Deck 12: Managing Innovation and Fostering Corporate Entrepreneurship

Question 1

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

Answer 1

True
Explanation:Process innovations are more likely to occur in the later stages of the industry life cycle as companies seek ways to remain viable in markets where demand has flattened out and competition is more intense. As a result, process innovations are often associated with overall cost leader strategies because the aim of many process improvements is to lower the costs of operations.

Question 2

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

Answer 2

True
Explanation:Business incubators are designed to hatch new businesses. They have a specialized purpose:to support and nurture fledgling entrepreneurial ventures until they can thrive on their own as stand-alone businesses.

Question 3

Product innovations are commonly associated with a differentiation strategy.

Answer 3

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 4

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

Question 5

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

Question 6

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

Question 7

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 8

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

Question 9

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 only with developing incremental innovations that will help the overall bottom line.

Question 10

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

Question 11

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

Question 12

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

Question 13

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

Question 14

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 15

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

Question 16

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

Question 17

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

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.

Question 19

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

Question 20

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 21

Radical innovations

A) often result in quick profits.
B) often occur because of technological change.
C) usually apply simultaneously to products and processes.
D) are a form of contentious innovation.

Question 22

________ means 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.

A) Associating
B) Integrating
C) Visioning
D) Allocating

Question 23

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 24

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 25

Innovation involves using ________ knowledge to ________ organizational processes or create commercially viable products and services.

A) more; disrupt
B) good; disrupt
C) new; transform
D) old; design

Question 26

Pierre Omidyar saw the opportunity that led to eBay when he linked three items: (1)a personal fascination with creating more efficient markets,(2)the desire of his fiancée to locate hard-to-find collectible Pez dispensers,and (3)the ineffectiveness of local classified ads in locating such items.This is an example of which innovator DNA trait?

A) questioning
B) associating
C) experimenting
D) networking

Question 27

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

A) launching incremental versus preemptive innovations
B) emphasizing marketing versus management innovations
C) choosing between experience and initiative
D) choosing between internal rather and external staffing

Question 28

Which habit is most directly related to the innovative process that managers should acquire as they start to build the innovative DNA needed to be more successful innovators in the future?

A) writing down product goals regularly
B) never sleeping over five hours at a time
C) networking across functions and organizations
D) motivating the team to work longer hours

Question 29

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 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 30

Incremental innovations

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

Question 31

According to the characterization of innovations by Professor Clayton Christensen,the rise of the smartphone was ________ innovation rather than ________ innovation.

A) a radical; an incremental
B) an incremental; a sustaining
C) a disruptive; a sustaining
D) a sustaining; a disruptive

Question 32

MiO,brought the Kraft Heinz Company many new awards including the 2011 Walmart Innovation of the Year Award and the 2012 Gold Medal Edison Innovation Award.What kind of innovation did MiO represent?

A) incremental innovation
B) technology innovation
C) process innovation
D) product innovation

Question 33

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 34

After witnessing the emergence of eBay and Amazon,Marc Benioff questioned why computer software was still sold in boxes rather than leased with a subscription and downloaded through the Internet.This was the genesis of Salesforce.com,a firm with over 6.7 billion USD in sales in 2016.This is an example of which innovator DNA trait?

A) experimenting
B) associating
C) questioning
D) networking

Question 35

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 36

What kind of innovation do Hulu,Amazon Prime Video,and Airbnb represent?

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

Question 37

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 38

________ 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

Question 39

________ 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 40

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 41

Which of the following is not part of a culture of entrepreneurship?

A) The search for venture opportunities permeates every part of the organization.
B) Every value chain activity is viewed as a source of entrepreneurial value creation.
C) Employees at every level are attuned to opportunities to help create new businesses.
D) A select staff are assigned to be attuned to new opportunities to create business.

Question 42

Financial reasons for undertaking internal corporate venturing include

A) strengthening competitive position.
B) obtaining above average returns.
C) adding to the resource base of the corporation.
D) reducing stakeholder commitment.

Question 43

What do Taco Bell,Mondelez,General Electric,Tyco,and MasterCard have in common as they work to be innovative?

A) They outsource the innovation process.
B) They tend to be very conservative in their innovative efforts.
C) They do not worry about being on the cutting edge of the market.
D) They use NVGs and business incubators to focus innovation activities.

Question 44

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 45

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 46

In corporations with a strong entrepreneurial culture,the willingness and ability to change

A) is imposed from the top-down.
B) is considered a core capability.
C) often leads to instability.
D) often worries stakeholders such as suppliers and creditors.

Question 47

Two common forms of a focused approach to corporate entrepreneurship include ________ and ________.

A) internal collaboration; internal venturing
B) social capital; collaboration capital
C) business incubators; new venture groups
D) focus groups; business incubators

Question 48

According to the text,________,which support fledgling startups are often used to pursue specific entrepreneurial ventures developed by ________.

A) collaboration partners; strategic partners
B) business incubators; new venture groups
C) product champions; corporate venture capitalists
D) lower-level managers; upper-level managers

Question 49

Fair Oaks Farms,one of the largest dairy farms in the country,is rapidly becoming a zero-carbon-footprint dairy.Starting with the 430,000 gallons of manure produced daily,a number of innovations designed to capture value from the manure and assorted by-products are leading to greater efficiencies and at the same time are environment-friendly.This is an example of a firm defining its ________ envelope.

A) environmental
B) internal
C) financial
D) strategic

Question 50

According to researchers from Drexel University and Rutgers University as presented in the Journal of Management,in industries that rely heavily on intellectual capital,such as technology,life sciences,or the arts,the loss of talented employees may have an unexpected benefit for the organization.While turnover of star scientists did disrupt innovation related to existing lines of research in the companies,it also increased the rate of innovation in previously unexplored areas.Companies adapt to the loss of talent by exploring products,brands,and methods they may not have otherwise considered.Which of the following statements is not a key takeaway from this research?

A) The loss of talented employees disrupts innovation related to established products.
B) The loss of talented employees allows fresh perspectives and ideas to emerge.
C) Companies adapt to star turnover by innovating in formerly unexplored areas.
D) Employee turnover broadly hurts an organization.

Question 51

Product champions

A) are typically senior executives.
B) are usually inventors of some sort.
C) scavenge for resources and encourage others to back promising new ideas.
D) are strong supporters of the status quo.

Question 52

Common features of a dispersed approach to corporate entrepreneurship include all the following except

A) semi-autonomous new venture groups.
B) use of product champions.
C) a top-down approach to supporting entrepreneurial behavior.
D) an entrepreneurial culture.

Question 53

Project ________ involves justifying whether an opportunity is attractive in the marketplace; project ________ involves evaluating the strategic and economic impact of a new venture.

A) impetus; definition
B) definition; impetus
C) reward; development
D) development; focus

Question 54

From watching his wife struggle to keep track of the family finances,Intuit founder Scott Cook identified the need for easy-to-use financial software that provided a single place for managing bills,bank accounts,and investments.This is an example of which innovator DNA trait?

A) experimenting
B) associating
C) observing
D) networking

Question 55

Michael Lazaridis got the idea for a wireless email device that led him to found Research in Motion,now called BlackBerry,from a conference he attended.At the conference,a speaker was discussing a wireless system Coca-Cola was using that allowed vending machines to send a signal when they needed refilling.Lazaridis saw the opportunity to use the same concept with email communications,and the idea for the smartphone was hatched.This is an example of which innovator DNA trait?

A) experimenting
B) associating
C) observing
D) networking

Question 56

________ involves building entrepreneurial businesses within existing corporations.

A) Insourcing
B) On-shoring
C) Intrapreneurship
D) Entrepreneurship

Question 57

Which of the following do corporate business incubators typically not provide?

A) physical space
B) mentoring
C) funding
D) student interns

Question 58

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 59

On average,approximately what percentage of corporate ventures reaches profitability within six years?

A) 80 percent
B) 65 percent
C) 50 percent
D) 35 percent

Question 60

Founders Larry Page and Sergey Brin provide time and resources for Google employees to experiment.Some,such as the Android cell phone platform,have been big winners.Others,such as the Orkut and Buzz social networking systems,have failed.But Google will continue to experiment with new products and services.This is an example of which innovator DNA trait?

A) experimenting
B) associating
C) observing
D) networking

Question 61

One of the following statements about innovativeness is false.Which is it?

A) Innovativeness refers to making decisions and taking risks without certain knowledge of probable outcomes.
B) Innovativeness refers to efforts of a firm to find new opportunities and novel solutions.
C) Innovativeness involves creativity and experimentation.
D) Innovativeness is aimed at developing new products, services, and processes.

Question 62

One of the pitfalls of real options analysis is that managers may have an incentive and know-how to game the system and back-solve a formula to get a proposal approved.This can give rise to

A) managerial conceit.
B) the illusion of control.
C) escalation of commitment.
D) agency problems.

Question 63

Strategic reasons for undertaking a corporate venture do not include

A) entering into new markets.
B) expanding capabilities by acquiring new knowledge.
C) building the base of corporation resources.
D) reinforcing stakeholder commitment.

Question 64

Another way to evaluate a corporate venture is in terms of the four criteria from the balanced scorecard.Which of the following is not one of those criteria?

A) customer perspective
B) supplier perspective
C) internal business perspective
D) financial perspective

Question 65

Intel uses a forecasting model for potential demand for its chip designs in which they calculate the likelihood of a range of potential demand levels and they established a computer simulation of a production plant.From these models,they gather the information to identify what equipment they definitely will need to order.This helps with pricing as well.What kind of investment analysis tool are they using?

A) inventory analysis
B) financial analysis
C) real options analysis
D) break-even analysis

Question 66

One of the following is not a question that should be answered when evaluating the performance of corporate venturing efforts.Which is it?

A) Is the venture attracting external venture funding?
B) Is the venture considered to be a market success?
C) Does the venture add to the worth of the firm internally?
D) Does the value proposition offered by the venture insulate it from competitive attack?

Question 67

Whereas ________ are willing to violate procedures and operate outside normal channels,________ gather hard data and develop a strong case for why a project should be killed.

A) senior managers; entrepreneurial leaders
B) strategic managers; financial managers
C) exit champions; product champions
D) product champions; exit champions

Question 68

Which of the following is not one of the dimensions of entrepreneurial orientation?

A) proactiveness
B) risk taking
C) autonomy
D) opportunism

Question 69

Which of the following statements about skunkworks is false?

A) They are independent work groups.
B) They are autonomous.
C) They refer to a specialized type of outside contractor that corporations use to develop entrepreneurial ideas.
D) They are used to leverage existing strengths in new arenas to identify new opportunities.

Question 70

Some of the most common applications of real options are with property and insurance.A real estate option grants the holder the right to buy or sell a piece of property at an established price sometime in the future.If the price of the property goes ________,the owner of the option is likely to buy it.If the market value of the property ________ the strike price,the option holder is unlikely to execute the purchase.

A) down; goes above
B) down; drops below
C) up; drops below
D) up; goes above

Question 71

Which of the following dimensions of entrepreneurial orientation is described as a forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities?

A) proactiveness
B) risk taking
C) autonomy
D) competitive aggressiveness

Question 72

Whereas ________ often emerge as heroes,________ run the risk of losing status by opposing popular projects.

A) managers; employees
B) product champions; exit champions
C) exit champions; product champions
D) shareholders; managers

Question 73

If managers believe that their abilities can reduce the risks inherent in decision making to a much greater extent that they actually can,they might demonstrate ________ and trust only their own judgment rather than conduct sufficient analysis.

A) agency problems
B) reasoning by analogy
C) managerial conceit
D) escalation of commitment

Question 74

After 15 teams created 128 different phones,Chris Galvin,former CEO of Motorola,eliminated the autonomous teams being used to develop new wireless phones.This was necessary because such teams

A) often lack coordination.
B) typically waste the CEOs attention.
C) create efficiencies through duplication of effort.
D) never duplicate efforts of the rest of the firm.

Question 75

The costly Motorola global satellite telecom project known as Iridium provides a useful illustration of the ________.Even though problems with the project existed during the lengthy development process,Motorola refused to pull the plug.Only after investing 5 billion USD and years of effort was the project abandoned.

A) overdependence on the exit champion
B) lack of a product champion
C) overdependence on the product champion
D) lack of an exit champion

Question 76

A(n)________ manager's role is to question the viability of corporate venture projects.

A) product champion
B) exit champion
C) rising star
D) mentor

Question 77

Which of the following dimensions of entrepreneurial orientation is described as an independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion?

A) autonomy
B) innovativeness
C) competitive aggressiveness
D) risk taking

Question 78

A manager might insist that separating a decision into multiple parts will guarantee that the decisions made will turn out well.This allows for an assessment of the project at each stage,lessening the likelihood the project will fall prey to which of the following?

A) incremental investment
B) illusion of control
C) escalation of commitment
D) paralysis by analysis

Question 79

Real options analysis is most appropriate when

A) the total investment required is small, but the environment is uncertain.
B) the investment required can be justified by Discounted Cash Flow (DCF) techniques.
C) a small investment up front can be followed by a series of subsequent investments.
D) there is no prospect of obtaining additional knowledge before making subsequent investments.

Question 80

Real options analysis (ROA)is an investment analysis tool from the field of finance.When applied to entrepreneurship,it suggests a path that companies can use to manage the ________ associated with launching ________ ventures.

A) certainty; large
B) risk; stable
C) uncertainty; new
D) interests; new