120 Questions
What are competence-enhancing discontinuities?
They represent an order-of-magnitude improvement over prior products.
How do process discontinuities impact the efficiency of production?
They result in an order-of-magnitude increase in the efficiency of producing a given product.
What are the critical characteristics of organizational environments mentioned in the text?
Uncertainty and munificence.
How do technological discontinuities impact price-performance or input-output ratios?
They drive sharp decreases in price-performance or input-output ratios.
What happens to environmental munificence and demand after a technological discontinuity?
They will be higher.
How do competence-enhancing discontinuities affect barriers to entry in a product class?
They consolidate leadership, increasing barriers to entry.
What is the impact of competence-destroying discontinuities on barriers to entry?
Barriers to entry are lowered.
How do new firms enter previously impenetrable markets after competence-destroying discontinuities?
By exploiting the new technology.
What does the text suggest about viewing contextual ambidexterity initiatives?
View them as 'driving leadership', not as being 'leadership-driven'.
Why do only few established companies innovate successfully according to the text?
Because their people are working in organizational structures designed to surmount old challenges.
What mistake should companies avoid when seeking to innovate, as mentioned in the text?
Not having the right resources and processes to support innovation.
What dilemma is highlighted regarding processes in the text?
Processes are set up for consistency and not meant to change, which can hinder innovation.
What is mentioned as the two most important values for innovation in the text?
Overhead costs determining minimum gross margins and a high stock price requiring bigger projects for growth.
Where do most difficulties with coping with change reside according to the text?
In informal and less visible processes.
What question should organizations ask to determine if they have the right values to innovate?
Does my organization have the right values to innovate, in terms of how employees set priorities?
What should companies consider when determining the best team and structure to support their innovation effort?
What team and structure would best support our innovation effort.
What type of team should be selected if the innovation fits well with existing values and processes?
Functional teams or lightweight ad hoc cross-functional teams
When an innovation fits well with existing values but poorly with existing processes, what type of team is recommended?
Heavyweight team dedicated exclusively to the innovation project
If an innovation fits poorly with existing values but well with existing processes, how should the project be organized?
Heavyweight team dedicated exclusively to the innovation project within the existing organization for development, followed by a spin-off for commercialization
What type of team should be chosen if the innovation fits poorly with existing processes and values?
Heavyweight team dedicated exclusively to the innovation project in a separate spin-off or acquired organization
Why are functional teams or lightweight ad hoc cross-functional teams selected when the innovation fits well with existing values and processes?
No new capabilities or organizational structures are called for due to the good fit with existing processes and values.
What is the reason behind selecting a heavyweight team when the innovation fits well with existing values but poorly with existing processes?
The poor fit with existing processes requires new types of coordination among groups and individuals.
In the case where an innovation fits poorly with existing values but well with existing processes, why is a spin-off for commercialization recommended?
A spin-off facilitates new values such as a different cost structure with lower profit margins.
When the innovation fits poorly with existing processes and values, why is a separate spin-off or acquired organization chosen?
It enables the project to be governed by different values and ensures that new processes emerge.
What is the impact of mismatch on team members?
Frustration and worsened attention to new information
Why is learning in subsequent stages critical in product development?
Difficult to obtain all input and knowledge initially
What happens if the team does not refine and update its knowledge during development?
Product might become inappropriate for the market
How do discounted cash flow (DCF) and net present value (NPV) affect managers' evaluation of investments in innovation?
Managers underestimate real returns and benefits
What assumption does discounting a future stream of cash flows into a 'present value' make?
Assumes a rational investor would be indifferent to timing of cash
What is Parmenides' Fallacy in the context of investments?
Assumes present health of the company will persist indefinitely
Why is it important to compare the base case of not investing against cash flows from innovation?
To avoid Parmenides' Fallacy
What type of learning activities do products with high novelty involve?
Exploratory learning activities
What is one drawback of project teams knowing how good the projections need to look in order to win funding?
It makes it difficult for gatekeepers to judge whether it’s realistic.
How does discovery-driven planning reverse the sequence of some steps in the stage-gate process?
Instead of fabricating acceptable numbers, required numbers are stated first followed by an assumptions checklist.
Why are assumptions rank-ordered in the assumptions checklist in discovery-driven planning?
To prioritize deal killers and assumptions that can be tested with little expense.
How is the assumptions checklist used when a project enters a new stage?
It serves as the basis of the project plan for that stage.
What is the main purpose of having an assumptions checklist in discovery-driven planning?
To test quickly and at low cost whether the assumptions for success are valid.
What must a project team do if a critical assumption proves not to be valid?
Revise its strategy until all assumptions are plausible.
How does the discovery-driven planning approach handle projects with no set of plausible assumptions?
The project is killed.
What is the key difference between traditional project planning and discovery-driven planning?
Traditional planning involves fabricating numbers, while discovery-driven planning focuses on testing assumptions.
What initiates an era of intense technical variation and selection?
Technological discontinuity
What always peaks after a dominant design emerges?
Sales
What is the era of ferment followed by?
A period of incremental technical progress
What is the era of ferment characterized by?
Two distinct selection processes
When will the era of ferment be longer?
After a competence-destroying discontinuity
What social, political, and organizational dynamics select?
Dominant designs
What does technological change represent?
A sociocultural evolutionary process
What increases during incremental change?
Interdependence and enhanced competence
What are the two types of management controls discussed in the text?
Process and output controls
What are the 3 characteristics of rigorous gate criteria mentioned in the text?
Strictness, objectivity/consistency, frequency of application
How do process management techniques impact organizational routines according to the text?
They stabilize routines and tighten linkages, reducing flexibility/adaptability.
Why do product development teams become enthusiastic about using stage-gate control?
It diminishes costs, eliminates weaker projects, improves speed to market, and efficiently allocates resources.
What drives managers to rigorously implement the stage-gate control process?
Enthusiasm from product development teams and the benefits it brings.
What motivates product development teams to meet the gate criteria?
Concern for their project's survival.
How do process discontinuities impact the efficiency of production?
They can disrupt efficiency by introducing change and variation.
What is the primary focus of process management techniques?
Improving efficiency and reducing variation.
What are the key factors that contribute to effective learning, according to the text?
Perceived knowledge gap, motivation to acquire new knowledge, cognitive freedom
Define market turbulence and technological turbulence according to the text.
Market turbulence: instability, uncertainty, lack of control in firm's marketplace; Technological turbulence: changes in technologies affecting the industry
How does gate conditionality impact project decision-making?
Saves teams from premature choices, allows meeting criteria in later stages
What is the significance of competence-enhancing discontinuities in product development?
They affect barriers to entry in a product class
Explain the impact of technological discontinuities on industries.
They create unexpected developments requiring motivation and cognitive flexibility
How does cognitive freedom play a role in effective learning?
Allows processing new input and changing existing cognitive structure
What is the relationship between project parameters and team motivation for acquiring new knowledge?
Fixed project parameters may reduce team motivation to acquire new knowledge
Why is frequent evaluation important in project development?
Teams end up committing to deliverables repeatedly and more deeply
What type of team is recommended when an innovation fits poorly with existing values but well with existing processes?
Heavyweight team dedicated exclusively to the innovation project
Why is a spin-off for commercialization recommended when an innovation fits poorly with existing values but well with existing processes?
A spin-off enables the project to be governed by different values and ensures that new processes emerge.
What type of team should be selected if the innovation fits well with existing values and processes?
Functional teams who work sequentially on issues, or lightweight teams - ad hoc cross-functional teams who work simultaneously on multiple issues
Why are functional teams or lightweight ad hoc cross-functional teams selected when the innovation fits well with existing values and processes?
Owing to the good fit with existing processes and values, no new capabilities or organizational structures are called for.
What is the reason behind selecting a heavyweight team when the innovation fits well with existing values but poorly with existing processes?
The poor fit with existing processes requires new types of coordination among groups and individuals.
When the innovation fits poorly with existing processes and values, why is a separate spin-off or acquired organization chosen?
A spin-off enables the project to be governed by different values and ensures that new processes emerge.
If an innovation fits poorly with existing values but well with existing processes, how should the project be organized?
In-house development for development, followed by a spin-off for commercialization
What happens to environmental munificence and demand after a technological discontinuity?
They typically increase post-discontinuity.
How does discovery-driven planning reverse the sequence of some steps in the stage-gate process?
By stating required numbers and assumptions checklist upfront, followed by testing assumptions before fabricating acceptable numbers.
What is one drawback of project teams knowing how good the projections need to look in order to win funding?
Teams may tweak assumptions quickly to meet funding criteria without genuinely assessing project feasibility.
How does the discovery-driven planning approach handle projects with no set of plausible assumptions?
If no set of plausible assumptions can support success, the project is terminated.
What is the main purpose of having an assumptions checklist in discovery-driven planning?
To rank-order critical assumptions and guide project planning based on testing those assumptions.
What dilemma is highlighted regarding processes in the text?
The dilemma of whether to stick with existing processes or adapt them to accommodate innovation.
What does the text suggest about viewing contextual ambidexterity initiatives?
The text suggests that contextual ambidexterity initiatives involve balancing exploration and exploitation in innovation.
What is Parmenides' Fallacy in the context of investments?
Parmenides' Fallacy is the false belief that the future can be predicted with certainty based on present assumptions.
What assumption does discounting a future stream of cash flows into a 'present value' make?
Discounting assumes that money has a time value and is worth more in the present than in the future.
What are competence-enhancing discontinuities?
Competence-enhancing discontinuities are order-of-magnitude improvements in price/performance that build on existing know-how within a product class.
What is the impact of competence-destroying discontinuities on barriers to entry?
Competence-destroying discontinuities lower barriers to entry, allowing new firms to enter previously impenetrable markets.
How do process discontinuities impact the efficiency of production?
Process discontinuities result in an order-of-magnitude increase in the efficiency of producing a given product.
What drives sharp decreases in price-performance or input-output ratios?
Technological discontinuities drive sharp decreases in price-performance or input-output ratios.
What two critical characteristics of organizational environments are mentioned in the text?
Uncertainty and Munificence are the two critical characteristics of organizational environments mentioned in the text.
What are important dimensions of competitive conditions mentioned in the text?
Entry-exit patterns and degree of order within a product class are important dimensions of competitive conditions mentioned in the text.
What happens to environmental munificence and demand after a technological discontinuity?
Environmental munificence and demand will be higher after a technological discontinuity.
What initiates an era of intense technical variation and selection?
Technological change initiates an era of intense technical variation and selection.
What is the main difference between incremental technological progress and discontinuities?
Discontinuities offer sharp price-performance improvements over existing technologies.
How are product discontinuities reflected?
In the emergence of new product classes, product substitution, or fundamental product improvements.
What is the impact of competence-destroying innovations?
They require new skills, abilities, and knowledge in both product development and production.
How are process discontinuities reflected?
In process substitution or in process innovations that result in radical improvements in industry-specific dimensions of merit.
Why do existing firms often remain committed to outmoded technology?
Due to traditions, sunk costs, and internal political constraints.
What major changes are associated with process discontinuities?
Changes in skills, distinctive competence, and production processes.
What happens to the distribution of power and control within firms and industries with major technological innovations?
They undergo major changes.
Why do product discontinuities either create a new product class or substitute for an existing product?
To ensure competitiveness with new technologies.
When should a heavyweight team be selected to operate an innovation project?
When the innovation fits well with existing values but poorly with existing processes.
Why is a spin-off for commercialization recommended when an innovation fits poorly with existing values but well with existing processes?
A spin-off enables the project to be governed by different values and ensures that new processes emerge.
In what scenario is a separate spin-off or acquired organization chosen to operate an innovation project?
When the innovation fits poorly with existing processes and values.
Why are functional teams or lightweight ad hoc cross-functional teams selected when the innovation fits well with existing values and processes?
Because no new capabilities or organizational structures are called for due to the good fit with existing processes and values.
What type of team should be selected if the innovation fits poorly with existing values but well with existing processes?
A heavyweight team.
Where should the project be organized if an innovation fits poorly with existing values but well with existing processes?
Within the existing organization for development, followed by a spin-off for commercialization.
What is the main reason for selecting a heavyweight team when the innovation fits well with existing values but poorly with existing processes?
To address the poor fit with existing processes that require new types of coordination.
Why is a spin-off or acquired organization chosen to operate an innovation project when the innovation fits poorly with existing values but well with existing processes?
To enable the project to be governed by different values and ensure the emergence of new processes.
What are the two different approaches for integrating an acquired company into the parent organization based on the capabilities being purchased?
Integrated or infused
Where do the greatest opportunities for competitive advantage lie?
In market confusion
What are the 5 types of simple rules mentioned in the text?
How-to rules, Boundary rules, Priority rules, Resource allocation, Timing rules
What is the main focus of companies in the new economy, according to the text?
Capturing unanticipated, fleeting opportunities
Why should simple rules not be broad and vague?
To be effective and actionable
What is the key to success in the new economy, as mentioned in the text?
Capturing unanticipated and fleeting opportunities
What is the recommended strategy for companies to navigate chaotic markets successfully?
Craft a few simple rules
What dictates the processes a company chooses, according to the text?
The combination of opportunities and constraints
What bias do fixed and sunk costs create for managers when new capabilities are needed for future success?
Managers are biased towards leveraging assets and capabilities that are likely to become obsolete.
Why do managers sometimes hesitate to adopt new technology?
Managers may stall in adopting new technology to avoid a write-off of obsolete assets that equity markets would punish.
How can managers understand the consequences of not investing in future capabilities?
By valuing strategies instead of projects, managers can predict the consequences of not investing.
What diverts resources away from investments with long-term payoffs?
The emphasis on earnings per share as the primary driver of share price and shareholder value creation diverts resources.
Why do managers face pressure to focus on short-term stock performance?
Due to principal-agent theory, managers are pressured to focus on short-term stock performance.
Why is it important for finance and strategy to be studied and practiced in an integrated way?
A firm's actual strategy is defined by the stream of projects in which it invests or doesn't invest.
What is the consequence of focusing solely on earnings per share for shareholder value creation?
Resources are diverted away from investments whose payoff lies beyond the immediate horizon.
How can managers overcome biases against investing in needed future capabilities?
By valuing strategies over individual projects, managers can better understand the need for investment.
Find out which type of team is best suited for operating your innovation based on how well it aligns with your existing values and processes. Choose between functional teams working sequentially or lightweight teams for different reasons.
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