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

1.

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

AACSB: Analytic Blooms: Remember Learning Objective: 12-01 The importance of implementing strategies and practices that foster innovation. Level of Difficulty: 1 Easy Topic: Managing Innovation

2.

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

AACSB: Analytic Blooms: Understand Learning Objective: 12-01 The importance of implementing strategies and practices that foster innovation. Level of Difficulty: 2 Medium Topic: Managing Innovation

3.

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

AACSB: Analytic Blooms: Remember Learning Objective: 12-01 The importance of implementing strategies and practices that foster innovation. Level of Difficulty: 1 Easy Topic: Managing Innovation

4.

Product innovations are commonly associated with a differentiation strategy.    TRUE 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.

AACSB: Analytic Blooms: Understand Learning Objective: 12-01 The importance of implementing strategies and practices that foster innovation. Level of Difficulty: 2 Medium Topic: Managing Innovation

5.

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

AACSB: Analytic Blooms: Understand Learning Objective: 12-01 The importance of implementing strategies and practices that foster innovation. Level of Difficulty: 2 Medium Topic: Managing Innovation

6.

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

AACSB: Analytic Blooms: Remember Learning Objective: 12-01 The importance of implementing strategies and practices that foster innovation. Level of Difficulty: 1 Easy Topic: Managing Innovation

7.

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

AACSB: Analytic Blooms: Understand Learning Objective: 12-01 The importance of implementing strategies and practices that foster innovation. Level of Difficulty: 2 Medium Topic: Managing Innovation

8.

Aereo enters the broadcasting market with a new offer that streams the local broadcast signals to customers so that they can watch content on their PCs or tablet computers in real time or save for another viewing time. This is an example of disruptive innovation.    TRUE Disruptive innovations are those that overturn markets by providing an altogether new approach to meeting customer needs. Aereo is striving to disrupt the TV market by bringing a simpler and cheaper alternative to cable television.

AACSB: Analytic Blooms: Understand Learning Objective: 12-01 The importance of implementing strategies and practices that foster innovation. Level of Difficulty: 2 Medium Topic: Managing Innovation

9.

Proctor and Gamble is centralizing twenty to thirty 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.    FALSE 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.

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Managing Innovation

10.

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

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Managing Innovation

11.

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

AACSB: Analytic Blooms: Remember Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 1 Easy Topic: Managing Innovation

12.

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

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Managing Innovation

13.

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.    TRUE 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.

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Managing Innovation

14.

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

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Managing Innovation

15.

Collaborating with innovation partners can provide missing resources necessary to make innovation projects successful, such as the Coca-Cola and DEKA partnership to produce the Slingshot water purification system.    TRUE Coca-Cola and DEKA each have an innovative vision. Apart, they are unlikely to reach their visions. Together, they just may make it happen. Combined, these two firms appear to have all the resources needed to make the Slingshot an innovative and valuable solution in the quest for clean water.

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Managing Innovation

16.

Crowdsourcing technologies, such as used by IBM when it hosted an Innovation Jam, do not foster collaboration between employees, customers, suppliers, and other stakeholders in their efforts to enhance innovation.    FALSE IBM is using crowdsourcing technologies to foster collaboration between employees, customers, suppliers, and other stakeholders to enhance its innovation efforts. Based on the jam sessions, IBM launched 10 new businesses using 100 million U.S. dollars in funding.

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Managing Innovation

17.

APC (formerly known as the American Productivity and Quality Center) recognizes companies for exemplary practices that increase entrepreneurship as was demonstrated by awardee Air Products and Chemicals, Inc. who was recognized for the importance of staffing for achieving success.    FALSE When it comes to implementing its innovation efforts, Air Products and Chemicals, Inc. (APCI) recognizes the importance of staffing for achieving success. Innovation teams are created to manage the intellectual assets of a company and to determine which technologies have the most potential value. A key benefit of this approach has been to more effectively leverage its human resources to achieve innovative outcomes without increasing its R and D expenses. These efforts resulted in an innovation award from APQC (formerly known as the American Productivity and Quality Center) which recognizes companies for exemplary practices that increase productivity.

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Corporate Entrepreneurship

18.

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

AACSB: Analytic Blooms: Understand Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 2 Medium Topic: Corporate Entrepreneurship

19.	Corporate entrepreneurship is sometimes called intrapreneurship.    TRUE Corporate new venture creation was labeled intrapreneuring by Gifford Pinchot, because it refers to building entrepreneurial businesses within existing corporations.

AACSB: Analytic Blooms: Remember Learning Objective: 12-02 The challenges and pitfalls of managing corporate innovation processes. Level of Difficulty: 1 Easy Topic: Corporate Entrepreneurship

20.

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

AACSB: Analytic Blooms: Understand Learning Objective: 12-03 How corporations use new venture teams; business incubators; and product champions to create an internal environment and culture that promote entrepreneurial development. Level of Difficulty: 2 Medium Topic: Corporate Entrepreneurship