CME CME Innovation & Entrepreneurship 2 — Questions and Answers
Question 1: A company analyzing its innovation pipeline uses the concept of an 'innovation funnel.' What does this represent?
- The budget allocated to R&D projects
- The process of filtering many ideas down to a few viable innovations for launch (Correct answer)
- The organizational hierarchy for approving new products
- A marketing approach for launching innovations
Correct answer: The process of filtering many ideas down to a few viable innovations for launch
An innovation funnel illustrates how a large number of initial ideas are progressively filtered through development stages, with only the most promising reaching market launch.
Question 2: What is the primary purpose of a 'stage-gate' process in innovation management?
- To allocate intellectual property rights
- To provide structured go/no-go decision points between development phases (Correct answer)
- To recruit technical talent for R&D teams
- To set product pricing before launch
Correct answer: To provide structured go/no-go decision points between development phases
The stage-gate process divides innovation projects into stages separated by gates where management reviews progress and decides whether to continue, modify, or kill the project.
Question 3: Which concept describes an organization's ability to acquire external knowledge and integrate it with internal capabilities to drive innovation?
- Knowledge Management
- Absorptive Capacity (Correct answer)
- Dynamic Capabilities
- Core Competency
Correct answer: Absorptive Capacity
Absorptive capacity, coined by Cohen and Levinthal, refers to a firm's ability to recognize, assimilate, and apply new external knowledge to create commercial value.
Question 4: In entrepreneurial finance, what is a 'Series A' funding round?
- The first round of venture capital after early seed funding, used to scale the business (Correct answer)
- Government grants for early-stage startups
- The initial public offering of company shares
- Angel investor funding before any product development
Correct answer: The first round of venture capital after early seed funding, used to scale the business
A Series A round is typically the first significant venture capital investment after seed funding, used to optimize the product and scale operations.
Question 5: What framework, used in innovation strategy, divides activities into 'core,' 'adjacent,' and 'transformational' categories?
- Porter's Value Chain
- BCG Growth-Share Matrix
- The Three Horizons Framework (Correct answer)
- Ansoff's Growth Matrix
Correct answer: The Three Horizons Framework
The Three Horizons Framework (McKinsey) categorizes innovation investments: Horizon 1 (core business), Horizon 2 (adjacent growth), and Horizon 3 (transformational bets).
Question 6: A manager wants to protect a company's unique innovation from competitors. Which legal mechanism protects a novel invention's design or process for a limited period?
- Trademark
- Copyright
- Patent (Correct answer)
- Trade Secret
Correct answer: Patent
A patent grants the inventor exclusive rights to make, use, or sell an invention for typically 20 years, preventing competitors from copying the protected innovation.
CME CME Innovation & Entrepreneurship 2
A company analyzing its innovation pipeline uses the concept of an 'innovation funnel.' What does this represent?