Question 1

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

Accepted Answer

Innovation involves using new knowledge to transform organizational processes or create commercially viable products and services. The sources of new knowledge may include the latest technology, the results of experiments, creative insights, or competitive information.

Question 2

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

Accepted Answer

Firms must have a means to focus their innovation efforts. By defining the strategic envelope, the scope of innovation efforts of a firm, firms ensure that their innovation efforts are not wasted on projects that are outside the domain of interest of the firm. Strategic enveloping defines the range of acceptable projects.

Question 3

Corporate entrepreneurship is sometimes called intrapreneurship.

Accepted Answer

Corporate new venture creation was labeled intrapreneuring by Gifford Pinchot, because it refers to building entrepreneurial businesses within existing corporations.

Question 4

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

Accepted Answer

Disruptive innovations are those that overturn markets by providing an altogether new approach to meeting customer needs. Walmart and Southwest Airlines are cited as two disruptive examples.

Question 5

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

Accepted Answer

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 6

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

Accepted Answer

Incremental innovations are more likely in mature industries. Because they often sustain a company by extending or expanding its product line or manufacturing skills, incremental innovations can be a source of competitive advantage by providing new capabilities that minimize expenses or speed productivity.

Question 7

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

Accepted Answer

The leaders of innovative firms have exhibited discovery skill that allow them to see the potential in innovations and to move the organization forward in leveraging the value of those innovations. These leaders spend 50 percent more time on these discovery activities than the leaders of less innovative firms.

Question 8

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.

Accepted Answer

Disruptive innovations are those that overturn markets by providing an altogether new approach to meeting customer needs. Michael Patterson, CEO of Graphene Frontiers, commented that researchers are really pushing the edges of technology with graphene, and it may take 10 years before we know if it will replace current technologies.

Question 9

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.

Accepted Answer

Having a corporate effort at innovation separates the budget for product development from divisional profit numbers, enhancing willingness of the firm to invest in long-term product development efforts. Also, the corporate unit will be able to foster collaboration between units to develop blockbuster products.

Question 10

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

Accepted Answer

Corporate entrepreneurship has two primary aims: the pursuit of new venture opportunities and strategic renewal. The innovation process keeps firms alert by exposing them to new technologies, making them aware of marketplace trends, and helping them evaluate new possibilities.

Question 11

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

Accepted Answer

Innovation partners may come from many sources, including research universities and the federal government. Each year, the federal government issues requests for proposals (RFPs) asking private companies for assistance in improving services or finding solutions to public problems. Universities are another type of innovation partner. Chip-maker Intel, for example, has benefited from underwriting substantial amounts of university research.

Question 12

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

Accepted Answer

Radical innovations produce fundamental changes by evoking major departures from existing practices. They tend to be highly disruptive and can transform a company or revolutionize a whole industry. Incremental innovations enhance existing practices or make small improvements in products and processes. They may represent evolutionary applications within existing paradigms of earlier, more radical innovations.

Question 13

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

Accepted Answer

The project time line of a radical innovation is typically long term, 10 years or more. Radical innovations often begin with a long period of exploration in which experimentation makes strict timelines unrealistic.

Question 14

The Dutch Boy twist and pour paint container 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. Even though the Dutch Boy innovation was simple, non-technological, and had nothing to do with the core product, the launch of the new packaging led to articles in 30 national consumer magazines and 60 major newspapers as well as a story on Good Morning America.

Question 15

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

Accepted Answer

Disruptive innovations are those that overturn markets by providing an altogether new approach to meeting customer needs. The features of a disruptive innovation make it somewhat counterintuitive. Disruptive innovations appeal to less demanding customers who are seeking more convenient, less expensive solutions; they are technologically simpler and less sophisticated than currently available products or services; and they take time to take effect and only become disruptive once they have taken root in a new market or low-end part of an existing market.

Question 16

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

Accepted Answer

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 17

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

Accepted Answer

There are two major avenues through which companies can expand or improve their business: innovation and corporate entrepreneurship. These two activities go hand-in-hand because they both have similar aims.

Question 18

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

Strategy experts Rita Gunther McGrath and Thomas Keil researched the types of human resource management practices that effective firms use to capture value from their innovation efforts. One practice that is especially important is to separate the performance of individuals from the performance of the innovation; otherwise, strong players may feel stigmatized, if the innovation effort they worked on fails.

Question 19

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.

Accepted Answer

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 20

Product innovations are commonly associated with a differentiation strategy.

Accepted Answer

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.

Quiz 12: Managing Innovation and Fostering Corporate Entrepreneurship