When defining your business strategy there are two main factors that influence strategy: Appropriabiltiy and Complementary Assets. Appropriability is the ability to generate cash from your innovations whereas complementary assets are the resources and capabilities required to make the business work.
One needs to determine the type of appropriability regime that you are have whether it be tight or weak. Tight appropriability implies strong protects, such as patents or tacit knowledge. Weak appropriability regimes are when protection is less strong such as when it is easy to imitate or engineer around a design. Perhaps it is pre-dominant design therefore the patent you have on the design is redeemed as useless.
There are two types of complementary assets: generic and specialised. Generic complementary assets are those which everyone has access to and therefore confer no real significant advantage to the company. Specialised assets however are a key source of differentiation.
The Teece model uses these factors to determines who profits from innovation and the strategy to take should you find yourself in one of these positions.
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