Corporate Strategy Insights

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Questions and Answers

What impact do more ambidextrous business units have on perceived business unit performance?

They decrease it

They increase it (correct)

They impair it

They have no significant effect

Which argument is supported by Raish & Tushman regarding the development of new corporate businesses?

A combination of integration and differentiation is beneficial (correct)

Independent ventures do not require integration

Only integration is sufficient for independent ventures

Only differentiation is needed to build corporate businesses

Which example best illustrates the concept of core competencies becoming core rigidities according to Tripsas and Gavetti?

The turnover of digital imaging experts at Polaroid

Switching focus from technology-driven to market-driven development

Adherence to the razor/blade business model impeding innovation (correct)

Polaroid's outsourcing of digital camera development

What was highlighted about the need for integration in structurally differentiated organizations according to Burgers & Covin?

It varies depending on market valuation of the firms Signup and view all the answers

What was a cause of high organizational performance for Polaroid that later became a rigidity?

Adherence to the razor/blade model Signup and view all the answers

What does the example of Polaroid's prototype digital camera development in 1992 illustrate?

Lost opportunities due to outsourcing Signup and view all the answers

Which statement is true about the changes in the workforce of Polaroid’s electronic imaging division after 1990?

Majority of skilled workers left over time Signup and view all the answers

Which factor was deemed irrelevant to the performance of firms according to Burgers & Covin?

Necessity of maintaining existing core competencies Signup and view all the answers

What is the primary focus of contextual ambidexterity in organizations?

Balancing alignment and adaptability within the same unit Signup and view all the answers

Which of the following is NOT a key driver in achieving ambidexterity?

Centralized Structure Signup and view all the answers

What is a primary benefit of viewing alignment and adaptability as complementary elements?

It helps manage tensions and improves long-term performance Signup and view all the answers

What framework did Ghoshal and Bartlett outline for creating a supportive organizational context?

Discipline, Stretch, Support, Trust Signup and view all the answers

What systems should organizations implement for effective ambidexterity?

Processes that enable simultaneous handling of current and future needs Signup and view all the answers

What aspect of organizational context is crucial for fostering ambidexterity?

Systems that encourage employee decision-making Signup and view all the answers

Which of the following is a potential outcome of employing contextual ambidexterity?

Improved cost-effectiveness and performance Signup and view all the answers

What is an essential element for the belief system within an organization focused on ambidexterity?

Support for both efficiency and innovation Signup and view all the answers

What is a key requirement for firms operating in high-velocity markets?

Focusing on real-time learning and problem-solving Signup and view all the answers

What does the element of Exploratory Processes emphasize in managing innovation?

Learning-oriented and exploratory approaches Signup and view all the answers

Why is it important to have a designated team for major innovation (MI)?

To accumulate experience and build MI sustainability Signup and view all the answers

What type of skills are necessary for managing innovation in uncertain environments?

Unique skills like creativity and complex problem-solving Signup and view all the answers

What should organizations do to cope with high-uncertainty environments regarding their MI projects?

Balance loose and tight coupling with mainstream systems Signup and view all the answers

What is a significant challenge when managing innovation skills within organizations?

Managers from stable environments may struggle with uncertainty Signup and view all the answers

What kind of metrics should be established for MI projects?

Differential metrics suitable for the experimental nature of MI Signup and view all the answers

What is a critical aspect of the governance over the MI system?

Implementing mechanisms for ongoing reflection and reconfiguration Signup and view all the answers

How do organizations benefit from establishing internal and external interface mechanisms?

They enhance strategic alignment and knowledge creation Signup and view all the answers

What aspect is crucial in the cultural and leadership context for MI?

Integration with organizational strategy and leadership support Signup and view all the answers

What is the purpose of using a process decoupling strategy in MI?

To create distinct processes for handling high-uncertainty environments Signup and view all the answers

What does the concept of 'Whole Greater than the Sum of Its Parts' refer to in the context of the MI system?

Combined elements should create more impact than individual elements Signup and view all the answers

What does the term 'autopoiesis' signify in systems theory related to MI?

Systems reproduce themselves through adaptation Signup and view all the answers

What is a key characteristic of contextual ambidexterity according to the study's findings?

It integrates alignment and adaptability within the same environment. Signup and view all the answers

What role do senior executives play in fostering contextual ambidexterity?

They set the context and model adaptable behavior. Signup and view all the answers

What is one of the major challenges that firms face regarding radical innovations (RIs)?

Significant uncertainty related to markets and technology. Signup and view all the answers

What does the term 'equifinality' imply in the context of achieving ambidexterity?

Multiple paths can lead to effective ambidexterity. Signup and view all the answers

What is a primary requirement for a sustainable innovation capability according to systems theory?

Integration and interaction among system elements. Signup and view all the answers

Which aspect does systems theory contrast with its mechanistic view?

Understanding systems as integrated wholes. Signup and view all the answers

How does dynamic capabilities theory relate to environmental changes?

It highlights the need for flexibility and learning. Signup and view all the answers

What is a key implication for business units aiming for performance in dynamic environments?

They need to create a balanced environment supporting both aspects. Signup and view all the answers

What distinguishes radical innovations from incremental ones?

Radical innovations require more deviation from existing practices. Signup and view all the answers

What can be inferred about the relationship between context and performance in ambidextrous units?

Context influences performance indirectly over time. Signup and view all the answers

Which system property is related to maintaining balance within a system?

Homeostasis Signup and view all the answers

What future research direction is suggested regarding the behavior of executives?

Explore how executives’ actions contribute to fostering ambidexterity. Signup and view all the answers

What is a proposed benefit of possessing dynamic capabilities in organizations?

Ability to adapt and reconfigure assets effectively. Signup and view all the answers

Which characteristic is NOT a feature of open systems according to systems theory?

They are entirely self-sufficient without any interactions. Signup and view all the answers

What primary issue did Polaroid face despite having advanced technological capabilities?

Clinging to outdated business models Signup and view all the answers

How did managerial cognition impact Polaroid’s market performance?

It resulted in cognitive inertia and resistance to change Signup and view all the answers

What was one consequence of Polaroid's belief in the razor/blade model?

Hindered adaptation to new market trends Signup and view all the answers

What aspect of leadership changes at Polaroid was noted in relation to organizational change?

Delayed implementation of digital strategies Signup and view all the answers

What factor significantly contributed to Polaroid's organizational failure in adapting to digital imaging?

Reliance on established routines and competencies. Signup and view all the answers

What is meant by the term 'cognitive dissonance' in the context of Polaroid's management?

Conflicting beliefs between senior management and the digital imaging division Signup and view all the answers

Which managerial belief did Polaroid hold that misguided its response to market changes?

Belief in the market's value for instant prints over electronic options. Signup and view all the answers

What role did cognitive adaptability play in Polaroid’s organizational issues?

It was compromised by hierarchical structures. Signup and view all the answers

What impact did cognitive inertia have on Polaroid's management decisions?

Stifled innovation and adaptation to change. Signup and view all the answers

Why is it important for organizations to manage cognitive change effectively?

To mitigate disruptive effects during transitions Signup and view all the answers

What is described as a potential benefit for firms in rapidly evolving environments?

Being ambidextrous in balancing different strategies Signup and view all the answers

How did Polaroid's technology-driven approach affect its market strategy in the 1980s?

Prioritized the creation of groundbreaking products over existing needs. Signup and view all the answers

What was a significant factor in Polaroid's failure to capitalize on its technological innovations?

Rigid adherence to old business models Signup and view all the answers

Which development strategy did Polaroid adopt for its digital imaging products in the late 1980s?

Incorporating market research into product development. Signup and view all the answers

What was a primary cause of commercial failure for the Helios Medical System project?

Distribution challenges and market misjudgments. Signup and view all the answers

How did Edwin Land influence Polaroid's organization post-departure?

Through continued adherence to his initial beliefs Signup and view all the answers

What change did Gary DiCamillo implement as the new CEO in 1996?

Outsourcing digital camera development. Signup and view all the answers

What research method was used in the study of AI effects on consultant productivity at BCG?

Random assignment to experimental conditions Signup and view all the answers

What dual role does AI play in the context of knowledge work according to the study?

It can enhance or disrupt human performance. Signup and view all the answers

The razor/blade model operated by Polaroid primarily focused on which aspect?

Selling cameras at a loss to drive film sales. Signup and view all the answers

Which factor delayed the launch of the PDC-2000 camera?

Disagreements over the business model between teams. Signup and view all the answers

What challenge does the 'jagged technological frontier' present for knowledge workers?

Determining which tasks to automate and manage manually Signup and view all the answers

What was one aspect measured in the initial phase of the BCG study?

Demographic and psychological profiling of participants Signup and view all the answers

What notable strategy did Polaroid adopt to enhance its digital imaging capabilities in the early 1980s?

Investing significantly in a microelectronics lab. Signup and view all the answers

How did Polaroid's approach to digital imaging evolve by the late 1990s?

They shifted towards rapid product development and market-driven strategies. Signup and view all the answers

What significant organizational change occurred at Polaroid in 1990?

Reorganization that elevated the focus on electronic imaging. Signup and view all the answers

What marked the end of Polaroid's significant internal digital imaging expertise by 1998?

Shift towards rapid development and market-driven approaches. Signup and view all the answers

What is the primary focus of corporate entrepreneurship (CE)?

Innovation, venturing, and strategic renewal Signup and view all the answers

Which challenge is associated with structural differentiation in organizations?

Coordination problems between units Signup and view all the answers

What role does a shared vision play in larger organizations according to the study?

It facilitates communication and alignment across differentiated units. Signup and view all the answers

What are the integration mechanisms highlighted in the study?

Shared vision, senior team social integration, and cross-functional interfaces Signup and view all the answers

In what way does organizational size influence the differentiation-CE relationship?

The positive effect of senior team social integration is stronger in larger organizations. Signup and view all the answers

What potential cost does integration introduce within differentiated organizations?

Slowed decision-making processes Signup and view all the answers

How does senior team social integration help in larger organizations?

It helps in resolving conflicts and sharing knowledge across units. Signup and view all the answers

What describes structural differentiation within an organization?

Creating separate departments with specific tasks and goals. Signup and view all the answers

How do cross-functional interfaces benefit larger organizations?

They facilitate formal coordination across diverse units. Signup and view all the answers

What is a consequence of structural differentiation combined with insufficient integration?

Reduced effectiveness of corporate entrepreneurship Signup and view all the answers

What was the average increase in the number of tasks completed by participants using AI support?

12.2% Signup and view all the answers

Why might smaller organizations require less emphasis on a shared vision compared to larger organizations?

Employees in smaller organizations interact more frequently. Signup and view all the answers

What is the primary benefit of AI for consultants who are typically lower performers?

43% improvement in work quality Signup and view all the answers

What disadvantage can arise from integration mechanisms in differentiated organizations?

Potential loss of agility in responding to market changes Signup and view all the answers

Which type of organizational structure is suggested to best support corporate entrepreneurship?

A balance between differentiation and integration Signup and view all the answers

What was the outcome when tasks were outside the AI’s technological frontier?

Lower likelihood of correct solutions by 19 percentage points Signup and view all the answers

Which strategy involves a selective use of AI for specific tasks while humans manage more complex tasks?

Centaur Strategy Signup and view all the answers

What is the potential negative consequence of over-reliance on AI in decision-making processes?

Diminished accuracy and performance Signup and view all the answers

What was one of the roles of the interviews with participants after task completion?

To gain qualitative insights about AI use Signup and view all the answers

Why is it vital for organizations to develop strategies for AI integration?

To effectively utilize AI while understanding its limitations Signup and view all the answers

In the context of knowledge work, what does AI potentially do best?

Enhance quality and productivity in specific tasks Signup and view all the answers

What is one of the challenges posed by AI in the context of creativity?

It may homogenize outputs and reduce diversity of ideas Signup and view all the answers

What is the main focus of the study regarding the role of AI in the modern workplace?

The challenges and benefits of strategically navigating AI capabilities Signup and view all the answers

What does the Cyborg Strategy emphasize in AI use?

Seamless integration of AI assistance throughout tasks Signup and view all the answers

Which of the following indicates that AI can reduce performance disparities among workers?

AI tools giving lower performers a 43% work quality boost Signup and view all the answers

What could be a possible outcome if organizations fail to implement effective AI training?

Potential over-reliance leading to erroneous outputs Signup and view all the answers

How does a shared vision impact differentiation in dynamic environments?

It imposes rigid norms that may constrain creativity. Signup and view all the answers

What is the effect of senior team social integration in dynamic environments?

It may hinder flexibility and slow down decision-making. Signup and view all the answers

Why might cross-functional interfaces be less effective in dynamic environments?

They channel resources into established processes, slowing response. Signup and view all the answers

How does organizational size influence the effect of shared vision on corporate entrepreneurship (CE)?

Larger organizations benefit more from a shared vision. Signup and view all the answers

What challenge do large organizations face in managing radical innovation (RI)?

Resistance arising from established processes geared towards efficiency. Signup and view all the answers

What role does environmental dynamism play in the relationship between integration mechanisms and corporate entrepreneurship?

It reduces the effectiveness of integration mechanisms. Signup and view all the answers

Which statement is true regarding firms that engage in radical innovation consistently?

They develop management systems to sustain radical innovation. Signup and view all the answers

How do larger organizations typically react to the need for radical innovation?

They prioritize incremental changes due to established processes. Signup and view all the answers

What effect does excessive integration have on innovation in dynamic environments?

It can slow down decision-making and reduce flexibility. Signup and view all the answers

Which integration mechanism is highlighted as essential for differentiated units in larger organizations?

Shared vision. Signup and view all the answers

What is a core challenge identified for large, established firms in the context of radical innovation?

Overcoming rigidity in established processes. Signup and view all the answers

What should managers consider when designing organizational structures to maximize innovation?

The balance between differentiation and integration based on environmental factors. Signup and view all the answers

What is a consequence of insufficient integration in smaller organizations?

Threats to innovation due to a lack of alignment. Signup and view all the answers

What impact do dynamic environments have on cross-functional interfaces?

They may channel resources into rigid processes, hindering flexibility. Signup and view all the answers

What is the primary focus of exploitation in firms?

Maximizing current resources Signup and view all the answers

Which of the following describes organizational ambidexterity?

Balancing both exploration and exploitation Signup and view all the answers

What is a characteristic of sequential ambidexterity?

Switching between periods of exploration and exploitation Signup and view all the answers

One of the benefits of organizational ambidexterity is:

Higher likelihood of innovations Signup and view all the answers

What role does leadership play in contextual ambidexterity?

Leaders encourage both exploitative and explorative activities Signup and view all the answers

What is a significant challenge of achieving ambidexterity in organizations?

Balancing efficiency and risk-taking Signup and view all the answers

Which of the following best represents simultaneous or structural ambidexterity?

Creating independent teams for different objectives Signup and view all the answers

What is one potential downside of a focus on exploitation?

It may inhibit innovation Signup and view all the answers

Which factor is essential for firms to achieve organizational ambidexterity?

A strong link between exploration and exploitation goals Signup and view all the answers

What has research shown regarding the relationship between ambidexterity and firm performance?

Ambidexterity is positively associated with firm success Signup and view all the answers

Which step is identified for future research regarding ambidexterity?

Examining the role of leadership in balance management Signup and view all the answers

What type of ambidexterity involves fostering a culture encouraging employees to engage in both activities?

Contextual ambidexterity Signup and view all the answers

Why do firms often show a bias towards exploitation?

It offers quicker and more predictable results Signup and view all the answers

What is the main purpose of the Discovery–Incubation–Acceleration (DIA) model in radical innovation?

To structure the innovation process into three phases. Signup and view all the answers

Which of the following is a notable effect of ambidexterity on a firm's survival?

Enhances resilience in dynamic environments Signup and view all the answers

Which competency is essential for identifying new market opportunities for radical innovations?

Market Competency Signup and view all the answers

What are organizational antibodies in the context of radical innovation?

Internal resistance to changes in established procedures. Signup and view all the answers

Which of the following best describes organizational ambidexterity?

The balance between exploiting current products and exploring new innovations. Signup and view all the answers

What is a common challenge firms face when transitioning from innovation to commercialization?

Ineffective management of internal processes. Signup and view all the answers

What is the role of senior leadership in supporting radical innovation?

To allocate resources and protect innovation teams. Signup and view all the answers

Which organizational structure allows firms to leverage existing resources while maintaining some separation for radical innovation?

Embedded Innovation Groups Signup and view all the answers

What is the primary focus of a corporate venture unit?

To function like internal startups with autonomy. Signup and view all the answers

What is necessary for building a long-term capability for radical innovation within an organization?

Creating systems for repeated engagement in innovation. Signup and view all the answers

Which of the following is NOT a phase in the Discovery–Incubation–Acceleration model?

Implementation Signup and view all the answers

Which statement best captures the essence of the conclusion regarding approaches to radical innovation?

Different firms adopt different structures based on unique needs. Signup and view all the answers

What impact does organizational structure have on radical innovation?

It affects the flexibility and creativity of innovation processes. Signup and view all the answers

What is one key skill required in the incubation phase of the DIA model?

Project management skills Signup and view all the answers

What is meant by the term 'exploitation' in the context of organizational ambidexterity?

Improving existing products and technologies. Signup and view all the answers

What is a technological discontinuity?

A significant change that disrupts industries and existing technologies. Signup and view all the answers

Why do incumbents often struggle to adapt to technological discontinuities?

They suffer from cognitive biases and organizational inertia. Signup and view all the answers

How does the focus of attention influence managerial decision-making in response to technological change?

If managers focus on established technologies, they may overlook new opportunities. Signup and view all the answers

What effect do homophilous relationships have on firms' awareness of technological discontinuities?

They reinforce shared mental models and cognitive biases. Signup and view all the answers

What is meant by the term 'situated attention' in the context of managerial decision-making?

The context influences what managers deem relevant and important. Signup and view all the answers

Which type of interorganizational relationship is most likely to expose firms to different perspectives on technological change?

Heterophilous relationships, such as with venture capitalists. Signup and view all the answers

Which principle highlights the influence of external factors on attention in firms?

Distributed Attention Signup and view all the answers

What is a common result of high-status firms in homophilous relationships regarding technological change?

They may downplay the importance of discontinuities for their advantage. Signup and view all the answers

What is cognitive bias in the context of organizational response to technological advancements?

A systematic error in thinking that affects decision-making. Signup and view all the answers

Which aspect does the attention-based view (ABV) of the firm emphasize regarding managerial action?

Where management directs attention influences the firm's strategic actions. Signup and view all the answers

What can result from organizational inertia in established firms?

Resistance to changes in established routines. Signup and view all the answers

What does path dependency imply for incumbent firms during technological discontinuities?

A reliance on past strategies that may no longer be effective. Signup and view all the answers

Which factor may lead to collective myopia in firms within homophilous networks?

Sharing similar mental models and knowledge structures. Signup and view all the answers

What role do venture capitalists (VCs) play in relation to heterophilous interorganizational relationships?

They provide essential insights into emerging technologies. Signup and view all the answers

How can executive management improve their recognition of technological discontinuities?

By fostering diverse relationships with various organizations. Signup and view all the answers

What best describes the anchoring trap in decision-making?

Relying too much on the first piece of information encountered. Signup and view all the answers

What common mistake do individuals make when falling into the status-quo trap?

They avoid change in favor of familiar choices. Signup and view all the answers

Which strategy is recommended to mitigate the effects of the anchoring trap?

Seeking information from a variety of sources. Signup and view all the answers

Why do organizations often fall into the status-quo trap?

Familiarity and comfort prioritize existing choices. Signup and view all the answers

What impact does the anchoring trap have on decision-making?

It narrows the range of decisions based on initial information. Signup and view all the answers

What is one potential outcome of not addressing cognitive biases in decision-making?

Heightened susceptibility to psychological traps. Signup and view all the answers

How can organizations benefit from employing scenario planning?

It aids in debiasing and enhancing strategic decisions. Signup and view all the answers

Which approach is least effective in minimizing decision-making traps?

Sticking with initial decisions and rarely questioning them. Signup and view all the answers

What is the primary focus of the concept of ambidextrous designs in organizations?

Balancing innovation with operational efficiency Signup and view all the answers

Which barrier most significantly hinders an organization’s ability to explore innovative opportunities?

Incentive structures that reward short-term gains Signup and view all the answers

What is meant by paradoxical cognition in the context of top management teams?

The capacity to embrace contradictory strategies simultaneously Signup and view all the answers

What role does differentiation play in managing strategic contradictions?

It recognizes distinct needs for exploration versus exploitation Signup and view all the answers

Why might firms that prioritize exploitation become stagnant?

As they neglect opportunities for disruptive technological changes Signup and view all the answers

What is a key outcome of implementing integration in firms balancing exploration and exploitation?

Enhanced alignment of distinct goals and processes Signup and view all the answers

Which psychological factor contributes significantly to the bias toward exploitation?

Comfort with established routines and processes Signup and view all the answers

How does structural inertia affect an organization's ability to innovate?

It creates resistance to necessary change Signup and view all the answers

What is the significance of resource allocation in balancing exploration and exploitation?

It affects the support both strategies receive in the organization Signup and view all the answers

What type of cultures tend to flourish under exploitation strategies?

Disciplined and efficiency-oriented cultures Signup and view all the answers

What would be a consequence of avoiding paradoxical cognition in management decisions?

A tendency to prioritize one strategy over the other Signup and view all the answers

What is emphasized in the integration process for managing exploration and exploitation?

Finding ways for exploration to improve exploitation Signup and view all the answers

Which characteristic describes organizations that successfully employ ambidextrous designs?

Simultaneous focus on new opportunities and existing capabilities Signup and view all the answers

What is the expected benefit of integrating exploration and exploitation strategies?

Improvement in both short-term efficiency and long-term innovation Signup and view all the answers

What role does corporate venture capital (CVC) play for incumbent firms?

It connects incumbents with VCs and startups for co-investment. Signup and view all the answers

How do high-status VCs impact management's attention to technological changes?

They provide insight that increases attention to discontinuities. Signup and view all the answers

Which type of relationships are shown to delay managerial attention to disruptive innovations?

Homophilous relationships with industry peers. Signup and view all the answers

What finding emerged from the longitudinal study regarding interorganizational networks?

Heterophilous networks provide new insights into innovations. Signup and view all the answers

What does engaging with diverse partners help firms overcome?

Cognitive biases and organizational inertia. Signup and view all the answers

Which variable significantly impacts managerial recognition of technological shifts?

Partner status of venture capital firms. Signup and view all the answers

What is a crucial managerial implication derived from the findings of the study?

Build heterophilous relationships with high-status VCs. Signup and view all the answers

What methodological approach was used in the study to analyze the data?

Event history analysis and fixed-effects panel regression models. Signup and view all the answers

What was measured as the dependent variable in the study?

The timing of formal recognition of technological discontinuities. Signup and view all the answers

Which factor is NOT highlighted as impacting managerial attention?

Industry reputation of incumbent firms. Signup and view all the answers

What does the attention-based view (ABV) emphasize in relation to firms?

External networks shape managerial attention toward disruptions. Signup and view all the answers

What limitation of the study could affect the results?

Narrow focus on four ICT industries from 1989 to 2000. Signup and view all the answers

What is the significant impact of heterophilous relationships on firms?

They enhance recognition of technological discontinuities. Signup and view all the answers

What is one of the significant benefits of scenario planning compared to traditional strategic planning methods?

It helps to reduce cognitive biases like framing bias. Signup and view all the answers

Which group in the study displayed a significant framing bias in their decision-making?

Control Group Signup and view all the answers

What aspect of scenario planning contributes to better decision quality according to the study?

Encouraging deep analysis and multiple future considerations. Signup and view all the answers

What was a key finding regarding the Partial Scenario Analysis Group's decision-making?

They still exhibited framing bias despite some planning. Signup and view all the answers

Why is scenario planning particularly valuable for organizations in volatile environments?

It helps managers develop robust and adaptable strategies. Signup and view all the answers

What was the primary method used to assess decision quality in the study?

Strategic recommendations and their alignment with original intent. Signup and view all the answers

What limitation of the study is noted regarding the participants?

They lacked decision-making experience. Signup and view all the answers

Which cognitive bias was primarily explored in relation to scenario planning in this study?

Framing bias Signup and view all the answers

What key outcome was reported for the Full Scenario Analysis Group?

Higher decision quality and effective strategic alignment. Signup and view all the answers

Which traditional planning tools were used by the Strategic Planning Group in the study?

SWOT analysis and Porter’s Five Forces Signup and view all the answers

What can be concluded about the relationship between scenario planning and collaboration?

Scenario planning enhances collaboration by including diverse stakeholder perspectives. Signup and view all the answers

In what way does scenario planning serve as a debiasing tool according to the study's findings?

By neutralizing the impact of framing on decision making. Signup and view all the answers

What implication does the study suggest for future research on scenario planning?

Investigate its effects on a wider range of cognitive biases. Signup and view all the answers

What is the primary negative impact of relationship-related faultlines on TMTs?

Reduced communication and cohesion among team members Signup and view all the answers

How do task-related faultlines positively influence strategic change?

By promoting collaboration across specialized groups Signup and view all the answers

In what type of environment might relationship-related faultlines have a diminished negative impact?

Highly dynamic environments with rapid changes Signup and view all the answers

What characteristic would likely contribute to a strong faultline within TMTs?

Similar educational backgrounds among subgroup members Signup and view all the answers

Which aspect of faultline theory suggests that subgroups formed by team members’ alignment can negatively affect team function?

Demographic similarity Signup and view all the answers

What is one potential benefit of task-related faultlines in a TMT?

Encouraging innovative problem-solving Signup and view all the answers

What hypothesis is made regarding environmental dynamism's effect on faultlines?

It diminishes the negative impacts of relationship-related faultlines. Signup and view all the answers

Which factor is primarily used to measure the strength of faultlines in TMTs?

Demographic and functional characteristics Signup and view all the answers

What outcome results from a strong relationship-related faultline based on educational level?

Decreased strategic change Signup and view all the answers

Which factors characterize task-related faultlines?

Functional background and tenure Signup and view all the answers

How does environmental dynamism affect the role of task-related faultlines?

It enhances the need for diverse problem-solving skills. Signup and view all the answers

What defines strategic change in the study?

Changes in resource allocation across strategic areas Signup and view all the answers

What overarching concept does the faultline theory illustrate regarding diversity in teams?

Diversity can have both positive and negative effects within teams. Signup and view all the answers

What is the primary responsibility in leadercentric teams regarding exploration and exploitation?

The leader assumes the main responsibility for balancing the strategies. Signup and view all the answers

How do teamcentric teams differ from leadercentric teams in managing exploration and exploitation?

Team members in teamcentric teams share responsibility for both strategies. Signup and view all the answers

What role does a leader play in a teamcentric structure?

The leader functions as a supportive integrator. Signup and view all the answers

Which of the following best describes 'demographic faultlines' within top management teams?

They are lines based on shared demographic characteristics that create subgroups. Signup and view all the answers

Which key factor is highlighted as important in managing strategic contradictions for long-term success?

Fostering paradoxical cognition within top management teams. Signup and view all the answers

What is emphasized as crucial for leader-centric teams in interaction dynamics?

Limited member-member interactions with a focus on leader interactions. Signup and view all the answers

How does environmental dynamism influence top management teams in relation to demographic faultlines?

It can enhance the positive effects of faultlines on strategic change. Signup and view all the answers

What approach do leader-centric teams use to manage tension between exploration and exploitation?

Providing coaching to reinforce differentiation. Signup and view all the answers

What is one of the main characteristics of team-centric teams?

Members contribute collaboratively to both strategies. Signup and view all the answers

What can hinder the effectiveness of top management teams in driving strategic change?

Demographic faultlines leading to internal divisions. Signup and view all the answers

In the context of team-centric teams, what is the leader's primary role?

To facilitate collaboration and integration among members. Signup and view all the answers

What is a potential advantage of adopting a paradoxical frame in organizations?

It enables the organization to balance exploration and exploitation. Signup and view all the answers

What outcome can be expected from effective management of strategic contradictions?

The ability to innovate while maintaining efficiency. Signup and view all the answers

How do relationship-related faultlines behave in dynamic environments?

They can sometimes provide beneficial access to diverse knowledge. Signup and view all the answers

What is one of the primary roles of task-related faultlines in dynamic environments?

They enhance the value of diversity for rapid problem-solving. Signup and view all the answers

What is a common cognitive bias that influences decision-making by how information is presented?

Framing Bias Signup and view all the answers

What is a significant limitation of the study mentioned regarding the generalizability of its findings?

It is limited to Chinese manufacturing firms. Signup and view all the answers

What is the primary purpose of scenario planning in organizations?

To enhance the adaptability and flexibility of strategies. Signup and view all the answers

How does scenario planning act as a debiasing tool?

It forces decision-makers to explore multiple possible outcomes. Signup and view all the answers

Which cognitive bias involves individuals overestimating their knowledge and predictions?

Overconfidence Bias Signup and view all the answers

What is the relationship between decision quality and cognitive biases?

Cognitive biases can lead to suboptimal decisions and lower decision quality. Signup and view all the answers

What impact can poor decision quality have on a firm's financial performance?

It can decrease total shareholder return by nearly six percentage points. Signup and view all the answers

Which type of faultlines typically harms strategic change?

Relationship-related faultlines Signup and view all the answers

Which aspect of demographic faultlines is highlighted as important in understanding their effect on organizations?

Cultural and industry variance in their impact Signup and view all the answers

What kind of knowledge do educational-level faultlines provide in dynamic environments?

Diverse knowledge essential for adaptation. Signup and view all the answers

What benefit is suggested by applying scenario planning to organizational strategies?

It fosters flexibility in preparing for future uncertainties. Signup and view all the answers

Which cognitive bias may lead individuals to favor information that aligns with their existing beliefs?

Confirmation Bias Signup and view all the answers

What is the main issue companies face that hinders radical breakthroughs in innovation?

Inadequate structural support for innovation programs Signup and view all the answers

Which phase of breakthrough innovation focuses on identifying market opportunities?

Discovery Signup and view all the answers

What is a significant loss for innovation professionals that affects career growth?

No clear paths beyond their roles Signup and view all the answers

What does current research suggest is the primary driver of radical innovation?

Corporate culture Signup and view all the answers

How could organizations improve their innovation capabilities according to the research?

Allowing employees to specialize in one innovation phase Signup and view all the answers

What are the three phases outlined for breakthrough innovation?

Discovery, incubation, and acceleration Signup and view all the answers

What common challenge do companies face when managing innovation talent?

Rotation of high-potential managers without expertise Signup and view all the answers

What framework is often expected but may lead to failure in innovation efforts?

Individuals transitioning through all innovation phases Signup and view all the answers

What is identified as the dominant force behind radical innovation in firms?

Corporate culture Signup and view all the answers

Which attitude is NOT considered a key driver of radical innovation according to the study?

Focus on immediate profits Signup and view all the answers

How has the role of labor as a driver of innovation changed according to the findings?

It has a diminishing impact due to interconnected labor markets. Signup and view all the answers

Which component of corporate culture promotes internal competition to foster innovation?

Internal markets Signup and view all the answers

What is a characteristic of firms that successfully implement a culture-centric approach to innovation?

Encouragement of experimentation and acceptance of failure Signup and view all the answers

Why is corporate culture considered more crucial than capital in driving innovation?

Corporate culture is firm-specific and intangible. Signup and view all the answers

Which of the following practices supports a culture of innovation in firms?

Empowerment of product champions Signup and view all the answers

According to the study, which factor is still necessary for innovation despite its reduced distinctiveness?

Corporate culture Signup and view all the answers

What component of corporate culture encourages firms to focus on long-term technological opportunities?

Future market orientation Signup and view all the answers

Which type of culture encourages innovation by allowing different internal teams to compete?

Competitive culture Signup and view all the answers

What is one of the implications of the study's findings regarding global capital markets?

They facilitate equal access to capital for firms globally. Signup and view all the answers

Which aspect of the proposed culture-centric theory directly impacts a firm's ability to innovate?

Corporate culture's internal practices and attitudes Signup and view all the answers

What hypothesis does the study propose regarding national culture and innovation?

Corporate culture is a more significant predictor of innovation than national culture. Signup and view all the answers

What is the consequence of firms having a willingness to cannibalize their own products?

Greater likelihood of sustaining innovation Signup and view all the answers

What role does separateness play in the process of breakthrough innovation?

It liberates individuals to pursue original ideas. Signup and view all the answers

How does extreme self-efficacy influence an innovator's potential for success?

It provides resilience to face failure and criticism. Signup and view all the answers

Which of the following accurately describes idealism as a motivator for innovators?

It fosters intrinsic motivation focused on a higher purpose. Signup and view all the answers

What is a potential drawback of an innovator's tenacious focus driven by idealism?

It may cause disregard for practicality and immediate concerns. Signup and view all the answers

How do the traits of separateness, self-efficacy, and idealism collectively influence innovative capacity?

They reinforce each other and enhance the likelihood of success. Signup and view all the answers

Which factor can help foster a creative environment for innovators within organizations?

Encouragement of independent work and solitude. Signup and view all the answers

What is considered the most significant driver of radical innovation according to the study?

Corporate culture Signup and view all the answers

In what way does idealism function as an ego defense for innovators?

It helps maintain resilience despite failures. Signup and view all the answers

How is financial performance measured in relation to radical innovation in firms?

Market-to-book ratio Signup and view all the answers

What is a likely implication of encouraging early successes for innovators?

It builds confidence and reinforces self-efficacy. Signup and view all the answers

Which three attitudes are identified as driving corporate culture related to radical innovation?

Risk tolerance, future market orientation, willingness to cannibalize Signup and view all the answers

Why might social isolation pose challenges for innovators?

It can result in reduced acceptance of their ideas. Signup and view all the answers

What impact does rule-breaking behavior have on innovation?

It can fuel innovative thought processes. Signup and view all the answers

Which variable was found to have minimal impact on radical innovation, according to the study?

Labor resources Signup and view all the answers

What sample size and sector were used in the study to assess radical innovation?

759 firms in the manufacturing sector Signup and view all the answers

What is a consequence of extreme self-efficacy regarding large goals?

It encourages taking on seemingly impossible challenges. Signup and view all the answers

Why is time spent alone deemed beneficial for breakthrough innovators?

It allows avoidance of societal restrictions. Signup and view all the answers

How does idealism help innovators maintain focus during setbacks?

It fuels their commitment to long-term goals. Signup and view all the answers

What key personal trait, alongside creativity, is essential for breakthrough innovators?

Idealism Signup and view all the answers

What is an essential characteristic that fosters breakthrough innovation among individuals?

A blend of separateness, self-efficacy, and idealism. Signup and view all the answers

What attitude is associated with corporate culture that fosters radical innovation?

Willingness to cannibalize Signup and view all the answers

Which of the following practices was linked to contributing to innovation within firms?

Offering incentives Signup and view all the answers

What did the study conclude about corporate culture in relation to national factors?

Corporate culture overshadows national-level factors in driving innovation. Signup and view all the answers

What is one limitation noted in the study regarding its sample?

Limited to 17 nations Signup and view all the answers

What aspect of corporate culture can significantly enhance innovation output?

Empowerment of product champions Signup and view all the answers

What does the concept of separateness refer to in breakthrough innovators?

A perception of being different from others Signup and view all the answers

Which of the following corporate practices was noted as having a weaker effect on innovation?

Developing internal markets Signup and view all the answers

What role does a firm's identity play in technological adaptation?

It becomes a source of inertia, hindering adaptation to new technologies. Signup and view all the answers

Which phase in the model of identity change reflects confusion due to new technologies?

Identity ambiguity Signup and view all the answers

How did Linco initially define itself after its spin-off from SemiCo?

As The Digital Photography Company Signup and view all the answers

What consequence did Linco face due to its strong identity as a digital photography company?

Delayed ability to capitalize on new opportunities. Signup and view all the answers

Which data collection method was NOT used in the study of Linco?

Surveys of external stakeholders Signup and view all the answers

What characterized Linco's internal communication regarding its identity?

Consistent messaging about digital photography Signup and view all the answers

What is the main challenge faced by Linco's organizational identity in the face of new technological opportunities?

Overcoming employee resistance to change Signup and view all the answers

Which statement about Linco's role in the digital photography industry is true?

It was instrumental in establishing digital film as a product category. Signup and view all the answers

What motivates a firm to converge on a new identity according to the model of identity change?

Market changes or acquisition interest Signup and view all the answers

What unintended effect can a firm’s identity have on its decision-making processes?

It leads to narrower focus by limiting exploration of new opportunities. Signup and view all the answers

What was a key element in Linco’s strategy to reinforce its identity as a leader in digital photography externally?

Strategic labeling of products as 'digital film' Signup and view all the answers

Which stage in the identity change model demonstrates a strong alignment between a firm's identity and its industry actions?

Self-reinforcing dynamic Signup and view all the answers

What type of data was included in the longitudinal case study of Linco?

Interviews and internal documents Signup and view all the answers

What major challenge did Linco face in recognizing new technological opportunities?

Alignment between its identity and strategic actions Signup and view all the answers

What did Linco need to shift its identity towards in order to address its financial challenges?

Exploring new product lines such as USB flash drives Signup and view all the answers

What issue arose during Linco's attempt to shift its identity?

Period of identity ambiguity Signup and view all the answers

How did Linco's old organizational routines contribute to its challenges?

Prioritizing projects related to digital photography Signup and view all the answers

What factor contributed to Linco's external identity inertia?

Analysts viewing Linco as a digital photography company Signup and view all the answers

When did Linco finally clarify its new identity as a flash memory company?

In 2005 following external pressures Signup and view all the answers

What is one benefit of Managerial Identity-Dissemination Discourse (MIDD) within established firms?

It fosters a shared understanding of the firm's core identity. Signup and view all the answers

How do flexible identity interpretations affect a firm's innovation capabilities?

They promote effective innovation by facilitating adaptability. Signup and view all the answers

What is the role of organizational identity in responding to disruptive innovations?

It governs how firms interpret and respond to disruptions. Signup and view all the answers

What does nonlocal search in the context of innovation refer to?

Seeking knowledge beyond immediate operational areas. Signup and view all the answers

Which aspect does role identity focus on within an organization?

The firm's perceived influence within its category Signup and view all the answers

What primary challenge do established firms face regarding breakthrough innovations?

Being influenced by local search mindsets. Signup and view all the answers

What often characterizes disruptive innovations compared to established products?

Introduction of new benefits like convenience Signup and view all the answers

Which aspect is essential for fostering a culture conducive to innovation in established firms?

Open communication that reinforces organizational identity. Signup and view all the answers

What is suggested as a future research direction regarding organizational identity?

Investigating how organizations can manage identity shifts Signup and view all the answers

How does the concept of organizational identity guide a firm's strategic choices?

By defining the core values that shape perceptions and decisions. Signup and view all the answers

What implication can be drawn from Linco's experience with technological change?

Strong organizational identity can prevent change. Signup and view all the answers

How did Linco's communication strategy impact its identity shift?

It confused internal and external stakeholders. Signup and view all the answers

In what way can MIDD contribute to breakthrough innovation?

By preventing misalignment between employee values. Signup and view all the answers

What limitation is acknowledged in the study regarding the applicability of its findings?

The exclusive focus on a single industry and country. Signup and view all the answers

What does the relationship between domain identity and role identity help explain?

Firms' interpretations and responses to disruptions Signup and view all the answers

What is a potential consequence of external identity inertia for a company?

Difficulty in rebranding and communicating changes Signup and view all the answers

What does successful knowledge recombination result in for established firms?

The ability to produce breakthrough innovations. Signup and view all the answers

Which transition challenge did Linco face as it sought to shift its identity?

Aligning projects with its new identity Signup and view all the answers

What common characteristic is seen in firms that fail to innovate effectively?

They experience rigidities due to outdated identity frameworks. Signup and view all the answers

Which leadership attribute is hypothesized to positively affect a firm's innovation capabilities?

Transformational leadership styles. Signup and view all the answers

Which of the following statements best reflects the concept of innovation in established firms?

Breakthrough innovations can occur when firms redefine their identities. Signup and view all the answers

What role does discourse play in MIDD?

It facilitates an understanding of the firm's core mission. Signup and view all the answers

What influences how firms perceive disruptive innovations?

Domain identity and role identity Signup and view all the answers

In the context of the study, what was the primary focus of prior research on organizational identity?

Domain identity and its influence on competitive advantage Signup and view all the answers

What characterized Leo Books' approach to digitalization?

Adoption of internally developed technologies Signup and view all the answers

How did Taurus Print respond to digitalization?

Rejected digitalization due to its traditional identity Signup and view all the answers

What internal struggle did Gemini & Sons face regarding digitalization?

Tensions between their domain and role identity led to inertia Signup and view all the answers

What was a notable action taken by Libra Press in response to digitalization?

Adopted digitalization without strategic vision Signup and view all the answers

What was a significant outcome of aligning domain and role identities in organizations?

Smoother adaptation to disruptive innovations Signup and view all the answers

Which firm viewed digitalization as enhancing its domain identity?

Leo Books Signup and view all the answers

Why did Taurus Print continue focusing on print innovations?

Strong commitment to traditional media identity Signup and view all the answers

What kind of research approach was utilized in this study?

Longitudinal, multi-case study Signup and view all the answers

What was a common characteristic of the firms studied?

Firms were established for at least 50 years Signup and view all the answers

Which finding indicates internal struggles within firms?

Misalignment between domain and role identities leads to conflict Signup and view all the answers

What role does 'role identity' play in firms according to the study?

Shapes the company's self-perceived position as a leader or follower Signup and view all the answers

What conclusion can be drawn about firms with strong role identity during disruptions?

They may face difficulties if their role is challenged Signup and view all the answers

What is one of the primary benefits of MIDD in organizations?

It promotes exploration of product-market combinations aligned with company values. Signup and view all the answers

Which leadership style is most supportive of MIDD's effectiveness?

Transformational leadership that inspires and motivates employees. Signup and view all the answers

How does centralization affect MIDD's impact within an organization?

It weakens MIDD by restricting information flow and autonomy. Signup and view all the answers

What role does formalization play in the context of MIDD?

It enhances MIDD by providing a clear administrative framework. Signup and view all the answers

In what year was a follow-up survey conducted to validate the MIDD instrument?

2016 Signup and view all the answers

Which statistical methods were used to establish the reliability of the MIDD instrument?

Factor analysis and Harman’s one-factor test. Signup and view all the answers

What effect does MIDD have on breakthrough innovations according to the findings?

It results in more products that redefine market offerings. Signup and view all the answers

What misconception does the study challenge about large established firms?

They can innovate only incrementally. Signup and view all the answers

What is suggested as more effective when combined with MIDD?

Advanced information and communication technologies (ICT). Signup and view all the answers

What type of research design does the study predominantly utilize?

Cross-sectional design that captures a snapshot in time. Signup and view all the answers

Which factor may be a focus for future research as mentioned in the study?

The role of different identity-embodying values in breakthrough innovations. Signup and view all the answers

How does MIDD influence organizational inertia?

It helps break inertia by reshaping how employees view the organization. Signup and view all the answers

Which component is critical for integrating dispersed knowledge into solutions?

Organizational identity aligned with MIDD. Signup and view all the answers

What is the primary purpose of internal corporate ventures within a company?

To drive innovation, enter new markets, and leverage technologies Signup and view all the answers

How does ALPHA define success in its internal corporate ventures?

In terms of capability development and transfer Signup and view all the answers

What was the role of the New Ventures Division (NVD) at ALPHA?

To explore new business opportunities outside core operations Signup and view all the answers

What does the process of 'capability branching' refer to within ALPHA's ventures?

The evolution of capabilities to be applied in different areas Signup and view all the answers

What approach was used in the research conducted on ALPHA's internal ventures?

A longitudinal study with qualitative and quantitative data Signup and view all the answers

What were the outcomes for most of ALPHA's internal ventures?

Most were discontinued before full commercialization Signup and view all the answers

How did ALPHA ensure ongoing development from discontinued ventures?

By systematically documenting their lessons and capabilities Signup and view all the answers

Which type of venture outcome resulted in ALPHA incorporating technologies into existing operations?

Spin-in Signup and view all the answers

What does the term 'early-stage discontinuation' imply for some ventures at ALPHA?

It means valuable insights or developments were still generated Signup and view all the answers

What was one significant benefit of ALPHA’s internal corporate ventures?

The ability to develop new patents and products Signup and view all the answers

What characterized the governance of ventures in the New Ventures Division at ALPHA?

A venture board reviewed and guided each stage of development Signup and view all the answers

How many patents were granted across ALPHA's internal ventures?

442 patents Signup and view all the answers

Which venture was specifically mentioned as a major success for ALPHA?

Bonn Signup and view all the answers

What process does ALPHA use to allocate funding to its ventures?

Incremental funding based on stage progression Signup and view all the answers

What was a significant benefit of the personal development reported by team members involved in ventures?

Improvement in organizational competence Signup and view all the answers

How did ALPHA's venture management process contribute to capability development?

It ensured valuable capabilities were captured and transferred. Signup and view all the answers

What role did regular reviews of ventures play in ALPHA's organizational learning?

They helped determine capabilities for reassignment. Signup and view all the answers

Which of the following indicates a greater capacity for learning from small failures in R&D?

Frequent small failures providing feedback. Signup and view all the answers

What can result from teams being reassigned from completed ventures?

Increased knowledge transfer across the organization. Signup and view all the answers

What does the study suggest about the primary focus of internal corporate ventures?

They are temporary vehicles for capability development. Signup and view all the answers

What was an essential factor in helping organizations learn from failures?

Positive organizational and psychological conditions. Signup and view all the answers

How can ventures contribute to long-term innovation in organizations?

Through the transfer of developed capabilities across the organization. Signup and view all the answers

What is a characteristic feature of small failures in R&D in the pharmaceutical industry?

They offer chances for resource realignment and learning. Signup and view all the answers

What critical role do senior managers play in the context of ALPHA's ventures?

Identifying opportunities for capability transfer. Signup and view all the answers

What type of capabilities were often transferred during capability transformation?

Technological know-how and new business models. Signup and view all the answers

Why is learning from failures considered important in process improvement?

Failures can lead to innovation and prevention of future mistakes. Signup and view all the answers

What does the pharmaceutical industry's context suggest about R&D processes?

Frequent patent filings may indicate potential for learning from small failures. Signup and view all the answers

What was a common strategy used by initiatives during the exploration phase to secure independence from their core businesses?

Hiring external experts Signup and view all the answers

What was a significant challenge faced by eBroker during its transition phase?

Overlap with core banking operations Signup and view all the answers

How did Nutrition aim to differentiate itself from FoodGroup’s core food business?

By acquiring a specialized company Signup and view all the answers

Which unit faced tensions due to perceived competition from its core business during the exploration phase?

Fleet Signup and view all the answers

What factor contributed to the success of Coffee Caps in the exploitation phase?

Collaboration with core business for production support Signup and view all the answers

In the transition phase, how did eBroker fail to establish its identity?

By transferring management from the core retail business Signup and view all the answers

What was a key outcome for initiatives that successfully transitioned into the exploitation phase?

Enhanced collaboration with core units Signup and view all the answers

Which initiative effectively clarified its market position relative to its core business during the transition phase?

Coffee Caps Signup and view all the answers

How did Icon overcome initial resistance from CarInc's core business?

By developing a unique pricing strategy Signup and view all the answers

Why did Nutrition's role become more apparent during the transition phase?

Due to collaboration with the core business. Signup and view all the answers

What main issue did Fleet encounter during its transition phase?

Internal competition perceived as a threat Signup and view all the answers

What approach did Basket take to ease tensions with its core business?

Clarifying its role focusing on retail derivatives Signup and view all the answers

How did the management strategies differ between Coffee Caps and eBroker?

eBroker lacked differentiated management while Coffee Caps embraced it Signup and view all the answers

What was a distinguishing characteristic of the initiatives during their exploration phase?

Recruiting external talent for distinct capabilities Signup and view all the answers

How did large established firms contribute to the legitimacy of the personal computer industry?

By using their credibility to draw attention to the new industry Signup and view all the answers

What is one major disadvantage of corporate children competing in new markets?

They are constrained by old business practices and structures Signup and view all the answers

What aspect does ambidexterity emphasize in organizations?

Balancing exploration and exploitation processes Signup and view all the answers

Why are stand-alone businesses often stronger competitors in industries built around disruptive innovations?

They are less impacted by legacy systems and practices Signup and view all the answers

What theory suggests that companies scale exploratory ventures when their potential value becomes clear?

Real options theory Signup and view all the answers

What often hampers the successful transition from exploration to exploitation within organizations?

Tensions between new ventures and established businesses Signup and view all the answers

What factor typically enhances a new industry's legitimacy through large companies?

The availability of established industry standards Signup and view all the answers

What common characteristic is associated with established companies when entering new, disruptive markets?

Rigid structures limiting innovation Signup and view all the answers

Why might younger corporate parents be better at promoting the competitiveness of new business units?

They offer greater flexibility and autonomy Signup and view all the answers

Which challenge do large established firms face when they attempt to compete in new, disruptive markets?

Their commitment to high-end, expensive products Signup and view all the answers

What is a common result of start-ups succeeding in industries driven by disruptive innovations?

They usually outcompete diversified corporations Signup and view all the answers

What role do diversified entrants play in legitimizing new industries?

Bringing recognized brands to endorse emerging sectors Signup and view all the answers

In the context of growing new corporate businesses, what is meant by 'graduation'?

The transition from exploratory initiatives to fully scaled operations Signup and view all the answers

How do start-ups benefit from their lack of established structures when entering new markets?

They are less influenced by existing industry practices Signup and view all the answers

What effect do early failures have on a firm's R&D quality?

They contribute to higher R&D quality by providing quick feedback. Signup and view all the answers

What is a significant challenge associated with late failures?

They involve more ambiguity, complicating the identification of failure causes. Signup and view all the answers

How do small failures influence patent production and R&D quality?

They reduce patent numbers while enhancing innovation quality. Signup and view all the answers

What role do 'corporate parents' play in new industry development?

They help provide legitimacy to new industries while their own units may perform worse. Signup and view all the answers

Which factor is crucial for a new industry to gain acceptance?

Social acceptance and legitimacy. Signup and view all the answers

What type of innovations tend to favor established firms?

Sustaining innovations that enhance existing products. Signup and view all the answers

What is one reason corporate children may struggle in new markets?

They often have outdated methods and greater legacy burdens. Signup and view all the answers

How does failure impact a firm's ability to allocate resources?

It leads to a better understanding of resource needs. Signup and view all the answers

What is a potential advantage of disruptive innovations for start-ups?

They create opportunities for new needs and markets. Signup and view all the answers

What does the term 'legitimacy' refer to in the context of new industries?

The acceptance and credibility among stakeholders. Signup and view all the answers

What key concept explains the decline in patent numbers due to small failures?

Focus on quality over quantity in innovation. Signup and view all the answers

What is the impact of technological changes on new industry success?

They allow both established firms and start-ups to excel depending on the nature of innovation. Signup and view all the answers

Which method was applied in the study to address potential endogeneity of failures?

Arellano–Bond estimator. Signup and view all the answers

What main responsibility did Coffee Caps gain that allowed it to pursue new opportunities?

Full profit and loss (P&L) responsibility Signup and view all the answers

Which of the following best describes the initial stage of the Peer Graduation Process?

Peer differentiation to avoid direct competition Signup and view all the answers

How did Nutrition increase its independence within the organization?

By expanding its specialty sales force and R&D capabilities Signup and view all the answers

What was a significant factor in Fleet's failure to scale?

Conflicts with CarInc's core business Signup and view all the answers

What stage involves the integration of exploratory units with their peer units?

Peer Integration Signup and view all the answers

Which element is crucial for a new business unit to secure resources from its corporate parent?

Strong relationships with senior management Signup and view all the answers

During which phase does an exploratory unit demonstrate its value to the parent organization?

Parent Graduation Signup and view all the answers

What is the outcome of achieving Parent Differentiation for exploratory units?

Greater autonomy and P&L responsibility Signup and view all the answers

Why did eBroker fail to scale within its organization?

Lack of strategic importance Signup and view all the answers

What role did Icon's success in luxury marketing play in its relationship with CarInc?

It led to greater independence and resources Signup and view all the answers

How did Coffee Caps establish distinct target markets?

Through effective peer differentiation Signup and view all the answers

What does the Peer Graduation Process emphasize?

Collaboration and integration between units Signup and view all the answers

Which characteristic does NOT represent an exploratory unit gaining autonomy?

Dependence on the core business for resources Signup and view all the answers

Which statement accurately reflects the overall outcome of the exploratory unit processes?

Successful units achieve strategic importance and independence Signup and view all the answers

What is the primary focus of dynamic capabilities in firms?

Enabling transformation and sustained performance Signup and view all the answers

What is emphasized as a crucial aspect for scaling new ventures within an organization?

Dynamics of multilevel exchange relationships Signup and view all the answers

Which adaptation mode did Nestlé primarily use to cope with discontinuous changes?

Structural separation Signup and view all the answers

What does ambidexterity in organizations typically refer to?

Balancing exploration and exploitation activities Signup and view all the answers

What is a key characteristic of dynamic capabilities in organizations?

Ability to sense and seize new market opportunities Signup and view all the answers

Which of the following capabilities is NOT part of the dynamic capabilities framework?

Capitalizing on existing competencies Signup and view all the answers

Which organizational structure is suggested to enhance adaptability in fast-changing markets?

Decentralized structures Signup and view all the answers

How did GSK approach the integration of exploration and exploitation?

Using behavioral integration models Signup and view all the answers

What aspect does the framework introduced in the study highlight for successful ambidexterity?

Balancing differentiation and integration Signup and view all the answers

What must exploratory units do in their early stages to contribute effectively to a company?

Differentiate themselves to build new capabilities Signup and view all the answers

What is an important aspect of BMW's approach to adaptation?

Alternating focus between exploration and exploitation Signup and view all the answers

What is a significant challenge when seizing opportunities in uncertain environments?

Understanding customer preferences Signup and view all the answers

Which term describes the specific processes, routines, and organizational practices that underpin dynamic capabilities?

Microfoundations Signup and view all the answers

Which mode of adaptation stresses the importance of cross-functional teams?

Behavioral integration Signup and view all the answers

Which strategy is essential for managing complements and platforms?

Building relationships with complementary businesses Signup and view all the answers

What is the significance of the firms' long-term vision in developing dynamic capabilities?

It shapes the specific capabilities aligned with adaptation strategies. Signup and view all the answers

What key aspect must managers consider when making strategic investments?

Avoiding cognitive biases and organizational inertia Signup and view all the answers

Which of the following statements best describes the contingency perspective on dynamic capabilities?

The mode of adaptation determines the specific capabilities firms develop. Signup and view all the answers

What undermines a firm's ability to adapt in fast-changing markets?

Rigid organizational frameworks Signup and view all the answers

Why is reconfiguration considered a critical aspect of dynamic capabilities?

It enables firms to maintain a competitive advantage over time. Signup and view all the answers

What is a critical component of successful organizational reconfiguration?

Integrating new knowledge and enhancing capabilities Signup and view all the answers

How do organizations generally ensure long-term performance under competitive pressure?

Through strong dynamic capabilities Signup and view all the answers

Which approach did the firms studied use to address disruptive changes?

Integration of their dynamic capabilities with ambidexterity Signup and view all the answers

What role do corporate leadership relationships play in the scaling process?

They help facilitate scale through effective resource allocation. Signup and view all the answers

What is a key characteristic of structural separation in firms?

Distinct units are created for exploration and exploitation. Signup and view all the answers

What challenges do firms face when adapting to discontinuous changes?

All of the above Signup and view all the answers

What do successful firms do to maintain resource reconfiguration as markets change?

Continuously scan for new opportunities and threats Signup and view all the answers

What is an important aspect of the identity dynamics in organizations featuring new units?

Redefining roles and boundaries over time Signup and view all the answers

Study Notes

Ambidextrous Business Units

According to Gibson & Birkinshaw (2004), more ambidextrous business units lead to increased perceived business unit performance.

Building New Corporate Businesses

Raish & Tushman (2016) argue that a blend of integration and differentiation strategies is effective for establishing new corporate businesses.

Core Competencies and Rigidities

Tripsas and Gavetti (2000) suggest that core competencies can transform into core rigidities.
This is exemplified by Polaroid's adherence to the razor/blade business model, which prevented digital innovation despite earlier success.

Integration in Structurally Differentiated Organizations

Burgers & Covin (2016) found that firms with a larger workforce require stronger integration to achieve high performance compared to smaller organizations.

Ambidexterity in Organizations

Organizations must manage current demands efficiently while adapting to future changes.
Ambidexterity balances alignment (efficiency) and adaptability (innovation).
Traditional approach: Structural ambidexterity – segregating structures or teams for efficiency and innovation.
Modern approach: Contextual ambidexterity – balancing alignment and adaptability within the same unit.

Importance of Systems and Processes

Implement systems and processes that enable simultaneous handling of current and future needs.
Avoid relying on separate structures.

Hypotheses and Findings

Ambidexterity is crucial for sustained performance.
Contextual ambidexterity may be more cost-effective than structural solutions.
Creating a supportive organizational context encourages both efficiency and innovation.
Key drivers: worker training and trust, decentralized structure and culture, shared vision and leadership development, organization context.

Ghoshal and Bartlett’s Framework

Four key attributes for creating a supportive context: discipline, stretch, support, and trust.
These attributes are interdependent and require balance.
Too much emphasis on any one can create internal tensions or lead to poor performance.

Summary of Findings and Implications

Research shows successful units achieve both alignment and adaptability by integrating them.
Contextual ambidexterity supports flexibility.
Organizations achieve ambidexterity through various paths.
Senior executives play a critical role in fostering ambidexterity.

Practical Implications

Business units should create a balanced environment that supports both discipline and flexibility.
Senior leaders need to actively foster this context.

Future Research Directions

Explore contextual ambidexterity across different industries and environments.
Investigate how executives’ actions contribute to fostering ambidexterity.
Consider various methods to capture contextual ambidexterity and develop objective performance indicators.

Radical Innovation and Major Innovation Concepts

Radical innovations (RIs) involve high risk and reward.
RIs disrupt markets and require reconfiguration of value chains.
RIs are characterized by major improvements, new features, or cost reductions.

Challenges with Radical Innovation

Managing RIs involves high uncertainty related to markets, technology, resources, and organizational practices.
This requires acquiring new knowledge and departing from existing practices.

Systems Theory

Views a system as a complex of interacting elements.
Emphasizes understanding systems as integrated wholes.
Key concepts: integrated systems, closed systems, open systems, system properties (autopoiesis, homeostasis, nesting and networking).

Dynamic Capabilities Theory

Originates from the resource-based view (RBV).
Emphasizes the need for capabilities to adapt, integrate, and reconfigure assets in response to environmental changes.
Initially focused on fixed organizational routines.
Now highlights flexibility and learning, especially in rapidly changing environments.

Applying Dynamic Capabilities Theory to Major Innovation

High uncertainty: traditional codifiable processes may be less effective for managing major innovations.
Market dynamics: firms in high-velocity markets must adapt quickly with less reliance on existing knowledge.
Iterative learning: frequent iterations and real-time information are crucial for navigating uncertainty.
Challenges: routine vs. flexibility, skill sets, sustainability.

Building an Organizational System for Major Innovation

Designate a team, department, or entity responsible for major innovation (MI).
Establish internal and external interface mechanisms to leverage and build competencies.
Implement exploratory processes, manage uncertainty through learning-oriented processes.
Identify and develop specific skills for managing innovation.
Implement governance and decision-making mechanisms to ensure effective oversight and adaptability.
Establish metrics aligned with MI projects’ unique demands.
Create the appropriate cultural and leadership context.

System Identifiability and Interdependence

MI system must be distinct, with a clear structure and interconnected elements.
Combined elements should create more impact than individual elements.

Interaction with Environment and Homeostasis

MI system must adapt to its environment, maintaining dynamic equilibrium.

Unique Role for the MI System

The MI system should support the firm’s strategic goals.

Implications

The seven elements offer a framework for embedding MI within organizations.
Leaders should integrate MI systems into organizational strategy, focusing on transformational routines.

Future Research

Explore how elements interact as a whole system to enhance MI capabilities.

Organizational Change and Technological Shifts

Established firms often fail to adapt to radical technological shifts.
Failures are commonly due to issues with capabilities and managerial cognition.

Capabilities and Technological Change

Firms struggle with new technologies due to established routines and competencies.
When new technologies disrupt existing assets, adaptation becomes difficult.

Managerial Cognition

Managers’ mental models and past experiences can hinder adaptation in rapidly changing environments.
This cognitive inertia contributes to organizational failure.

Polaroid Case Study

Polaroid had difficulties transitioning to digital imaging despite early investments.
Existing business model and managerial beliefs delayed digital product commercialization.

Capabilities and Beliefs of Polaroid (1980)

Technological expertise: Polaroid had unmatched expertise in instant photography, including over 500 patents.
Manufacturing strengths: Polaroid developed significant in-house capabilities for cameras and film.
Distribution channels: Polaroid effectively used mass market retailers, like K-Mart and Wal-Mart.

Managerial Beliefs of Polaroid (1980)

Technology-driven approach: Polaroid's philosophy was driven by innovation, not market research.
Large-scale projects: Polaroid prioritized ambitious projects, such as the SX-70 instant camera.
Physical print preference: Polaroid dismissed video camcorders and similar technologies as competitors.
Quality focus: Polaroid was committed to matching or exceeding the quality of traditional 35mm prints.
Razor/blade model: Polaroid lowered camera prices to boost film sales and increased film prices to maintain profitability.

Digital Imaging Search of Polaroid (1981-1989)

Polaroid invested in digital imaging, establishing a microelectronics lab.
PIF Concept: Polaroid developed a hybrid product combining digital sensors with instant film.
Helios System: Polaroid developed a high-resolution medical imaging system using laser technology.
Electronic Imaging Products: Polaroid introduced image recorders for specialized markets.

Capabilities and Beliefs of Polaroid (1981-1989)

Technical growth: Polaroid advanced its digital imaging technology, including high-resolution sensors and lossless compression algorithms.
Management beliefs: Polaroid continued to emphasize technology over market needs, adhered to the razor/blade business model, and believed in the value of instant prints.

Shifts in Approach of Polaroid (1980s)

Market Focus: By the late 1980s, Polaroid began incorporating market research into product development, marking a shift from its technology-centric approach.

Reorganization and Focus of Polaroid (1990-1998)

Corporate changes (1990): Polaroid reorganized, elevating the Electronic Imaging Division.
New leadership: The Electronic Imaging Division saw a major influx of new hires with digital imaging experience.

Conflicts and Delays at Polaroid (1990-1998)

Business model dispute: Tensions arose between senior management, which favored the razor/blade model and was skeptical of digital-only strategies, and the new team, which saw potential in digital imaging without immediate film integration.
Development delays: Disagreements led to delays and difficulties in launching digital products.

Product Focus and Setbacks of Polaroid (1990-1998)

Helios Medical System: The Helios system received continued support but failed commercially due to distribution issues and market misjudgments.

Corporate Entrepreneurship (CE)

Organizations strive to innovate, venture, and renew through Corporate Entrepreneurship (CE).
CE requires a different organizational structure than traditional business activities.

Structural Differentiation

Aims to create specialized units to promote CE.
Benefits: Greater autonomy for entrepreneurial units, fostering innovation.
Drawback: Potential coordination issues, knowledge transfer problems, and agency risks.

Structural Integration

Integration mechanisms aim to address issues created by differentiation.
Three core types of integration: Shared Vision, Senior Team Social Integration, and Cross-Functional Interfaces.

Research Focus

This study investigates how structural differentiation and integration influence organizational CE.
The study analyzes how organizational size and environmental dynamism moderate the relationship between differentiation and integration.

The Impact of Organizational Size

Shared Vision: Larger organizations require a strong shared vision for communication and alignment across diverse units, while smaller organizations need less emphasis on it.
Senior Team Social Integration: Larger organizations rely heavily on senior team integration to resolve conflicts and share knowledge, whereas it is less crucial in smaller organizations with close employee connections.
Cross-Functional Interfaces: Larger organizations benefit from formal coordination mechanisms like interfaces, while smaller organizations may find them unnecessary due to easier informal communication.

The Impact of Environmental Dynamism

Shared Vision: In dynamic environments, a strong shared vision may hinder flexibility and innovation by setting rigid norms.
Senior Team Social Integration: Dynamic environments may see integration slowing decision-making and focusing on existing business, instead of new opportunities.
Cross-Functional Interfaces: While interfaces promote sharing and innovation in stable environments, they can stifle flexibility and slow responses to change in dynamic environments.

Study Design and Methods

The research utilized data from 240 Dutch companies across various industries.
Two surveys were conducted with a time lag to minimize bias.
Data collected included organizational size, environmental dynamism, structural differentiation, integration mechanisms, and measures of CE activity.

Technological Discontinuities & Firm Attention

Technological discontinuities involve significant shifts disrupting industries and challenging existing business models.
These changes are sparked by startups often backed by venture capital (VC).
Established companies (incumbents) struggle to react effectively due to cognitive biases and organizational inertia.

Incumbents and Technological Discontinuities

Incumbents have resources to innovate, but often fail to adapt as they are entrenched in existing technologies.
Factors contributing to failure include path dependency, organizational inertia, and outdated knowledge frameworks.
Discontinuities typically emerge outside the typical focus areas of incumbents, making them harder to recognize early.
The focus is on adapting strategy and operations to emerging technologies challenging established routines.

Managerial Attention to Discontinuities

Manager's attention is crucial in company responses to technological change.
The attention-based view (ABV) explains that companies fail to acknowledge new technologies as their focus is on familiar, incremental innovations rather than radical shifts.
ABV emphasizes three principles regarding managerial attention:
- Focus: Managers act on what they pay attention to.
- Situation: The context influences what managers deem relevant.
- Distribution: Internal and external environments impact attention.

Interorganizational Relationships and Managerial Attention

Homophilous relationships involve partnerships with similar firms, such as industry peers.
These relationships can lead to groupthink and a reluctance to embrace new technology.
Homophilous relationships reinforce existing biases and hinder the adoption of radical innovations.

Heterophilous Relationships and Top Management’s Attention to Discontinuities

Heterophilous relationships involve partnerships with different types of firms, like venture capitalists (VCs).
VC firms are closely connected to innovative startups and can provide insights into emerging technologies.
These relationships can expose incumbents to radical innovations and encourage them to shift their attention.

Corporate Venture Capital (CVC) Relationships and Technological Discontinuities

CVC is a form of strategic investment where companies invest in startups with promising technologies.
CVC allows firms to gain exposure to emerging technologies and learn about their potential impact on the industry.
CVC ties can serve as an alert mechanism, signaling the emergence of new technologies that could challenge established players.

CVC, Homophily, and Heterophily

Homophilous CVC relationships (investing in startups similar to the incumbent's existing business) can reinforce existing biases and hinder the adoption of radical innovations.
Heterophilous CVC relationships (investing in startups with technologies different from the incumbent's) can expose incumbents to radical innovations and encourage them to shift their attention.

Conclusion

CVC ties, especially heterophilous ones, can be crucial for incumbents to notice and respond to technological discontinuities.
By investing in startups, companies can access new technologies and develop the knowledge and skills needed to compete in the face of disruption.
Understanding the role of interorganizational relationships is vital for managing firm attention amidst technological change.

Top Management Team (TMT) Composition

Demographic Faultlines: These are hypothetical dividing lines within a TMT based on shared characteristics like age, gender, education, functional background, and tenure.
Influence of Faultlines: Faultlines can influence the effectiveness of a TMT in driving strategic changes.
Social Identity Theory: Individuals identify with others who share similar attributes, which leads to the formation of subgroups within teams.
Environmental Dynamism: The study examines how the speed and unpredictability of changes in an industry (environmental dynamism) can moderate the impact of faultlines on strategic change.

Study Objectives

Impact of TMT composition on strategic change: This research investigates the relationship between TMT composition and strategic change in organizations.
Role of faultlines in strategic change: The study explores how demographic faultlines within TMTs can either hinder or encourage strategic change.
Moderating effect of environmental dynamism: The researchers analyze how environmental dynamism interacts with faultlines to influence the effectiveness of strategic change.
Understanding the dynamic: The goal is to understand the intricate interplay between TMT composition, environmental factors, and the success of strategic initiatives.

TMT Faultlines

Faultlines, which are divisions among team members based on shared characteristics (e.g., gender, age, education).
Relationship-related faultlines are based on socio-cultural aspects (e.g., gender, age, education) and can lead to conflict and reduced communication within the team.
Task-related faultlines are based on work-related aspects (e.g., functional background, tenure) and can be beneficial by fostering collaboration and diverse expertise.
Environmental dynamism (the degree of change in the industry) affects faultline impacts on strategic change.
Dynamic environments reduce the negative impact of relationship faultlines because the focus shifts to collective success, while enhancing the positive effects of task faultlines due to the need for innovation.
Stable environments may exacerbate the negative effects of relationship faultlines and diminish the benefits of task faultlines due to lower urgency for collaboration and less need for diverse problem-solving.
Study findings: Relationship-related faultlines (particularly those based on education) negatively affect strategic change, while task-related faultlines positively influence strategic change.
Environmental dynamism moderates these effects: In dynamic environments, the negative effects of relationship faultlines are reduced, and in some cases, these faultlines can even be beneficial.

Cognitive Biases and Decision Quality

Cognitive biases are systematic thinking errors that can negatively impact decision-making.
Relevant biases:
- Framing bias: The way information is presented influences decisions.
- Overconfidence bias: Individuals overestimate their knowledge or predictions, leading to potential errors.
- Confirmation bias: The tendency to seek and interpret information that confirms pre-existing beliefs.
Decision quality refers to the effectiveness of a decision in achieving its intended goals.
Scenario planning is a strategic tool that helps organizations envision various potential futures to improve decision-making.

Cognitive Benefits of Scenario Planning

Debiasing refers to strategies for reducing or eliminating cognitive biases.
Scenario planning is considered an effective debiasing tool because it encourages decision-makers to explore multiple futures, challenging assumptions and considering alternative perspectives.
Cognitive conflict generated by scenario planning promotes deeper thinking and scrutinizes decisions.
Scenario planning fosters collaboration by integrating perspectives from various stakeholders, enhancing the decision-making process.

Study Method and Findings

Experimental design: 252 graduate management students were divided into four groups:
- Control Group: No strategic planning.
- Full Scenario Analysis Group: Full scenario planning process.
- Partial Scenario Analysis Group: Completed part of the scenario planning process.
- Strategic Planning Group: Used traditional strategic planning tools.
Framing bias: The control group exhibited framing bias, while the full scenario analysis group did not.
Decision quality: The full scenario analysis group consistently reported higher decision quality compared to the strategic planning group.

Implications for Corporate Practice

Scenario planning is a valuable tool for improving decision-making in uncertain environments by reducing cognitive biases.
Scenario planning enhances decision quality by fostering strategic thinking and adaptability.

Limitations and Further Research

Experiment conducted with students: Further research should be done with experienced managers.
Focus on framing bias: Future research should investigate other cognitive biases.
Specific steps within scenario planning: Detailed research should investigate individual steps that contribute to debiasing and decision quality.

The Hidden Traps in Decision-Making

Psychological traps are cognitive biases that distort rational thinking.
The Anchoring Trap: Individuals rely heavily on the first piece of information encountered, leading to biased decisions.
The Status-Quo Trap: Individuals stick with existing choices rather than exploring new alternatives.
The Sunk Cost Trap: Individuals continue investing in a failing course of action due to past investments.
The Confirming-Evidence Trap: Individuals seek out information that confirms existing beliefs and avoid information that challenges them.
The Framing Trap: The way information is presented influences choices.
The Overconfidence Trap: Individuals overestimate their abilities, leading to poor decisions.
The Recallability Trap: Individuals rely on their memories rather than objective data.

Breakthrough Innovation Career Paths

Companies often struggle with radical innovation.
Companies should create distinct career paths for innovation professionals aligned with the three phases of breakthrough innovation: discovery, incubation, and acceleration.
Companies should allow innovation professionals to specialize in one of the three phases rather than expect them to transition through all.

Radical Innovation: The Preeminence of Corporate Culture

Corporate culture, rather than national factors, is the primary driver of radical innovation.
Four key drivers of radical innovation are: labor, capital, government policy, and culture.
The impact of labor and capital has become less distinctive as global markets have become more interconnected.
Corporate culture is firm-specific, intangible, and difficult to replicate, making it a crucial factor in fostering radical innovation.

Corporate Culture and Innovation

Three key attitudes in innovative firms:
- Willingness to cannibalize existing products or assets.
- Future market orientation, emphasizing long-term opportunities.
- Tolerance for risk, encouraging experimentation and acceptance of failure.
Three key practices in innovative firms:
- Empowering product champions.
- Offering incentives for innovation.
- Fostering internal markets that promote competition within the firm.

Breakthrough Innovators and Their Unique Characteristics

Breakthrough innovators exhibit "separateness," often perceiving themselves as different from others.
Time spent alone allows breakthrough innovators to think deeply and pursue unconventional ideas.
Breakthrough innovators often exhibit rebelliousness, challenging societal norms and resisting authority.
Breakthrough innovators demonstrate extreme self-efficacy, exhibiting an extraordinary belief in their ability to achieve significant goals.
Idealism, or the belief in striving for a higher purpose, is a powerful motivator for breakthrough innovators.
The combination of separateness, self-efficacy, and idealism increases an individual's capacity for breakthrough innovation.

Fostering a Culture of Breakthrough Innovation

Encourage solitude and independent work to enhance creativity.
Tolerate rule-breaking behavior and non-conformity to nurture breakthrough innovators.
Encourage self-efficacy through early wins and celebrate intelligent failures.
Nurture idealism as a source of intrinsic motivation for creativity.
These traits, while not guaranteeing innovation, offer valuable insight into cultivating breakthrough potential.

Technology, Identity, and Inertia

The study explores the connection between a firm's identity and technological change.

Why Some Established Firms Produce Breakthrough Innovations

Paradox of Innovation: Established firms, despite being seen as rigid and inflexible, can still generate breakthroughs.
Traditional View: New entrants are better at producing breakthroughs because of their nimbleness.
Challenge to the Status Quo: Some incumbent firms defy this expectation, proving their ability to create disruptive innovations.

Organizational Learning from Failures

Organizations often learn from experience, including failures.
Although typically associated with negative outcomes, failures can provide valuable learning opportunities.
Failures can lead to improvements in processes, innovation, and help to prevent future mistakes.

Learning from Failure in the Pharmaceutical Industry

Patent expirations are used as indicators of failures in the pharmaceutical industry, representing failed R&D efforts.
Small failures, such as voluntary patent discontinuations, provide valuable feedback for firms.
Firms that experience more small failures tend to have better R&D performance in terms of quality.
More important failures stimulate more significant learning and lead to more extensive search processes, increasing subsequent R&D performance.
Early failures provide quicker feedback, allowing firms to reallocate resources and experiment further.
Late failures involve more ambiguity, making it harder to identify the precise causes of failure.
Early feedback helps avoid sunk costs and prevents firms from continuing down unproductive paths.

The Parenting Paradox in New Industry Development

Large companies (corporate parents) can help new industries gain legitimacy by providing credibility and drawing attention.
However, their own business units (corporate children) often perform worse than independent startups in new industries.
This is because corporate children struggle to adjust quickly to new market needs, often held back by old ways of doing business.
Start-ups, on the other hand, are better suited to handle disruptive innovations and adapt to new markets, providing stronger competition.
While corporate children often have more resources, they lack flexibility and struggle to fit into the new market.

The Process of Growing New Corporate Businesses

Large companies face the challenge of transitioning exploratory initiatives from exploration to exploitation, referred to as "graduation".
Differentiation allows exploratory units to develop unique capabilities while integration with the parent organization ensures access to essential resources.
Successful graduation requires balancing exploration and exploitation, while managing tensions between new ventures and established businesses.
The transition to scale depends on showing sufficient value to justify the investment.
The study analyzes six exploratory business initiatives from three large companies in different phases: exploration, transition, and exploitation.

Exploration Phase

Units differentiate themselves from the core business to develop unique capabilities and secure independence.
Examples include Coffee Caps and Nutrition (FoodGroup), Icon (CarInc), Basket (BankCorp), Fleet (CarInc), and eBroker (BankCorp).
Successful units build close relationships with corporate leaders to secure continued support during the development phase.
Units that fail to differentiate struggle to gain traction due to conflicts with the core business.

Transition Phase

Successful units begin to collaborate with their core businesses, clarifying their roles and finding synergies.
Examples include Coffee Caps, Nutrition, and Icon which successfully defined distinct value propositions and found ways to collaborate with the core.
Units that failed to transition, such as Fleet and eBroker, struggled with internal competition and lacked support.

Exploitation Phase

Units that successfully transitioned scaled up by leveraging their unique capabilities while collaborating with core units for resources and infrastructure.
Examples include Coffee Caps and Nutrition which leveraged their expertise to gain full P&L responsibility and pursue new opportunities.
Units that failed to transition remained limited in their impact and struggled to achieve sustainable growth.

Exploring the Dynamics of New Business Units

New business units in large corporations go through a transitional process to move from initiation to full-scale operations.
Peer Graduation Process:
- In the early stages, exploratory units differentiate themselves from core businesses to avoid competition and build their own capabilities.
- As these units mature, they clarify roles in relation to core businesses, leading to reduced friction and collaboration.
- Finally, integration occurs, where exploratory and core units share resources and leverage synergies, maintaining autonomy.
Parent Graduation Process:
- Initially, exploratory units rely heavily on corporate support. They have strong relationships with senior management to secure funding, expertise, and infrastructure.
- Once the unit grows, it demonstrates its value to the parent organization. The parent then recognizes the unit’s strategic importance and views it as a core contributor.
- Finally, the units gain greater autonomy from the parent, with full decision-making authority and P&L responsibility.

Understanding Dynamic Capabilities and Sustainable Enterprise Performance

Dynamic capabilities are essential for companies to create, deploy, and protect their intangible assets for long-term performance in competitive environments.
Sensing (and Shaping) Opportunities and Threats:
- Companies should be continuously scanning for new opportunities and potential threats.
- This involves research, monitoring customer needs, technological advancements, and competitor strategies.
- Effective hypothesis development and evidence-based updating are critical.
Seizing Opportunities:
- Once a company senses an opportunity, it must invest in new products, processes, or services.
- This involves strategic decisions on business models and exploiting the opportunity effectively.
- Selecting product architectures and business models that align technologies, market needs, and capabilities is key.
- Vertical integration and outsourcing are essential decisions, especially in high-tech industries.
Managing Threats and Reconfiguration:
- Companies must adaptively manage their assets and organizational structures to stay competitive.
- This includes enhancing capabilities, integrating new knowledge, and restructuring when needed.
- Decentralized organizations are often better at adapting to change.

How Firms Adapt to Discontinuous Change

Discontinuous change requires firms to adjust their strategies significantly.
The paper proposes three modes of ambidextrous adaptation:
- Structural Separation: Creating distinct units for exploration and exploitation.
- Behavioral Integration: Embedding exploration and exploitation within the same units.
- Sequential Alternation: Shifting focus between periods of exploration and exploitation.
Case Study Findings:
- Nestlé utilized structural separation, creating specialized units for specific markets.
- GSK implemented behavioral integration with cross-functional teams for both discovery and commercialization.
- BMW Group practiced sequential alternation, alternating between periods of innovation and efficiency.

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Questions and Answers

What impact do more ambidextrous business units have on perceived business unit performance?

Which argument is supported by Raish & Tushman regarding the development of new corporate businesses?

Which example best illustrates the concept of core competencies becoming core rigidities according to Tripsas and Gavetti?

What was highlighted about the need for integration in structurally differentiated organizations according to Burgers & Covin?

What was a cause of high organizational performance for Polaroid that later became a rigidity?

What does the example of Polaroid's prototype digital camera development in 1992 illustrate?

Which statement is true about the changes in the workforce of Polaroid’s electronic imaging division after 1990?

Which factor was deemed irrelevant to the performance of firms according to Burgers & Covin?

What is the primary focus of contextual ambidexterity in organizations?

Which of the following is NOT a key driver in achieving ambidexterity?

What is a primary benefit of viewing alignment and adaptability as complementary elements?

What framework did Ghoshal and Bartlett outline for creating a supportive organizational context?

What systems should organizations implement for effective ambidexterity?

What aspect of organizational context is crucial for fostering ambidexterity?

Which of the following is a potential outcome of employing contextual ambidexterity?

What is an essential element for the belief system within an organization focused on ambidexterity?

What is a key requirement for firms operating in high-velocity markets?

What does the element of Exploratory Processes emphasize in managing innovation?

Why is it important to have a designated team for major innovation (MI)?

What type of skills are necessary for managing innovation in uncertain environments?

What should organizations do to cope with high-uncertainty environments regarding their MI projects?

What is a significant challenge when managing innovation skills within organizations?

What kind of metrics should be established for MI projects?

What is a critical aspect of the governance over the MI system?

How do organizations benefit from establishing internal and external interface mechanisms?

What aspect is crucial in the cultural and leadership context for MI?

What is the purpose of using a process decoupling strategy in MI?

What does the concept of 'Whole Greater than the Sum of Its Parts' refer to in the context of the MI system?

What does the term 'autopoiesis' signify in systems theory related to MI?

What is a key characteristic of contextual ambidexterity according to the study's findings?

What role do senior executives play in fostering contextual ambidexterity?

What is one of the major challenges that firms face regarding radical innovations (RIs)?

What does the term 'equifinality' imply in the context of achieving ambidexterity?

What is a primary requirement for a sustainable innovation capability according to systems theory?

Which aspect does systems theory contrast with its mechanistic view?

How does dynamic capabilities theory relate to environmental changes?

What is a key implication for business units aiming for performance in dynamic environments?

What distinguishes radical innovations from incremental ones?

What can be inferred about the relationship between context and performance in ambidextrous units?

Which system property is related to maintaining balance within a system?

What future research direction is suggested regarding the behavior of executives?

What is a proposed benefit of possessing dynamic capabilities in organizations?

Which characteristic is NOT a feature of open systems according to systems theory?

What primary issue did Polaroid face despite having advanced technological capabilities?

How did managerial cognition impact Polaroid’s market performance?

What was one consequence of Polaroid's belief in the razor/blade model?

What aspect of leadership changes at Polaroid was noted in relation to organizational change?

What factor significantly contributed to Polaroid's organizational failure in adapting to digital imaging?

What is meant by the term 'cognitive dissonance' in the context of Polaroid's management?

Which managerial belief did Polaroid hold that misguided its response to market changes?

What role did cognitive adaptability play in Polaroid’s organizational issues?

What impact did cognitive inertia have on Polaroid's management decisions?

Why is it important for organizations to manage cognitive change effectively?

What is described as a potential benefit for firms in rapidly evolving environments?

How did Polaroid's technology-driven approach affect its market strategy in the 1980s?

What was a significant factor in Polaroid's failure to capitalize on its technological innovations?

Which development strategy did Polaroid adopt for its digital imaging products in the late 1980s?

What was a primary cause of commercial failure for the Helios Medical System project?

How did Edwin Land influence Polaroid's organization post-departure?

What change did Gary DiCamillo implement as the new CEO in 1996?

What research method was used in the study of AI effects on consultant productivity at BCG?

What dual role does AI play in the context of knowledge work according to the study?

The razor/blade model operated by Polaroid primarily focused on which aspect?

Which factor delayed the launch of the PDC-2000 camera?

What challenge does the 'jagged technological frontier' present for knowledge workers?

What was one aspect measured in the initial phase of the BCG study?

What notable strategy did Polaroid adopt to enhance its digital imaging capabilities in the early 1980s?

How did Polaroid's approach to digital imaging evolve by the late 1990s?

What significant organizational change occurred at Polaroid in 1990?

What marked the end of Polaroid's significant internal digital imaging expertise by 1998?

What is the primary focus of corporate entrepreneurship (CE)?

Which challenge is associated with structural differentiation in organizations?

What role does a shared vision play in larger organizations according to the study?

What are the integration mechanisms highlighted in the study?

In what way does organizational size influence the differentiation-CE relationship?

What potential cost does integration introduce within differentiated organizations?