SPP Innovation & Growth Strategy 4 — Questions and Answers
Question 1: A company shifts from selling a product outright to charging customers a recurring subscription fee. This is an example of which type of innovation?
- Process innovation
- Business model innovation (Correct answer)
- Incremental product improvement
- Supply chain innovation
Correct answer: Business model innovation
Business model innovation changes how a company creates, delivers, or captures value—subscription pricing alters the revenue model without necessarily changing the product itself.
Question 2: Which strategic analysis tool maps a company's unique activities to show how they create a defensible competitive position through interdependencies?
- Value chain analysis
- Activity system map (Correct answer)
- PESTEL framework
- Stakeholder map
Correct answer: Activity system map
Porter's activity system map visualizes how a firm's unique set of interlocking activities reinforce each other, making the strategy difficult for competitors to replicate.
Question 3: In the context of technology S-curves, what typically signals that a technology is approaching its performance limit?
- Increasing R&D spending with diminishing performance gains (Correct answer)
- Rapid performance improvement with low investment
- New entrants flooding the market
- Regulatory approval of the technology
Correct answer: Increasing R&D spending with diminishing performance gains
As a technology matures, more R&D investment produces progressively smaller performance improvements—a sign the S-curve is flattening and a new paradigm may be needed.
Question 4: Which growth lever involves partnering with external companies to co-develop products, share distribution, or access complementary capabilities?
- Organic growth through internal R&D
- Strategic alliance or partnership (Correct answer)
- Share buyback
- Vertical integration
Correct answer: Strategic alliance or partnership
Strategic alliances allow firms to grow by combining complementary strengths without the full cost and risk of mergers and acquisitions.
Question 5: A company discovers that its core product is being used in an unexpected way by a small group of customers, revealing a potential new market. This is best described as:
- Market segmentation error
- Lead user insight (Correct answer)
- Brand dilution
- Cannibalization risk
Correct answer: Lead user insight
Lead users—identified by Eric von Hippel—face needs ahead of the general market and often innovate solutions themselves, signaling nascent market opportunities.
Question 6: The 'innovate or die' pressure from digital disruption is best countered at the strategic level by:
- Cutting all R&D budgets to fund short-term profitability
- Building a portfolio of innovation bets across multiple time horizons (Correct answer)
- Waiting for a dominant design to emerge before investing
- Copying the competitor's product feature-for-feature
Correct answer: Building a portfolio of innovation bets across multiple time horizons
A portfolio approach across horizons ensures a firm maintains current revenues while seeding future growth, reducing the existential risk of single-bet innovation.
Question 7: Which acquisition rationale is most aligned with an innovation growth strategy seeking to accelerate entry into an emerging technology space?
- Acqui-hire to reduce headcount
- Consolidation to achieve cost synergies
- Capability acquisition to access proprietary technology or talent (Correct answer)
- Hostile takeover for undervalued assets
Correct answer: Capability acquisition to access proprietary technology or talent
Capability acquisitions target companies for their intellectual property, engineering talent, or proprietary platforms rather than for cost savings or market share.
SPP Innovation & Growth Strategy 4
A company shifts from selling a product outright to charging customers a recurring subscription fee.
This is an example of which type of innovation?