Deck 12: Managing Innovation and Fostering Corporate Entrepreneurship

Question 1

Sustaining innovations are those that overturn markets by providing an altogether new approach to meeting customer needs.

Answer 1

False
Explanation: Sustaining innovations are those that extend sales in an existing market, usually by enabling new products or services to be sold at higher margins. Such innovations may include either incremental or radical innovations. Disruptive innovations are those that overturn markets by providing an altogether new approach to meeting customer needs.

Question 2

Product innovations are commonly associated with a differentiation strategy.

Answer 2

True
Explanation: Product innovations tend to be more common during the earlier stages of the life cycle of the industry. Product innovations are also commonly associated with a differentiation strategy. Firms that differentiate by providing customers with new products or services that offer unique features or quality enhancements often engage in product innovation.

Question 3

For innovation projects,people from inside the company may have greater social capital and know the organizational culture,but this may inhibit them from thinking creatively.

Answer 3

True
Explanation: Innovation projects need competent staffs to succeed. People drawn from inside the company may have greater social capital and know the organizational culture and routines. But this knowledge may actually inhibit them from thinking outside the box.

Question 4

Corporate entrepreneurship is sometimes called intrapreneurship.

Question 5

For innovation team members to work enthusiastically on innovation projects,it is important to separate the performance of individual team members from the performance of the innovation itself.

Question 6

The term strategic envelope refers to the scope of innovation efforts of a firm.

Question 7

There are two major avenues through which companies can expand or improve their business.One is innovation and the other is strategic renewal.

Question 8

Innovation efforts of the firm rarely benefit from partnering with non-business entities such as universities and government agencies.

Question 9

Research indicates that leaders of innovative firms spend 50 percent more time on discovery activities than the leaders of less innovative firms.

Question 10

The Dutch Boy twist and pour paint container is an example of a high tech source of innovation.

Question 11

A disruptive innovation appeals to less demanding customers who are seeking more convenient,less expensive solutions.

Question 12

The term innovation refers primarily to an invention that uses the latest technologies.

Question 13

Strategic renewal and the pursuit of new venture opportunities are the two primary aims of corporate entrepreneurship.

Question 14

Radical innovation often involves open-ended experimentation which can be very time consuming.

Question 15

As an industry matures,there are greater opportunities for change and so innovations tend to be more radical.

Question 16

Disruptive innovations are those that overturn markets by providing an altogether new approach to meeting customer needs.

Question 17

Proctor & Gamble is centralizing 20 to 30 percent of its research efforts in a new corporate-level business creation and innovation unit.They believe that this will assist them only with developing incremental innovations that will help the overall bottom line.

Question 18

Graphene can be magnetized and used in building computer systems that use spintronics,a technology that involves processing a signal using magnetic spin rather than electric change.It has the potential to replace silicon as the primary component of semiconductor chips.This is an example of disruptive innovation.

Question 19

Radical innovations are evolutionary applications of novel ideas within existing paradigms.

Question 20

Process innovations are often associated with a low cost leadership strategy.

Question 21

Corporate venturing that is focused permeates all parts of the organization and involves every member of the organization.

Question 22

When evaluating the effectiveness of the venturing initiatives of a corporation,an assessment needs to be made of the external competencies of the firm in order to determine if goals such as leveraging existing assets,building new knowledge,and enhancing company capabilities are likely to be met.

Question 23

Product champions are critical during the period after a new venture project has been defined but before it has gained momentum and achieved project impetus.

Question 24

Exit champions,different from product champions,must be willing to energetically stand up for what they believe.

Question 25

Corporate business incubators often provide physical space and business services to internal ventures,but not funding.

Question 26

The strategic goals of corporate entrepreneurship are often just as important as the financial goals.

Question 27

New venture groups are formed within corporations by individuals or a division and usually have the same mandate as a typical research and development department.

Question 28

One of the important questions the corporation must address in assessing the effectiveness of its venturing initiatives is that of the sustainability of its basis of competitive advantage.

Question 29

According to the text,new venture ideas must pass through two critical stages to be implemented by corporations: project definition and project impetus.

Question 30

Firms using a focused approach to corporate entrepreneurship typically separate corporate venturing activities from ongoing operations of the firm.

Question 31

Dispersed approaches to corporate entrepreneurship are often found in organizations with a strong spirit of entrepreneurship.

Question 32

Exit champions deal in uncertainty and ambiguity.Product champions reduce ambiguity by gathering hard data and developing a strong case for why a project should be killed.

Question 33

Only about 50 percent of corporate venturing efforts reach profitability within six years of their launch.

Question 34

Most CE programs have strategic goals.The reasons for undertaking a corporate venture include maintaining the corporation base of resources and experience.

Question 35

Exit champions are often reluctant to gather hard data about a venture because it might kill the project.

Question 36

The Taco Bell Waffle Taco was the result of a team development effort.This is an example of a new venture group (NVG)identifying,evaluating,and cultivating a venture opportunity.

Question 37

Product champions are the employees who identify new product ideas or services.

Question 38

In evaluating the effectiveness of the venturing initiatives of a corporation,marketplace acceptance of the new products or services needs to be assessed.

Question 39

The failure of the Motorola Iridium global satellite telecom project was a result of its exit champion.

Question 40

Business incubators are designed to support fledgling entrepreneurial ventures until they can operate as stand-alone businesses.

Question 41

Competitive aggressiveness is a response to threats whereas proactiveness is a response to opportunities.

Question 42

A real estate option grants the holder the obligation to buy or sell a piece of property at an established price sometime in the future.

Question 43

Corporate ventures that use real options logic in decision making tend to keep total investment low in order to minimize the downside risk of a project.

Question 44

Financial risk taking involves the risk an executive assumes in taking a stand in favor of a strategic course of action.

Question 45

The term skunkworks is used to refer to a type of in-house facility that corporations use to develop entrepreneurial ideas.

Question 46

Managerial conceit occurs when decision makers who have made successful choices in the past come to believe that they possess superior expertise for managing uncertainty.

Question 47

The more specific the human capital of the manager becomes,the easier it is to transfer it to other organizations.

Question 48

Real options logic is useful when corporations consider stock options as a way to finance entrepreneurial ventures.

Question 49

Real options analysis helps managers make investment decisions involving large irreversible commitments of financial resources.

Question 50

Options exist when the owner of the option has the obligation to engage in certain types of transactions.The most common are stock options.

Question 51

Firms can act proactively by introducing new products or technological capabilities after the competition has entered the market.Amazon and its online bookselling market is a good example of this.

Question 52

Business risk taking refers to the risk associated with entering untested markets or committing to unproven technologies.

Question 53

One of the potential pitfalls of real options analysis is that managers may have the incentive and know-how to game the system.

Question 54

Intel uses option contracts for the right to purchase key pieces of equipment at a specific future date.They simulate the likelihood that they will need to purchase a specific piece of equipment and then create the options contracts to reduce risk and potentially save money.

Question 55

Escalation of commitment is the tendency for managers to irrationally stick with an investment,even one that is broken down into a sequential series of decisions,when investment criteria are not being met.

Question 56

Stock options offer the prospect of high gains with relatively small up-front investments that represent limited losses.

Question 57

According to Peter Drucker,successful entrepreneurs typically are risk takers.

Question 58

First movers in an industry often capture above-average profits,but usually find it difficult to maintain early market share gains.

Question 59

Fostering creativity and experimentation is the only innovativeness technique that company managers should consider when identifying and launching corporate ventures.

Question 60

Risk taking can lead to competitive advantage,but it needs to be managed carefully.

Question 61

Radical innovations

A) often result in quick profits.
B) often represent technological breakthroughs.
C) usually apply simultaneously to products and processes.
D) usually cannot be patented.

Question 62

Which of the following is not an advantage of collaborating with strategic partners in order to innovate?

A) obtaining skills and new knowledge from outside sources
B) making firms identify their own strengths and weaknesses
C) managers clarifying what an innovation project requires to be successful and who will accomplish it
D) decreasing economies of scale

Question 63

In a typical corporation,which of the following factors does not determine how entrepreneurial projects will be pursued?

A) structural features that guide and constrain action
B) corporate culture
C) organizational systems that foster learning and manage rewards
D) number of innovation projects in the pipeline

Question 64

Whereas ______________ are often associated with a low cost leader strategy,______________ are frequently an important aspect of a differentiation strategy.

A) process innovations; product innovations
B) product innovations; service innovations
C) radical innovations; instrumental innovations
D) marketing innovations; management innovations

Question 65

Which of the following is not a dilemma faced by corporations trying to manage the innovation process?

A) launching incremental rather than preemptive innovations
B) emphasizing marketing over management innovations
C) preferring experience over initiative
D) choosing internal rather than external staffing

Question 66

Companies such as Zimbra,Inc.and Best Practices LLC enhanced their entrepreneurial positions by using competitive aggressiveness techniques such as entering the marketplace with drastically lower prices and by copying successful business models.

Question 67

Individuals with highly innovative DNA traits have the ability to connect seemingly unrelated questions,problems,and ideas from different fields that allows them the opportunity to creatively see opportunities others miss.This is referred to as

A) associating.
B) integrating.
C) visioning.
D) allocating.

Question 68

Which of the following is not characteristic of a disruptive innovation?

A) It is usually more sophisticated technologically.
B) It appeals to less demanding customers.
C) It is typically a less expensive solution for meeting a need.
D) It usually takes root in a new market or the low-end of an existing market.

Question 69

The innovation dilemma known as seeds versus weeds refers to

A) choosing to pursue radical rather than incremental innovations.
B) choosing to pursue product rather than process innovations.
C) promoting organizational stars onto innovation teams rather than involving all employees in innovation efforts.
D) choosing to pursue investment in one innovative idea over another.

Question 70

Innovation involves introducing or changing to something

A) less costly.
B) with broader marketplace appeal.
C) new.
D) different.

Question 71

According to Exhibit 12.1,the continuum of radical and incremental innovations,frozen yogurt represents mostly _______________ innovation,because ______________.

A) incremental; it extends sales in an existing market by enabling higher margins
B) radical; it is a small improvement on existing products
C) radical; it is a fundamental change that evokes a major departure from existing practices
D) incremental; it is a small improvement on existing products

Question 72

Innovations that extend sales in an existing market,usually by enabling new products or services to be sold at higher margins are known as _____________ innovations.

A) radical
B) disruptive
C) technology
D) sustaining

Question 73

Creative intelligence involves the ability to see patterns in data,integrating data,and making insights.Which of the following are the four patterns of action managers should take in order to develop more creative and higher potential innovations?

A) observing, experimenting, cataloging, and networking
B) questioning, observing, integrating, and networking
C) questioning, observing, experimenting, and networking
D) observing, experimenting, cataloging, and integrating

Question 74

______________ refers to efforts to create designs and applications of technology to develop new products,while ______________ refers to efforts to improve the efficiency of organizational systems such as manufacturing and operations.

A) Radical innovation; incremental innovation
B) Breakthrough innovation; instrumental innovation
C) Product innovation; process innovation
D) Product innovation; service innovation

Question 75

Incremental innovations

A) are usually highly disruptive.
B) usually represent technological breakthroughs.
C) are usually small improvements in products and processes.
D) nearly always can be patented.

Question 76

McGrath and Keil researched the types of human resource management practices that effective firms use to capture value from their innovation efforts.Which of the following is not one of their findings?

A) Create innovation teams with experienced players.
B) Require that employees serve in the new venture group as part of their career climb.
C) Transfer people to mainstream management positions after they have experience in the new venture group.
D) Integrate the performance of individuals with the performance of the innovation.

Question 77

The innovation dilemma known as building capabilities versus collaborating refers to

A) developing innovation skills internally versus partnering with qualified outsiders.
B) building innovative products in-house versus outsourcing.
C) building credibility by launching products ahead of potential collaboration partners.
D) incrementally launching a product.

Question 78

In the 1990s,DuPont used its knowledge of plastics to develop biodegradable plastic products.This is an example of

A) focusing on process rather than product innovation.
B) defining its innovation efforts within the context of its strategic envelope.
C) radical innovation.
D) public relations, since plastics are not biodegradable.

Question 79

New technology is an important source of new ideas because it

A) is seen by the customer as being important.
B) provides the manpower that firms need to make new products and services.
C) automatically reduces organizational waste.
D) provides the raw material that firms use to make innovative products and services.

Question 80

______________ produce fundamental changes that can transform a company or even revolutionize an industry,while ______________ enhance existing practices and often represent evolutionary applications of fundamental breakthroughs.

A) Technological breakthroughs; product-market breakthroughs
B) New technologies; new paradigms
C) Incremental innovations; radical innovations
D) Radical innovations; incremental innovations