CHAPTER 2

Section A: True or False Questions

Circle the correct answer for the following statements.

Fluid phase of innovation is the usual term used to describe catalytic cracking
1. T F
in the oil industry.
Established firms predictably fail to take advantage of discontinuous shifts in
2. T F
technology.
A dominant design is imposed by the largest firm in a sector on the rest of that
3. T F
industry.
The growing success of low cost airlines in the travel industry is one of the
4. T F
best examples of disruptive innovation.
Discontinuous innovations are always associated with radical technological
5. T F
breakthroughs.
The use of tungsten filaments instead of carbon was a discontinuous
6. T F
innovation in the lighting industry.
The problem for firms which found their marketplace disrupted in the computer
7. T F disk drive industry wasn’t that they didn’t listen to customers, but rather that
they listened too well to the wrong customers.
Discontinuous innovations are always difficult to fit with mainstream, which is
8. T F
why it always comes from outside the firm.
The development of steam power in the Industrial Revolution was an example
9. T F
of discontinuous innovation.
Close and consistent relationships with regular partners in a network is the key
10. T F
to successful discontinuous innovation.
'Stage gate' decision systems are essential to control risks in innovation
11. T F projects. But sometimes they can be a problem in discontinuous innovation
because they reject ideas which are highly speculative.
The growth in use of SMS—text messaging via mobile phones—is an example
12. T F
of a discontinuous innovation.
13. T F The development of novel replacement product occurs very often.
A me-too product is a product introduced into the market in direct competition
14. T F
with a product that is already available.
Technological innovations are products that are not really innovative and have
15. T F
a lower degree of innovation.
Breakthrough means coming up with something new. Usually the breakthrough
16. T F
product is in the areas of technology and markets.
Magnetic Resonance Imaging (MRI) is an example of the improvement product
17. T F
type.
18. T F Breakthrough products will usually create new industries.

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 Repositioning means that products are targeted at new segments or new
19. T F
markets to increase market share.
Types of innovation could help differentiate the level of novelty in an innovation
20 T F
as well as help describe the various responses of new technologies.

Section B: Essay Questions

Answer all the following questions in the space provided.

1. Why are many established firms wary of radical/disruptive innovations?

Established firms have standardized their standard operating procedures (SOP) and have decided on
specific technology to be used in all of their operations. With radical or disruptive innovation, as the
names indicates, there will be radical changes to their SOP and technology used. This will disrupt their
normal routine and additional cost will have to be incurred to embrace the new innovation as well to
train personnel for the new innovation. The learning curve will be slow at first and this will surely affect
the firm’s operations and bottom line.

2. Discuss two process innovations and their impacts on society.

a. Customer Relationship Management (CRM) - Customer relationship management (CRM) is

an approach to managing a company's interactions with current and future customers. CRM
refers to the practices, strategies and technologies that companies use to organize, automate,
record and evaluate customer interactions and synchronize sales, marketing, customer
service, and technical support in order to drive sales growth by deepening and enriching
relationships with their customer bases.
b. Six Sigma – It is a measure of quality that strives for near perfection at the organization’s
production. It is a disciplined and data-driven approach methodology for eliminating defects in
any process, from manufacturing to transactional and from product to service. Six Sigma is
basically focuses on process improvement and variation reduction to reduce the six standard
deviations between the mean and the nearest specification limit.
3. What are the differences between component knowledge and system knowledge?

Component knowledge is the knowledge about the individual component in an existing architecture. It
employs new components with different design concept. It could be changed with another component
or changing the relationship for an incremental improvement. System knowledge on the other hand
requires significant resources from various disciplines which completes a system. System knowledge
requires both social and technical dimensions and the interaction between these two dimensions.

4. Why are radical innovations usually in small proportion of innovations?

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Radical innovation is about the newness and the significant impact it produced for the products,
services or processes involved. The impact will change the market significantly. Because of this high
impact changes depend on the newness of the all aspects such design, component and configuration,
not many innovations fall under radical innovations. Most innovations probably are incremental
innovations because of the small innovation offered.

5. One example of a good architectural innovation is the Sony Walkman. Discuss why.

Architectural innovation requires overall changes of the design without changing the design of the
components. Sony Walkman is a good architectural design because it was the first product that
offered a portable audio cassette player. The original Walkman introduced a change in music listening
habits by allowing people to carry music with them and listen to music through lightweight
headphones. Before that, people listen to music from a gramophone to record player and radio which
usually is static. The concept is still the same, that is listening to audio or music but the medium and
the experience is difference. With Walkman, we can listen to music anywhere we want and when we
want.