Understanding Exam Question Types

Example-Based Questions

• Example questions may present a specific scenario and require reasoning based on lecture or paper content.
• The question provides all the necessary information about the example.
• Example-based questions test understanding, even if the answer is directly stated in lecture materials.

"All Answer Options Are Correct" Questions

• May require selecting "all answer options are correct" as the answer if all options are true based on course material.
• Other options may be partially correct but not the full answer, yielding 0 points.
• "All answer options are correct" can also be an incorrect answer, testing understanding of the subject matter.

Empirical Article Questions

• Can ask about the findings of a specific empirical article, requiring knowledge of results and findings.
• Findings may not always align with initial hypotheses.

Exam Example Questions

Burgers & Covin (2016): Need for Integration

• Firms with a higher number of employees require stronger integration for high performance compared to firms with fewer employees.

Gibson & Birkinshaw (2004): Ambidextrous Business Units

• More ambidextrous business units (able to both explore and exploit) increase the perceived performance of the business unit.

Raish & Tushman (2016): Building New Corporate Businesses

• A combination of integration and differentiation can help organizations build up new corporate businesses.

Tripsas and Gavetti (2000): Core Competencies to Core Rigidities

• The Polaroid example illustrates that core competencies (razor/blade business model) that led to past success can hinder digital innovation, becoming core rigidities.

Building an Innovative Organization: Three Transitions

• Transitioning from "best-in-class" to "world-class" is generally the most difficult for companies.
• The most challenging organizational condition to adjust is the "culture" – it often requires a significant shift and can be slow and difficult.
• This challenge arises because cultural change within an organization is complex and requires deep efforts in leadership, communication, and employee involvement.
• Approaches to tackle this challenge include:
  • Overhauling: complete and intentional rewiring of the entire organizational structure to create a new paradigm.
  • Transformational: creating new business units within the organization with new cultural models and practices, while allowing the old units to continue.

Innovation Importance and Difficulties

• Innovation is essential for survival: Species that adapt to change are more likely to survive, echoing Charles Darwin's words.
• Innovation types:
  • Product innovations: Changes in goods or services.
  • Process innovations: Improvements in technology or organizational methods.
  • Digitalization impacts: Services and technological innovations drive digitalization and new business models.
• Product life cycle impacts innovation:
  • Fluid phase (early stage): Flexible organization, frequent task redefinition, high communication, adapting to uncertainty.
  • Specific phase (mature stage): Stable tasks, hierarchy for control, top-down communication, predictable environment.
  • Organizational shifts: Transition from fluid to specific involves formalization of structure, rigid behavior, power shift to managers, and internal focus.
• Innovation discontinuities:
  • Competence-enhancing: Established players benefit from improvements on existing knowledge.
  • Competence-destroying: New entrants benefit as existing knowledge becomes obsolete and new skills are required.
• Digital disruption:
  • Accelerated innovation: "Big is no longer beautiful," as new entrants succeed with disruption.
  • Companies must adapt: Improvement (incremental) vs. renewal (radical) are key responses.

Digital Disruption and its Penetration

• Global economic impact: AI is expected to add trillions to global GDP by 2037.
• Singularity: AI's intelligence is expected to surpass human intelligence by mid-century.
• AI's impact on work: Significant changes are anticipated for professional roles, including medicine, law, business, education, etc., with impacts on jobs and work patterns.
• Ease of use: AI tools are readily available, requiring minimal investment and offering low marginal cost.
• AI performance variability: High performance in specific areas, but "hallucinations" or errors can occur, requiring ongoing learning through user feedback.
• AI's impact on professional performance: Studies show AI can increase output volume, speed, and quality, particularly for well-defined tasks.
• AI impact varies by task complexity: Within AI's "technological frontier," performance improvements are seen across skill levels, but beyond this frontier, AI's effectiveness decreases.
• Entrepreneurial context: AI's impact on complex, multifaceted tasks in entrepreneurial settings differs from structured, defined tasks in professional environments.
• Creativity and AI: AI can generate new ideas, but human creativity offers novelty and potential for breakthroughs.

Innovation Killers: Barriers to Change

• Economic barriers: Sunk costs and lack of financial motivation.
• Cognitive barriers: Lack of understanding, knowledge traps, overvaluing internal knowledge, neglecting external expertise.
• Social/Psychological barriers: Complacency, fear of change, and resistance to disrupting established structures.
• Innovation killers in specific cases: ToolsMed example highlights specific economic, cognitive, and social/psychological barriers to innovation.
• Organizational barriers: Lack of strategic priority, limited market data, inadequate skills for new business, and a culture resistant to innovation are key hurdles.

Strategies for Success

• Organizational separation: Creating separate structures for radical innovation, such as teams or incubators, allows for independent development.
• Team dynamics: Teams consistently outperform individuals in innovation, fostering idea generation and problem-solving.
• Team structures:
  • Functional teams: Suitable for technical, straightforward tasks.
  • Light weight teams: Good for incremental innovation.
  • Heavy weight teams: Used for "adjacent innovation," requiring commitment and continuity.
  • Autonomous teams: Effective for radical innovation, providing focus and decision power.
• Innovation timelines: Radical innovations require significant time horizons (5-10 years) and investment.
• Balancing core business and new ventures: Companies need to navigate the strategic paradox between maintaining their core business while embracing disruptive innovations.
• Innovation ambition matrix: A tool to assess the potential of different innovations based on their level of disruptiveness and potential impact.
• Top management team dynamics:
  • Leadercentric teams: A single leader acts as an integrator, potentially limiting member interaction.
  • Teamcentric teams: Each team member is both an advocate and integrator, fostering more interaction but increasing the risk of conflict.
• Managing paradoxes:
  • Strategic schizophrenia: Embracing the tension between core business and innovation.
  • Sweet spot of optionality: Finding the balance between exploring new opportunities and maintaining existing strengths.

Innovation Killers: Structure, Strategy, Systems

• Structure: Lack of organizational separation for radical innovation can stifle innovation.
• Strategy: Resistance to change, lack of alignment between leadership and innovation, and failure to address the strategic paradox can inhibit innovation.
• Systems: Inflexible systems that prioritize efficiency over experimentation can hinder innovation.
• Leadership: "One size fits all" management, rigid resource allocation, and resistance from core business can create obstacles.
• Culture: A culture that doesn't value experimentation or embraces risk-aversion can hinder innovation.
• People: Lack of leadership buy-in, lack of communication, and fear of change can negatively impact innovation.

Key Strategies for Innovation

• Understanding the "H" model:
  • H1 businesses: Mature, focused on cost and profitability.
  • H2 businesses: Rapidly growing, focused on revenue growth.
  • H3 businesses: Future options, focused on market development and confirming viability.
• Strategic entrepreneurship execution process: A process for managing new ventures and integrating them into the overall organization.
• Innovation portfolio: A tool to assess the potential of different innovations and prioritize resource allocation.
• Embracing digital transformation: Organizations need to adapt to the changing digital landscape and incorporate new tools and technologies.

Conclusion

Innovation is essential for long-term success, but it faces barriers related to economics, cognition, and social-emotional factors. Leaders need to address these barriers by creating organizational structures that support innovation, adopting a strategic mindset that balances core business with new ventures, and developing systems and cultures that foster experimentation and risk-taking. By embracing the tension between tradition and change, organizations can drive innovation and ensure their future survival.

Innovation Killers

• Company Culture:
  • Inflexibility: Resistance to change and protecting the status quo prevents resource allocation towards innovative ideas.
  • Standardization: Prioritizing existing practices discourages experimentation and risk-taking needed for innovation.
  • Conformity: Rewarding compliance and conformity can suppress creative thinking and the willingness to question existing practices.
• Execution:
  • Avoiding Failures: Moving too quickly ("no time to lose") and moving too slowly ("give me more time") can both hinder innovation.
  • Denying Failures: Protecting sales, protecting investments, ridiculing early stage innovations and procrastination on upscaling & market introduction are all signs of denying failures.
• Economic Barriers:
  • Protecting Sales: This leads to loss aversion bias.
  • Protecting Investments: This leads to sunk costs bias.
• Cognitive Barriers:
  • Avoiding Failures: Failure myopia, action bias, and escalation of commitment act as barriers to innovation.
  • Denying Failures: These lead to fear of scapegoating and the perception of failure as 'fault'.
• Social-Emotional Barriers:
  • Avoiding and Denying Failures: Fear of scapegoating and the perception of failure as 'fault' contribute to social-emotional barriers.
• Lack of Empowerment: Employees without autonomy are less likely to contribute innovative ideas.
• Fear of Non-Conformance: Employees may hesitate to propose unconventional solutions when innovation is judged by its conformity with the existing business model.
• Inability to Act Swiftly: Delays in withdrawing from emerging markets give startups the chance to take the lead.
• Leadership (Not Liking Them): Core business people being allocated to innovation activities can hinder progress.
• People (Not Liking Them): Talent leaving the organization or facing burnout can stifle innovation efforts.
• Leadership (Not Trusting Them): Micro-management by senior managers and missing out on weak signals in the environment can hinder innovation.
• People (Not Trusting Them): Talent leaving the organization or facing burnout can stifle innovation efforts.
• Execution (Not Trusting Them): Lack of inspiration or fear at the innovation work-floor can hinder progress.
• Cognitive Barriers (Not Trusting Them): Lack of innovation experience with senior management and stability bias create barriers.
• Social-Emotional Barriers (Not Liking Them): Affinity bias in allocating resources and narcissistic tendencies within leadership can hinder innovation.
• Social-Emotional Barriers (Not Trusting Them): Fear of losing control and difficulty in changing leadership style can act as barriers.

Worldclass Innovators

• Alignment: Strategy & Leadership, Structure & Systems, Culture & People must align for innovation success.
• Culture:
  • Willingness to Cannibalize Existing Products/Services: A willingness to sacrifice existing sales for new product development is crucial for innovation.
  • Future Orientation: Focusing on future customer needs and industry shifts is critical for being a successful innovator.
  • Tolerance for Risk: Embracing risk-taking and high-risk/high-return investments encourages innovative ventures.
• People:
  • Strategic Entrepreneurship/Venturing: Three phases: Discovery, Incubation, and Acceleration are necessary to turn an idea into a scalable business.
  • Willingness to Fail, Learn, and Improve: Companies should embrace the concept of “Try, Fail, Learn, Improve” to foster innovation.
  • Psychological Safety and Constructive Conflict: This environment is vital for encouraging experimentation and innovation.
• Strategic Entrepreneurship/Venturing (H3, H2, H1):
  • H3 (Creators) focus on high creativity and experimentation.
  • H2 (Intrapreneurs/Business Builders) focus on building a business and balancing creativity with execution.
  • H1 (Managers) focus on operationalizing and scaling innovation.
• H2 People – Business Builders:
  • Characteristics: Appetite for risk, Internal locus of control, Self-confidence, High energy, Hybrid personalities.
  • Key skills: Comfortable with ambiguity, Managing internal and external networks, Socially intelligent.

Volvo Case

• Organizational Identity:
  • Organizational Domain Identity: Members' perceptions of their organizations' category.
  • Organizational Role Identity: Members' perceptions of their organizations' impact within their category.
• Volvo’s Identity as a Shaper:
  • Volvo is position as an active role in shaping the future of the automotive industry, especially during times of disruption.
• Four Key Concerns of Volvo in Digital Innovation: This is a pattern observed in other case studies.
• Emerging Innovation Champion: A process of discovery and incubation of new ideas, followed by integration into the broader corporate structure..
• Situational Influences on Organization Design (Lawrence & Lorsch):
  • Differentiation : The extent to which the organization is broken down into subunits.
  • Integration: The degree to which various subunits work together in a coordinated fashion.
• Conditions for Integration of Innovations:
  • Ability to Integrate: Coordination and knowledge flow exchange (Cognitive Integration).
  • Willingness to Integrate: Reduction of conflicts between innovation teams and the organization (Economic & Social-Emotional Integration).
• Volvo's Connectivity Hub: Heavyweight team focused on "adjacent/system innovation," with a strong project lead.
• Volvo's App Dev Group: This "Tiger team’ is dedicated to radical innovation, has autonomy, and a separate budget.
• Strategy & Leadership: Product vs. Process
• Structure & Systems: Control vs. Flexibility
• Rotation of People: HR changes that shift employees from 'just a job' to a career in innovation.
• Strategic Paradox: Combining existing and new business models is challenging but essential for sustainable growth.

Digital Transformation

• Digital Transformation: The process of adopting digital technology to create new business models and improve processes.
• Conflict of Interest and Resistance: Difficult to transition from 'catching up' to 'best-in-class' due to conflicting interests and resistance to change.

Eras of Innovation

• Four distinct eras of innovation
• Each era creates new opportunities
• Understanding these eras helps to navigate innovation strategies.

Paradigm Shift

• Requires a radical change in thinking
• Often involves a shift in technology or customer needs.
• Allows for the creation of entirely new markets

Entering New Segments

• Businesses can reach new customers and achieve new revenue growth
• Can involve developing new products or services.
• Requires a deep understanding of the target market.

Radical Innovation is Imperative

• Allows for the development of entirely new products, services, or business models.
• Enables companies to open the next era of innovation
• Is often risky but potentially highly rewarding.

Why Innovate and Why So Difficult?

• Contextual Ambidexterity balances alignment and adaptability within the same unit.
• Major Innovation requires a dynamic capability that integrates market and technical knowledge.
• Managerial Cognition influences adaptation to radical technological shifts as managers rely heavily on historical successes.
• AI's Impact on Knowledge Worker Productivity is greatest when tasks fall within AI's capabilities.
• Ambidexterity improves both incremental and radical innovation outcomes.
• Digital Innovation can combat "us versus them" thinking by rotating people in and out of innovation roles.

Structure & Systems

• Structural Differentiation requires integration mechanisms.
• Managing Radical Innovation requires a structurally differentiated innovation team.
• Ambidextrous Organizations balance exploration and exploitation in separate units.

Strategy & Leadership

• Scenario Planning helps reduce decision-making biases.
• Decision-Making Traps are a common concern in strategic decisions.
• Heuristics lead to inevitable biases in uncertain situations.

People & Culture

• Corporate Culture is crucial for promoting radical innovation.
• Identity plays a significant role in technological adaptation, as illustrated by Kodak's struggles to adapt.
• Distinct Career Paths for Innovators are recommended to retain innovation talent.

Digital Innovation

• Internal Corporate Venturing builds new capabilities from internal failures.
• Small Failures in R&D are crucial for learning and improving R&D performance.
• Transition from Exploration to Exploitation is a key focus in digital innovation.

General Questions Across Topics

• Dynamic Capabilities yield unpredictable outcomes in high-velocity markets.
• Serial Breakthrough Innovations often stem from idealism and self-efficacy.
• Four Attributes Emphasized by Ghoshal & Bartlett: Autonomy, control, innovation, risk-taking.

Ambidexterity

• Successful organizations achieve ambidexterity by balancing exploration and exploitation within the same unit.
• Successful organizations do not separate exploration and exploitation completely, focus solely on operational efficiency, or only pursue short-term performance goals.

Innovation Systems

• Major innovation systems should adapt dynamically to market and technology changes.
• Innovation systems do not rely on existing knowledge only, be fully integrated into the core business, or avoid cross-functional teams.

Polaroid Case Study

• Polaroid's reliance on its established business model resulted in delayed commercialization of digital products.
• This did not lead to faster transition to digital imaging, increased collaboration with external partners, or immediate success in new markets.

AI & Knowledge Workers

• AI improves knowledge worker productivity when tasks are within the AI's technological frontier.
• AI does not improve worker productivity when workers are highly experienced in AI, tasks involve significant ambiguity, or tasks are outside AI's capability.

Differentiated Organizations

• Differentiated organizations require stronger integration mechanisms to support corporate entrepreneurship.
• They do not require enhanced market research efforts, higher levels of structural hierarchy, or less interaction between innovation teams and core business units.

Managing Radical Innovation

• Organizations need distinct organizational units to manage radical innovation.
• They do not need unified structures across all innovation and operational units, reduced communication across departments, or full integration of radical innovation teams into the core business.

Ambidextrous Organizations

• Ambidextrous organizations are successful because they allow simultaneous exploration and exploitation in distinct units.
• Ambidextrous organizations do not separate innovation from core operations, focus solely on market-driven innovation strategies, or rely on top management's direct involvement in all innovation decisions.

Scenario Planning

• Scenario planning helps reduce biases in decision-making processes.
• It does not predict market fluctuations with high accuracy, increase R&D investment efficiency, or centralize decision-making in organizations.

Effective Decision-Making

• Effective decision-making involves identifying and avoiding hidden traps in the process.
• It does not involve focusing only on short-term profits, relying heavily on past performance metrics, or increasing the complexity of decision frameworks.

Heuristics in Decision-Making

• Heuristics in decision-making lead to biases under conditions of uncertainty.
• They do not lead to completely rational outcomes in all situations, enhanced decision-making in complex markets, or no significant impact on organizational performance.

Corporate Venture Capital (CVC)

• CVC is a mechanism to remain alert to technological disruptions.
• It is not a means to boost short-term profitability, a replacement for traditional R&D functions, or a tool for improving operational efficiency in large firms.

Serial Breakthrough Innovations

• Serial breakthrough innovations are driven by idealism, self-efficacy, and a sense of separateness.
• They are not driven by incremental improvements in technology, market-led strategies focused on customer feedback, or emphasis on operational efficiency.

Radical Innovation Drivers

• The most important driver of radical innovation across nations is corporate culture that supports experimentation.
• This is not driven by government policy, access to financial resources, or legal frameworks that encourage risk-taking.

Retaining Innovation Talent

• Creating distinct career paths for innovators helps retain innovation talent and provide long-term growth opportunities.
• This does not maximize operational efficiency, reduce costs in innovation projects, or ensure innovators work closely with core business teams.

Disruptive Innovation Response

• Firms respond differently to disruptive innovation based on the firm's domain identity and role identity.
• This response is not based on industry-specific factors only, the size of their R&D investments, or the competitive intensity in their markets.

Internal Corporate Venturing

• Internal corporate venturing helps firms develop new capabilities from internal failures.
• They should not be avoided in dynamic markets, focus primarily on improving existing products, or be only effective when fully integrated with core business units.

Differentiation and Integration (Organizational Strategy)

• A combination of differentiation and integration helps organizations build new corporate businesses.
• They do not minimize costs in disruptive innovation projects, achieve short-term operational goals, or reduce R&D investments.

Frequent R&D Failures

• Frequent small failures in R&D enhance learning and contribute to overall R&D success.
• They do not impede long-term performance improvements, should be completely avoided to improve efficiency, or lead to organizational rigidity.

Digitalization in Large Firms

• Digitalization in large firms like Siemens is successful when innovation processes are deeply integrated into the firm's structure.
• Digitalization is not successful when the firm adopts a rigid hierarchical approach, digital innovation is managed by external partners only, or there is minimal disruption to existing business operations.

Adapting to Discontinuous Change

• Firms adapt to discontinuous change by leveraging a combination of ambidexterity and dynamic capabilities.
• They do not rely solely on dynamic capabilities, abandon established business models completely, or focus on small, incremental changes.

Dynamic Capabilities

• Dynamic capabilities are the firm's ability to reconfigure and renew resources in response to environmental changes.
• Dynamic capabilities do not optimize existing resources for short-term efficiency, innovate without any connection to current processes, or eliminate uncertainty in all innovation projects.

Successful New Corporate Businesses

• New corporate businesses are most successful when they are initiated by separate innovation units and later integrated.
• They are not most successful when they remain completely independent from the core business, rely solely on external market validation, or avoid collaboration with internal teams.

Firms with Serial Breakthrough Innovations

• Firms with serial breakthrough innovations share the characteristic of high levels of self-efficacy and idealism.
• They do not share reluctance to engage in high-risk projects, separation between operational and innovation units, or centralized decision-making.

Successful Firm Contexts

• Successful firms create organizational contexts characterized by discipline, stretch, support, and trust.
• They do not create organizational contexts characterized by control, predictability, and minimal flexibility, strictly defined roles and limited innovation scope, or high employee turnover and resistance to change.

This quiz focuses on different types of exam questions, including example-based, multiple-answer, and empirical article questions. It assesses comprehension of question formats based on course materials and articles, ensuring a deeper understanding of the subject matter. Test your skills on how well you can identify and respond to various question types!