A Comparative Study of Innovation Practices in Business Reading Answers

Oct 1, 2022

A Comparative study of Innovation Practices in Business Reading Answers contains twelve passages and 14 different types of questions. Candidates will be shown various question types with clear instructions in this IELTS Section. Reading Answers comprises three types of questions: Matching heading, sentence completion, and Choose the correct option. For the Matching heading, candidates need to thoroughly go through each passage. For sentence completion, candidates need to skim the passage for keywords and understand the concept. To choose the correct option, candidates must read the IELTS Reading passage and understand the statement provided.

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Reading Passage Question

Results of interviews with corporate executives and senior innovation officers in four of the largest publically-traded companies and one government agency in the Chicago-area provide some insight into how businesses approach innovation.

The dictionary defines innovation as “the introduction of something new”. Regardless of the type of innovation – whether it be product, process or service – it results in significant change. This change could be as simple as changing the way we do something routine: a breakthrough which provides a substantial benefit to the customer, or one that dramatically increases the revenue or profitability of the company

Participants interested in breakthrough innovation believe ‘if innovation doesn’t deliver bottom-line results, it is just creativity’. Indeed, the very definition of innovation for Afuah (2003) is ‘invention plus commercialization.’ The relationship of innovation to financial performance was well demonstrated by Kim and Mauborgne (l997). In manufacturing environments, they found that while 86% of product launches involved some small improvements to existing models – that is incremental changes, they accounted for only 62% of total revenues and 39% of total profits, The remaining 14% of launches, the real breakthrough innovations – generated 38% of total revenues and a huge 61 % of total profits.

Innovation may offer one significant way that companies can gain an advantage. Utterback’s (1994) concept of ‘dominant design’ provides insight into how innovation can create a temporary monopoly situation that will weaken competitive forces, however, when an innovative product or service is launched, rivals typically begin to copy it (once patents run out). Hence it is necessary for the company to continuously seek further ways to innovate.

Every innovation process has Its strengths and weaknesses, but it seems that when a company sets up a systematized innovation process it communicates the importance of innovation to the entire organization. In these companies, more resources are devoted to development. The best companies have learned to systematize the process (Hargadorn & Sutton 2000)

The primary disadvantage of having a structured innovation process is speed to market – the more structure, the longer the lead time is from idea to product. The only company that described its process as ‘quick’ did not have such a process. Employees were empowered to solve problems and create new products for the customer by responding to demand. While this benefits customers, the company stated it lacked systems to share learning with other segments of the organization. A potential disadvantage of this approach, according to Utterback, is that evolutionary change can be missed when companies are too focussed on pleasing customers.

The most challenging aspect of any innovation is determining marketability. No company said It lacked creative ideas or creative people, but many ideas require significant resources to test, develop, and launch. Millions of dollars are at stake, so an element of risk-taking is required.
Taking risks is generally defined as being able to drive new ideas forward in the face of adversity. Publically traded companies have a major dilemma. To guarantee a leadership position they have to stay on the leading edge of innovation. This requires a long-term approach and a high tolerance for risk. Investors especially in a down economy, want short-term results. As investors’ tolerance for risk decreases, so does the company’s ability to lake the significant financial risk necessary to create breakthrough changes; however, most recognize that investing in innovation is the ‘right thing to do’.

One company actively pursues a rather unusual strategy of acquiring innovation by purchasing other smaller companies or partnering with specialized companies. This enables the acquiring company to bring a product to market more quickly and gives the smaller company access to funds it might not otherwise have.

How can a company involve all its employees in the innovation process? It may be as simple as requesting new ideas. A brainstorming session during a staff meeting need only take 30 minutes. Another system is to use existing suggestions box processes, Involving employees in idea-generation can reap some large benefits at a very low cost. Only modest monetary rewards are necessary for successful innovation ideas, especially since many companies have found that employees place a high value on recognition.

In most organizations, teams are extensively used to evaluate ideas, but rarely to generate them. Companies need to learn how to construct teams for the purpose of innovation. A team member should be selected for their tendency to be more creative or more risk-taking. This could markedly increase innovation output. According to Hargadon and Sutton, using teams to capture and share ideas is one method of keeping ideas alive – a key step in the innovation process. Good ideas need to be nurtured by teams and incorporated into the information and communication system of the company.

In conclusion, innovation can be difficult to structure. It is the authors’ perception that even the most innovative companies in the sample under-invest in market research during the concept refining phase. The risk could be reduced considerably by the adoption of this strategy but, of course, it could not have culminated.

Most of the problems cited by participants were due to a low tolerance for risk – by employees (what they would or would not say), and by committees, (being afraid to invest money without knowing the return on investment). Raising the risk tolerance would reduce the amount of analysis required to bring a new idea to market, thus shortening the cycle time of new product/service development According to psychologists Kahn and Hirshhorn, people come alive when they feel safe. It is a threat and anxiety that inhibits them. It would follow that in order for people in organizations to take risks, a lack of success must be tolerated. The organizations that manage risk most effectively transform those risks into challenges and opportunities.

Solution with Explanation
Questions 1- 7:
Look at the following theories (Questions 1– 7) and the list of experts below.
Match the theories with the correct expert A-E. You may use any letter more than once.

List of experts

Afuah
Kim and Mauborgne
Utterback
Hargadon and Sutton
Kahn and Hirshhorn

A business cannot rely on the success of one good innovation.

Answer: C
Supporting Statement: Innovation may offer one significant way that companies can gain an advantage. Utterback’s (1994) concept of ‘dominant design’ provides insight into how innovation can create a temporary monopoly situation that will weaken competitive forces, however, when an innovative product or service is launched, rivals typically begin to copy it (once patents run out). Hence it is necessary for the company to continuously seek further ways to innovate.
Keywords: dominant design, monopoly situation, innovate.
Keyword location: Paragraph 4
Explanation: These statements suggest that a company cannot depend on the achievement of a single successful innovation. The solution is therefore C.

A group approach is an effective way of generating innovation

Answer: D
Supporting Statement: according to Hargadon and Sutton, using teams to capture and share ideas is one method of keeping ideas alive – a key step in the innovation process. Good ideas need to be nurtured by teams and incorporated into the information and communication system of the company.
Keywords: capture, share ideas, innovation process, communication system.
Keyword location: Paragraph 9, last line
Explanation: We can infer from these lines that, as proposed by Hargadorn and Sutton, a collaborative method is an efficient way to produce ideas and creativity, according to the ninth paragraph's final sentence. The solution is hence D.

Employees are more creative in a culture that accepts failure.

Answer: E
Supporting Statement: according to psychologists Kahn and Hirshhorn, people come alive when they feel safe. It is a threat and anxiety that inhibits them. It would follow that in order for people in organizations to take risks, a lack of success must be tolerated. The organizations that manage risk most effectively transform those risks into challenges and opportunities.
Keywords: anxiety, organizations, risks, challenges and opportunities.
Keyword location: Paragraph 11, line 4
Explanation: These lines demonstrate how extremely creative workers may be in an environment where taking risks and failing is encouraged. So, E is the appropriate response.

Radical innovations will provide greater income than minor changes.

Answer: B
Supporting Statement: the relationship of innovation to financial performance was well demonstrated by Kim and Mauborgne (l997). In manufacturing environments, they found that while 86% of product launches involved some small improvements to existing models – that is incremental changes, they accounted for only 62% of total revenues and 39% of total profits, The remaining 14% of launches, the real breakthrough innovations – generated 38% of total revenues and a huge 61 % of total profits.
Keywords: financial performance, incremental changes, innovations.
Keyword location: Paragraph 3, line 3
Explanation: These lines make it quite evident that significant breakthroughs will generate more income than small adjustments. So, B is the correct response.

Businesses with a structured approach to innovation are more likely to succeed.

Answer: D
Supporting Statement: every innovation process has Its strengths and weaknesses, but it seems that when a company sets up a systematized innovation process it communicates the importance of innovation to the entire organization. In these companies, more resources are devoted to development. The best companies have learned to systematize the process (Hargadorn & Sutton 2000).
Keywords: strength, weakness, systematized innovation process
Keyword location: Paragraph 5
Explanation: From paragraph 5, it is clear that companies are more likely to succeed if they approach innovation from a systematic perspective. Thus, the response is D.

Innovation consists of a new idea combined with business potential.

Answer: A
Supporting Statement: participants interested in breakthrough innovation believe ‘if innovation doesn’t deliver bottom-line results, it is just creativity’. Indeed, the very definition of innovation for Afuah (2003) is ‘invention plus commercialization. We can understand from these lines that Afuah says that innovation consists of a new idea combined with business potential.
Keywords: breakthrough, creativity, commercialization.
Keyword location: Paragraph 3
Explanation: The first few sentences of paragraph A imply that; hence, the solution is A.

A business that concentrates on responding to clients’ needs may overlook the need for wider development.

Answer: C
Supporting Statement: a potential disadvantage of this approach, according to Utterback, is that evolutionary change can be missed when companies are too focussed on pleasing customers. The most challenging aspect of any innovation is determining marketability. No company said It lacked creative ideas for creative people, but many ideas require significant resources to test, develop, and launch.
Keywords: utterback, marketability, develop and launch.
Keyword location: Paragraph 6,line 5
Explanation: These lines suggest that a company that focuses on meeting customer wants could miss the necessity for more extensive development. The solution is therefore C.

Questions 8- 14:
Complete each sentence with the correct ending A – I below.

can be to develop a sympathetic manufacturing environment.
must put time and money into innovation.
can be a very cost-effective way of achieving innovation.
may require a more sophisticated communication system.
may give rise to a lengthy period between the initial concept and launch
could be attributed to an unwillingness to accept the risk
can be to work out the saleability of a future product
would be to put more money into the analysis of customer demand.
might involve collaboration with another company with particular expertise

Unfortunately the development of an organized innovation process ………..

Answer: E
Supporting Statement: the most challenging aspect of any innovation is determining marketability. No company said It lacked creative ideas for creative people, but many ideas require significant resources to test, develop, and launch.
Keywords: marketability, creative people, test, develop, launch.
Keyword location: Paragraph 7
Explanation: Sadly, the development of a structured creative process is indicated by these lines. The time between the original concept and launch could be rather long. So, the response is E.

One of the most difficult issues in innovation ………………

Answer: G
Supporting Statement: The most challenging aspect of any innovation is determining marketability. No company said It lacked creative ideas for creative people, but many ideas require significant resources to test, develop, and launch. Millions of dollars are at stake, so an element of risk-taking is required.
Keywords: challenging aspect, lacked creative ideas, test, develop, launch.
Keyword location: Paragraph 7
Explanation: These lines suggest that determining the viability of a potential product can be one of the most difficult problems in innovation. The solution is therefore G.

A company wanting to maintain a leading position in business………….

Answer: B
Supporting Statement: Publicly traded companies have a major dilemma. To guarantee a leadership position they have to stay on the leading edge of innovation. This requires a long-term approach and a high tolerance for risk. Investors, especially in a down economy, want short-term results. As investors’ tolerance for risk decreases, so does the company’s ability to lack the significant financial risk necessary to create breakthrough changes; however, most recognize that investing in innovation is the ‘right thing to do’.
Keywords: long0term approach, high tolerance, financial risk, breakthrough
Keyword location: Paragraph 7, line 5
Explanation: These words suggest that an organization must devote a significant amount of time and resources to innovation if it wants to keep its position as a market leader. So, B is the correct response.

A different approach to achieving innovation ………………

Answer: I
Supporting Statement: In manufacturing environments, they found that while 86% of product launches involved some small improvements to existing models – that is incremental changes, they accounted for only 62% of total revenues and 39% of total profits, The remaining 14% of launches, the real breakthrough innovations – generated 38% of total revenues and a huge 61 % of total profits.
Keywords: manufacturing environments, incremental changes, breakthrough innovations.
Keyword location: Paragraph 3, line 5
Explanation: These lines imply that creating a supportive industrial environment can be a distinct strategy for achieving innovation. So, I am the correct response.

Getting staff to come up with new Ideas……………………..

Answer: C
Supporting Statement: taking risks is generally defined as being able to drive new ideas forward in the face of adversity. Publicly traded companies have a major dilemma. To guarantee a leadership position they have to stay on the leading edge of innovation. This requires a long-term approach and a high tolerance for risk.
Keywords: taking risks, dilemma, leadership position, high tolerance.
Keyword location: Paragraph 7
Explanation: These lines suggest that encouraging employee invention can be a relatively affordable means of obtaining innovation. The solution is therefore C.

A recommendation for companies already committed to innovation……………

Answer: H
Supporting Statement: employees were empowered to solve problems and create new products for the customer by responding to demand. While this benefits customers, the company stated it lacked systems to share learning with other segments of the organization.
Keywords: new products, benefits customers, lacked systems.
Keyword location: Paragraph 6, line 3
Explanation: These words make it clear that one advice for businesses already devoted to innovation would be to invest more money in the study of customer demand. The solution is therefore H.

The problem experienced by companies participating in the study…………………

Answer: F
Supporting Statement: most of the problems cited by participants were due to a low tolerance for risk – by employees (what they would or would not say), and by committees, (being afraid to invest money without knowing the return on investment).
Keywords: tolerance, employees, committees
Keyword location: Paragraph 12
Explanation: These lines suggest that the issue faced by study participants' companies may be related to a reluctance to take on risk. The solution is therefore F.

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