Management Strategy and Decision Making

Questions and Answers

Which of these approaches to strategy and planning is described as 'measure-and-act' and involves a systematic definition of goals, with a schedule of resources and plans for the use of capabilities and processes needed to achieve them?

Classical approach (correct)

Wait-and-see approach

Adaptive approach

Processual approach

Which approach to strategy is characterized by the ability to quickly adapt to opportunities and invest in flexibility?

Wait-and-see approach

Classical approach

Processual approach

Adaptive approach (correct)

Which of the following is NOT a characteristic of the adaptive approach to strategy?

Openness to new opportunities

Emphasis on long-term planning (correct)

Investment in flexibility

Focus on analytical rigour

Which approach to strategy is best suited for environments with low uncertainty and high capital investment?

Classical approach Signup and view all the answers

Which of these strategies is most associated with the concept of 'keeping options open' and allowing for quick adaptation to opportunities?

Wait-and-see approach Signup and view all the answers

Which strategy is characterized by being the first to enter a market and establish a dominant position?

First-mover advantage Signup and view all the answers

Which of the following is NOT a characteristic of the Fast-follower strategy?

Developing innovative and disruptive technologies Signup and view all the answers

Which approach to strategy is best suited for radical innovation, characterized by high uncertainty and multidimensional outcomes?

Adaptive approach Signup and view all the answers

What is one primary view regarding planning in uncertain environments?

Judgment-based approaches may be more effective. Signup and view all the answers

What does the 'leave-it-to-the-experts' approach imply regarding decision-making?

It may exclude wider stakeholder engagement. Signup and view all the answers

In the context of innovation, when is planning likely to be most ineffective?

During radical innovations with high uncertainty. Signup and view all the answers

Which of the following is a potential downside of relying on qualitative judgments for strategy?

Risk of analysis paralysis. Signup and view all the answers

What concept developed by Lindblom aligns with managing uncertainty in strategic decisions?

Muddling through Signup and view all the answers

What level of uncertainty typically requires managers to focus on intuitive judgment?

Level 3 or 4 Signup and view all the answers

Why might formal measurement tools be counterproductive in uncertain innovation settings?

They can lead to irrelevant data and complications. Signup and view all the answers

Which strategy allows organizations to observe market developments before making decisions?

Wait and See Approach Signup and view all the answers

What type of innovation strategy is described as a "messy process of learning, failing, and compromising"?

Processual Approach Signup and view all the answers

Which innovation strategy involves making "big bets" on future developments with the aim of shaping the market?

First-mover Advantage Signup and view all the answers

What is the primary goal of a fast-follower strategy?

To learn from the mistakes of early adopters and improve on their offerings. Signup and view all the answers

Which of the following is NOT a characteristic of the Processual approach to strategy?

Focus on detailed planning and analysis Signup and view all the answers

What is the main disadvantage of a Wait-and-See approach to innovation strategy?

It can lead to missed opportunities to gain first-mover advantage. Signup and view all the answers

What is the primary distinction between First-mover and Fast-follower strategies?

First movers take the risk of pioneering a new market, while fast followers capitalize on established markets. Signup and view all the answers

Which approach to innovation strategy is most likely to be successful in situations with high levels of uncertainty?

Processual Approach Signup and view all the answers

Which of the following statements best describes the relationship between innovation strategy and firm performance?

The best innovation strategy for a firm depends on its specific circumstances and goals. Signup and view all the answers

By when did the two companies reach an agreement to settle out of court?

March 2003 Signup and view all the answers

In which industry are legal protection mechanisms very effective?

Pharmaceuticals Signup and view all the answers

What can other firms often do to patents in the electronics industry?

Invent around them Signup and view all the answers

What makes it difficult to enforce patents protecting industrial processes?

It is notoriously difficult Signup and view all the answers

What may a firm rely more heavily on if patents provide little protection?

Trade secrets Signup and view all the answers

In which type of industries do firms sometimes choose to liberally diffuse their technologies?

Increasing returns Signup and view all the answers

What is the goal of liberally diffusing technologies in industries with increasing returns?

To increase the likelihood of rising to the position of dominant design Signup and view all the answers

What is required to protect a trade secret?

Exposing the product to the public without revealing the underlying technology Signup and view all the answers

What is the primary reason why scientific principles like gravity are typically not patentable?

They are considered too fundamental to be owned. Signup and view all the answers

Which of the following is NOT typically considered patentable?

A new use for an existing product. Signup and view all the answers

What event led to a significant increase in patent applications for software in the United States?

The Supreme Court ruling that software algorithms could be patented. Signup and view all the answers

What is a key requirement for applying for a patent in the United States?

A clear explanation of how to make and use the invention. Signup and view all the answers

What is the role of a patent examiner in the United States?

To review the patent application and potentially modify the scope of the claims. Signup and view all the answers

Which of the following is an example of a software-enabled method of doing business that was patented?

Amazon's '1-click' ordering system. Signup and view all the answers

What is a potential downside to patenting an invention?

It can be a costly and time-consuming process. Signup and view all the answers

What is a potential benefit of patenting an invention?

All of the above. Signup and view all the answers

What is the typical time from filing to grant of a patent in the United States?

Two to five years Signup and view all the answers

Which country had the largest number of patent applications in 2015 and 2016?

China Signup and view all the answers

What is a significant drawback of the current patenting system in relation to industries with short product lifecycles?

Lengthy approval processes Signup and view all the answers

What is the approximate cost for a 'small entity' to file a patent in the United States?

$1500 Signup and view all the answers

How long does it typically take to grant a patent in Japan?

Five to six years Signup and view all the answers

How much can attorney fees amount to for filing a patent?

$5000-$10,000 Signup and view all the answers

What percentage increase in patent applications did China see between 2015 and 2016?

21.5 percent Signup and view all the answers

What happens during the time a patent is published?

Other inventors can challenge the patent grant Signup and view all the answers

Which book discusses the concept of 'increasing returns' and its impact on economic path dependency?

Increasing Returns and Path Dependency in the Economy Signup and view all the answers

What is the focus of the research by Henderson and Clark, as mentioned in the provided text?

The process of architectural innovation and its effects on established firms Signup and view all the answers

In the context of establishing a technological standard, what is the significance of 'complementary goods' according to the text?

They are essential for ensuring the long-term sustainability of the standard. Signup and view all the answers

Which of the following cases studies the establishment of the Java standard by Sun Microsystems?

Sun Microsystems: Establishing the Java Standard Signup and view all the answers

What is the primary focus of the research by Garud, Jain, and Kumaraswamy regarding common technological standards?

The role of institutional entrepreneurship in establishing these standards Signup and view all the answers

What is the main theme explored in the article 'Disk versus Disk: The Fight for the Ears of America'?

The rivalry between two rival disk drive technologies Signup and view all the answers

Which of the following publications examines the competitive dynamics in winner-take-all industries?

Establishing a Standard: Competitive Strategy and Technological Standards in Winner-Take-All Industries Signup and view all the answers

What does the term 'installed base' refer to in the context of technological standards, as mentioned in the text?

The number of users who have adopted a particular technology Signup and view all the answers

Which of the following articles specifically investigates the economic value of patents?

Farre-Mensa, J., D.Hegde, and A.Ljungqvist, "What Is a Patent Worth?Evidence from the U.S.Patent 'Lottery' (March 14, 2017)," USPTO Economic Working Paper 2015-5. Signup and view all the answers

Which article explores the concept of 'complementary and substitute appropriability regimes' in innovation ecosystems?

Holgersson, M., O.Granstrand, and M.Bogers, "The Evolution of Intellectual Prop- erty Strategy in Innovation Ecosystems: Uncovering Complementary and Substitute Appropriability Regimes," Long Range Planning 51 (2018):303-19. Signup and view all the answers

Which article discusses the implications of technological innovation for public policy?

J., "Profiting from Technological Innovation-Implications for Integra- tion, Collaboration, Licensing and Public-Policy," Research Policy 15, no. 6 (1986), pp. 285-305. Signup and view all the answers

Which article provides an integrative review of patent strategy and management, outlining a research agenda?

Somaya, D."Patent Strategy and Management: An Integrative Review and Research Agenda," Journal of Management 38 (2012), pp. 1084-114. Signup and view all the answers

Which article delves into the strategic management of intellectual property?

Fisher, W.W., and F.Oberholzer-Gee, "Strategic Management of Intellectual Prop- erty," California Management Review 55, no. 4 (Summer 2013), pp. 157-83. Signup and view all the answers

Which article examines the implications of disclosing patent secrets?

Graham, S., and D.Hegde, "Disclosing Patents' Secrets," Science 347 (2015), no. 6219.pp. 236-37. Signup and view all the answers

Which article is referenced as a source for the probability of receiving a US patent?

Carley, M., D.Hegde, and A.Marco, "What is the probability of receiving a US Patent?" Yale Journal of Law & Technology, 17 (2015), pp. 204-223. Signup and view all the answers

Which article investigates the relationship between patents and the dissemination of inventions?

Alderucci and Baumol, "Patents and the dissemination of inventions," Journal of Eco- nomic Perspectives, 27 (2013), no. 4, pp. 223-26 Signup and view all the answers

Study Notes

Innovation Strategy Approaches

The 'adaptive' approach to innovation strategy involves keeping options open, investing in flexibility, and allowing quick adaptation to opportunities, while still demanding rigorous processes.
This approach helps firms deal with high levels of uncertainty.

Measure-and-Act (Classical) Approach

This approach is based on the belief that managers can make rational choices in response to technical opportunities and social, economic, and environmental needs.
It involves the systematic definition of goals, with a schedule of resources and plans for the use of capabilities and processes needed to achieve them.
This approach is often used in operations and engineering management, where capital investment is intense, market uncertainty is low, and risk can be contained.

Judgment-Based Approach

This approach is used when uncertainty and ambiguity are high, making it difficult to produce a systematic strategy with clarity of purpose.
Managers base their decisions mainly on qualitative judgements, using their experience and intuition to make adjustments to strategic orientations and operations.
This approach is often used in radical innovation, where uncertainty is high and outcomes are novel and unpredictable.

Limitations of Formal Measurement Tools

Using formal measurement tools and techniques can cause complications, such as irrelevant data and mistaken diagnoses, leading to analysis paralysis.
In highly uncertain innovation projects, it may be better to leave decision-making to the judgement and experience of experts.

Emergent Strategy Approach

This approach, associated with management scholars such as Mintzberg, argues that strategy is emergent, evolving from decisions that are crafted as internal and external events unfold.
This approach accepts uncertainty and the difficulty of measurement, but believes in the possibility of developing plans and using techniques to collect evidence where practical.

Types of Innovation Strategy

Firms rarely comply with ideal types, but there are broad categories of innovation strategy, including:
- First-mover and fast-follower strategies (see Box 4.4)
- Other types of innovation strategy that can be described and analyzed for analytical purposes.

Patentability

Scientific principles that pertain to natural laws (e.g., gravity) cannot be patented because they are considered to have always existed
The following are not typically patentable:
- Substituting one material for another (e.g., plastic for metal)
- Merely changing the size of an already existing device
- Making something more portable
- Substituting an element for an equivalent element
- Altering an item's shape
- Printed materials (but may be protected by copyright)

Software Patents

Historically, software algorithms were not considered patentable
In 1998, a U.S. Supreme Court case upheld a patent on a computerized method of managing mutual funds that relied on software algorithms
This led to a surge in patent applications for software-enabled methods of doing business, increasing by over 700% from 1997 to 2000

Patent Application Process

To apply for a patent, the inventor must explain how to make and use the invention and make claims about what it does that makes it a new invention
Drawings of the new invention are often required
The application is reviewed by a patent examiner who may modify the scope of the claims made by the patent
The patent is then published for a time in which other inventors can challenge the patent grant
If the standards for patentability are met, the patent is then granted

Patent Statistics

The number of patent applications being filed is growing around the world, with China having the largest number of patent applications in 2015 and 2016, and the largest rate of growth in patent applications (21.5%)
The entire patenting process from application to grant takes several years, ranging from 2-5 years in the United States, 3-5 years in Europe, 5-6 years in Japan, and 5-7 years in India

Costs of Filing and Maintaining a Patent

Fees vary by patenting office
In the United States, the entire patenting process for a “small entity” costs around $1500 in filing fees (and roughly double that for large entities), and $5000-$10,000 in attorney fees

Effectiveness and Use of Protection Mechanisms

The methods used to protect innovation and their effectiveness vary significantly both within and across industries
In some industries, such as pharmaceuticals, legal protection mechanisms like patents are very effective
In other industries, such as electronics, patents and copyright provide relatively little protection because other firms can often invent around the patent without infringing on it
Trade secrets can be used as an alternative form of protection, but the ability to protect trade secrets also varies with the nature of the technology and the industry context

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Description

This quiz assesses understanding of management approaches to decision making under uncertainty, including adaptive and measure-and-manage strategies. Test your knowledge of the benefits and drawbacks of each approach.