerft | Apr 4, 2025 | Glossary entry
Loss aversion describes the phenomenon that losses have a stronger emotional impact than equally high gains. This cognitive bias leads people to act in a risk-averse manner and avoid potentially favourable decisions just to prevent possible losses. Especially in investment decisions, loss aversion can lead to overly cautious behaviour or holding on to loss-making investments. Understanding this effect is crucial to making rational and successful long-term decisions.
