Question 1

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

Accepted Answer

One way to avoid costly and discouraging defeats is to support exit champions, a key role in the corporate entrepreneurship process. In contrast to product champions and other entrepreneurial enthusiasts within the corporation, exit champions are willing to question the viability of a venture project. By demanding hard evidence and challenging the belief system that is carrying an idea forward, exit champions hold the line on ventures that appear shaky.

Question 2

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

Accepted Answer

Process innovations focus on improving efficiency and reducing costs, making them a natural fit for a low-cost leadership strategy. By implementing innovative processes, a company can produce goods or services at a lower cost than its competitors, allowing it to offer lower prices and still maintain profitability.

Question 3

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

Accepted Answer

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

Question 4

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.

Accepted Answer

This is because innovation projects are often uncertain and risky, so it is important to create an environment where team members feel free to experiment and take risks without the fear of failure or individual consequences. By separating individual performance from project performance, team members can focus on collaborating, sharing ideas, and working towards the common goal of creating successful innovations.

Question 5

The Kraft Heinz Company makes MiO Drops. This is an example of a high-tech source of innovation.

Accepted Answer

Innovation involves introducing or changing to something new, but technology is not the only source of innovations. There can be innovations in human resources, firm infrastructure, marketing, service, or many other value-adding areas that have little to do with anything high-tech. Although the MiO product is a relatively incremental innovation, with it, Kraft Heinz created an entirely new beverage category, liquid water enhancers.

Question 6

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

Accepted Answer

Personal risk taking refers to the risks that an executive assumes in taking a stand in favor of a strategic course of action. Executives who take such risks stand to influence the course of their whole company, and their decisions also can have significant implications for their careers. Financial risk taking requires that a company borrow heavily or commit a large portion of its resources in order to grow. In this context, risk is used to refer to the risk-return trade-off that is familiar in financial analysis.

Question 7

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

Accepted Answer

Business risk taking involves the risk of entering unknown markets or investing in unproven technologies, which may or may not succeed.

Question 8

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

Accepted Answer

This is a valid concern as managers may try to manipulate the inputs and assumptions used in the analysis to justify their preferred courses of action or to secure personal gains.

Question 9

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

Accepted Answer

First movers have several advantages. They often capture unusually high profits because there are no competitors to drive prices down. First movers that establish brand recognition are usually able to retain their image and hold on to the market share gained by being first. Generally, first movers have an advantage that can be sustained until the maturity phase of the industry life cycle.

Question 10

Proctor and Gamble has centralized 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 onlywithdeveloping incremental innovations that will help the overall bottom line.

Accepted Answer

The statement says that Proctor and Gamble has centralized 20 to 30 percent of its research efforts in a new corporate-level business creation and innovation unit, which implies that the company is focused on developing new businesses and disruptive innovations, not just incremental ones.

Question 11

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

Accepted Answer

Radical innovations are actually a departure from existing paradigms, often involving the creation of completely new markets or industries.

Question 12

Focused corporate venturing permeates all parts of the organization and involves every member of the organization.

Accepted Answer

Two distinct approaches to corporate venturing are found among firms that pursue entrepreneurial aims. The first is focused corporate venturing, in which CE activities are isolated from existing operations of the firm and worked on by independent work units. The second approach is dispersed, in which all parts of the organization and every organization member are engaged in intrapreneurial activities.

Question 13

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.

Accepted Answer

Real options logic allows for flexible decision making and the ability to adjust investment levels based on changing conditions. This means that corporate ventures using this logic are unlikely to make large upfront investments, as they are able to wait and gather more information before investing further. This helps to minimize the downside risk of a project.

Question 14

Product innovations are commonly associated with a differentiation strategy.

Accepted Answer

Product innovations are one of the ways in which a company can differentiate itself from its competitors, and thus are commonly associated with a differentiation strategy.

Question 15

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

Accepted Answer

According to a study by Harvard Business Review, only about 50 percent of corporate venturing efforts reach profitability within six years of their launch.

Question 16

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

Accepted Answer

The term strategic envelope does refer to the scope of innovation efforts of a firm. It represents the range of possible options for a company's innovation strategy and includes the markets, technologies, and capabilities that a company has chosen to focus on in order to create and capture value.

Question 17

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.

Accepted Answer

The statement accurately describes how Intel uses option contracts to manage risk and potentially save money.

Question 18

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.

Accepted Answer

The statement is true. The sustainability of the corporation's basis of competitive advantage is crucial in determining if its venturing initiatives will be effective in the long run.

Question 19

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

Accepted Answer

Dispersed approaches to corporate entrepreneurship involve empowering employees throughout the organization to identify and pursue entrepreneurial opportunities. Organizations with a strong spirit of entrepreneurship are more likely to embrace this approach to corporate entrepreneurship.

Question 20

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

Accepted Answer

Business incubators provide various resources and support services to help startups develop and grow until they have the necessary resources to become independent businesses.

Quiz 12: Managing Innovation and Fostering Corporate Entrepreneurship