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CHAPTER 5: INNOVATION: THE CREATIVE PERSUIT OF IDEAS

TRUE/FALSE

1. Peter Drucker has stated that successful innovators must look, ask, and listen.
ANS: T PTS: 1 KEY: pg 141

2. Innovation is the process by which entrepreneurs convert opportunities into marketable ideas.
ANS: T PTS: 1 KEY: pg 140

3. The innovation process involves only the development of a good idea.


ANS: F PTS: 1 KEY: pg 140

4. The 4 basic types of innovation are invention, extension, duplication, and synthesis.
ANS: T PTS: 1 KEY: pg 141

5. Entrepreneurs are always looking for unique opportunities to fill needs or wants.
ANS: T PTS: 1 KEY: pg 130

6. Creativity is the generation of ideas that result in the improved efficiency or effectiveness of a system.
ANS: T PTS: 1 KEY: pg 130

7. Creativity cannot be developed or improved.


ANS: F PTS: 1 KEY: pg 131

8. Structured and focused chaos is necessary for creativity to occur.


ANS: T PTS: 1 KEY: pg 131

9. Truly creative people are always geniuses.


ANS: F PTS: 1 KEY: pg 131

10. Successful creations do not require investigation and information gathering.


ANS: F PTS: 1 KEY: pg 131

11. Many inventions and innovations are a result of the inventors seeing new and different relationships
among objects, processes, materials, technologies, and people.
ANS: T PTS: 1 KEY: pg 133

12. The innovation process allows creative people to subconsciously mull over the information they have
gathered.
ANS: T PTS: 1 KEY: pg 132

13. Creative people always exhibit a strong need for group approval.
ANS: F PTS: 1 KEY: pg 132

14. The four phases of the creative process are knowledge accumulation, incubation, idea experience, and
evaluation.
ANS: T PTS: 1 KEY: pg 133

15. The easiest step in the creative endeavor is the implementation and evaluation phase.
ANS: F PTS: 1 KEY: pg 132

16. The left hemisphere of the brain produces logical and analytical skills.
ANS: T PTS: 1 KEY: pg 136

17. The creative climate rejects the ambiguity common in work and life.
ANS: F PTS: 1 KEY: pg 140

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18. Background or knowledge accumulation is the second phase of the creative process.
ANS: F PTS: 1 KEY: pg 132

19. Incubation in the creative process often occurs when the individual is doing something completely
unrelated to the subject.
ANS: T PTS: 1 KEY: pg 132

20. The idea experience phase of the creative process is often the least interesting part of the process.
ANS: F PTS: 1 KEY: pg 132

21. Only new patterns of thinking will lead to new ideas and innovation.
ANS: T PTS: 1 KEY: pg 139

22. Innovation is planned and predictable.


ANS: F PTS: 1 KEY: pg 141

23. Most innovations result from a conscious, purposeful search for new opportunities.
ANS: T PTS: 1 KEY: pg 141

24. Most successful innovations are complex and focused.


ANS: F PTS: 1 KEY: pg 141

25. Incongruities are gaps or differences between expectations and reality.


ANS: T PTS: 1 KEY: pg 127

26. Innovators must always search for new ideas, opportunities, or sources of innovation.
ANS: T PTS: 1 KEY: pg 142

27. Extension is the combination of existing concepts and factors into a new formulation.
ANS: F PTS: 1 KEY: pg 141

28. Synthesis is the combining of two existing concepts into a new formulation.
ANS: T PTS: 1 KEY: pg 141

29. In innovation through duplication, a product is simply copied.


ANS: F PTS: 1 KEY: pg 141

30. The principles of innovation are largely focused on profit maximization.


ANS: F PTS: 1 KEY: pg 142

31. Innovation should follow a milestone schedule.


ANS: T PTS: 1 KEY: pg 142

32. It is really genius and not hard work that creates success for the entrepreneur.
ANS: F PTS: 1 KEY: pg 143

33. Innovative activity should be rewarded.


ANS: T PTS: 1 KEY: pg 143

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MULTIPLE CHOICE

1. Which of the following questions concerning innovation is not relevant?


a. What is the problem? c. What costs are involved?
b. Whom does it affect? d. When the product goes to market?
ANS: D PTS: 1 KEY: pg 130

2. Which of the following statements is true?


a. Innovation is the specific function of entrepreneurship.
b. Innovation is the process by which entrepreneurs consume marketable ideas.
c. Innovation does not involve change.
d. Innovation is the governments responsibility.
ANS: A PTS: 1 KEY: pg 140

3. Which of the following are keys to understanding opportunity and its development for entrepreneurs?
a. creativity and capital c. background and knowledge
b. innovation and creativity d. incubation and experience
ANS: B PTS: 1 KEY: pg 127

4. Entrepreneur sense potential in business problems by asking


a. who is to blame and how to relocate them?
b. what about profits?
c. what if and why not?
d. farfetched, unimaginative questions
ANS: C PTS: 1 KEY: pg 130

5. The two most important aspects of creativity are


a. design and solution. c. process and people.
b. intelligence and technical competence. d. capital and opportunity.
ANS: C PTS: 1 KEY: pg 130

6. Which of the following statements is true?


a. People are born with creativity and can do nothing to change their level of creativity.
b. People can learn to be creative.
c. Creativity has nothing to do with learning.
d. The creative mind cannot be developed.
ANS: B PTS: 1 KEY: pg 131
7. Some ways to develop a creative mind include
a. reading a variety of textbooks on entrepreneurship.
b. creative minds are born not made.
c. observing other entrepreneurs.
d. getting away from it all.
ANS: C PTS: 1 KEY: pg 131 & 132

8. The incubation process involves which of the following?


a. working harder c. talking with friends
b. letting the subconscious work d. changing jobs
ANS: B PTS: 1 KEY: pg 132

9. Which of the following statements is true?


a. The right brain helps people analyze and verbalize.
b. The right brain helps people understand analogies and imagine things.
c. The left brain helps people understand analogies and imagine things.
d. Right and left brain concepts are meaningless.
ANS: B PTS: 1 KEY: pg 134

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10. Which of the following can help speed up the idea process?
a. working harder c. taking breaks while working
b. seeing new movies d. intuition
ANS: C PTS: 1 KEY: pg 132

11. Which of the following can help carry out the evaluation and implementation stage?
a. increasing energy level
b. hide your ideas from knowledgeable people
c. avoid advice from others
d. ignore hunches and feelings
ANS: A PTS: 1 KEY: pg 132

12. A person can develop their own creativity by


a. quitting a boring job.
b. focusing on making money.
c. taking up a new hobby.
d. seeing new and different relationships in people, objects, and places around them.
ANS: D PTS: 1 KEY: pg 133

13. Which of the following is a characteristic of creative people?


a. bright but not necessarily brilliant c. rigid and dogmatic
b. poor image of themselves d. unmotivated by challenging problems
ANS: A PTS: 1 KEY: pg 141

14. Which of the following statements is true?


a. The right brain is more important in the creative process than the left brain.
b. The left brain is more important in the creative process than the right brain.
c. Both sides of the brain are important to the creative process.
d. Motivation, not the brain is the key to the creative process.
ANS: C PTS: 1 KEY: pg 136

15. Which of the following mental habits inhibit creativity and innovation?
a. either/or thinking, stereotyping c. security hunting, risks
b. functional perspective, mindsets d. stereotyping, incubation
ANS: A PTS: 1 KEY: pg 138
16. Security hunting means
a. using probability and stereotypes to minimize risk
b. finding a permanent source of venture capital
c. sticking firmly to decisions
d. installing a security system
ANS: A PTS: 1 KEY: pg 138

17. Which of the following statements is not true?


a. Creative ideas never come out of the blue.
b. Ideas often emerge during activities unrelated to the enterprise.
c. ANSs usually come to an individual incrementally.
d. Creative individuals allow their subconscious to mull over information.
ANS: A PTS: 1 KEY: pg 132

18. Which one is not one of the phases in the creative process?
a. background or knowledge accumulation c. the incubation process
b. evaluation and implementation d. preliminary investigation
ANS: D PTS: 1 KEY: pg 131 & 132

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19. In the incubation process, ways of getting away from a problem include
a. working harder c. going to parties.
b. working on something else. d. visiting the library.
ANS: B PTS: 1 KEY: pg 132

20. Successful entrepreneurs are able to identify


a. those ideas that are workable and that they have skills to implement.
b. those ideas that will make money.
c. those ideas that are not feasible.
d. those ideas that will win instant approval from customers.
ANS: A PTS: 1 KEY: pg 132

21. Security hunting is


a. looking for a safe place to sleep.
b. trying to make the right decision or take the correct action.
c. taking no action that involves risk.
d. adding a firewall to your computer system.
ANS: B PTS: 1 KEY: pg 138

22. Creativity is most likely to occur when the climate is right. What is a characteristic of that climate?
a. willingness to avoid change
b. employees with similar work habits
c. trustful management that does not exert strict control over employees
d. strict management rules
ANS: C PTS: 1 KEY: pg 140

23. Relying on abstractions can


a. limit ones perception of reality. c. help in making correct choices.
b. do nothing detrimental. d. add a mathematical element to the idea.
ANS: A PTS: 1 KEY: pg 138

24. Logical, analytical skills are developed by the


a. left hemisphere of the brain. c. central hemisphere of the brain.
b. right hemisphere of the brain. d. anterior hemisphere of the brain.
ANS: A PTS: 1 KEY: pg 134
25. Which of the following terms would not be associated with the right hemisphere of the brain?
a. Synthesizing c. spatial
b. Linear d. intuitive
ANS: B PTS: 1 KEY: pg 136

26. Which of the following terms would be associated with the left hemisphere of the brain?
a. Nonrational c. abstract
b. Nonverbal d. imagining
ANS: C PTS: 1 KEY: pg 136

27. All of the following are characteristics of a creative climate except


a. a large variety of personality types.
b. an enjoyment in experimenting with new ideas.
c. restricted communication with outsiders.
d. a willingness to accept change.
ANS: C PTS: 1 KEY: pg 140

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28. The four phases in the creative process in order are
a. background or knowledge accumulation, incubation, idea experience, and evaluation and implementation.
b. idea experience, background or knowledge accumulation, incubation, and evaluation and implementation.
c. incubation, background or knowledge accumulation, idea experience, and evaluation and implementation.
d. evaluation and implementation, idea experience, incubation, and background or knowledge accumulation.
ANS: A PTS: 1 KEY: pg 133

29. Which of the following statements is true with regards to creativity?


a. peoples approach will remain the same, but their process will change.
b. peoples process will remain the same, but their approach will change.
c. peoples approach and process will both remain the same.
d. peoples approach and process will both change.
ANS: B PTS: 1 KEY: pg 130

30. People practice the creative search for background knowledge in which of the following ways:
a. join professional groups and organizations c. a and b
b. attend seminars or professional meetings d. socializing at parties
ANS: C PTS: 1 KEY: pg 132

31. The idea experience phase of creativity is also referred to as


a. the eureka factor c. the wow theory
b. the big bang theory d. the light bulb going on
ANS: A PTS: 1 KEY: pg 132

32. Which of the following is not an example of recognizing relationships in creativity?


a. adding fruit juice to soft drinks to make Slice
b. Introducing Sierra Mist to the market to compete with Sprite
c. combining combustion engine technology with the wheel to create the automobile
d. using a 330 pound defensive football player as a running back and wide receiver
ANS: B PTS: 1 KEY: pg 133

33. Which of the following statements is true?


a. Successful innovations are clear and focused.
b. Successful innovations are directed toward unclear applications.
c. Most successful innovations are detailed and ambiguous.
d. Successful innovations are profit motivated.
ANS: A PTS: 1 KEY: pg 141

34. The four types of innovation include which of the following?


a. invention, extension, synthesis, duplication c. synthesis, extension, retention, analysis
b. extension, retention, analysis, duplication d. analysis, synthesis, duplication, retention
ANS: A PTS: 1 KEY: pg 141

35. Which of the following statements is true?


a. A good innovator should be a genius.
b. Innovators rarely work in more than one field.
c. Innovators are poor workers.
d. A good innovator uses only the left side of the brain.
ANS: B PTS: 1 KEY: pg 141

36. Which of the following are sources of innovation?


a. unexpected occurrences and incongruities c. synthesis and technology
b. duplication and processes d. industry changes and extension
ANS: A PTS: 1 KEY: pg 127
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37. Which of the following are causes of industry and market changes?
a. process needs c. unexpected occurrences
b. advancements in technology d. natural disasters
ANS: B PTS: 1 KEY: pg 128

38. Most innovations result from


a. the total genius of inventors.
b. a conscious and purposeful search for new opportunities.
c. lucky guesses.
d. the subconscious adaptation to reality.
ANS: B PTS: 1 KEY: pg 141

39. The combination of existing concepts and factors into a new formulation would define which of the
following terms?
a. Synthesis c. invention
b. Extension d. analysis
ANS: A PTS: 1 KEY: pg 141

40. Ray Krocs development of McDonalds would be a good illustration of which form of innovation?
a. Invention c. duplication
b. Extension d. synthesis
ANS: B PTS: 1 KEY: pg 141

41. A potential entrepreneur needs to realize that


a. there are no principles of innovation.
b. principles of innovation can be learned.
c. monetary gain is the principal motivator in all innovation.
d. profitability is the ultimate key to success.
ANS: B PTS: 1 KEY: pg 142

42. Most successful innovations are


a. simple and focused. c. focused and extensive.
b. complex and focused. d. complex and extensive.
ANS: A PTS: 1 KEY: pg 141

43. Which of the following is not a type of innovation?


a. Invention c. adaptation
b. Duplication d. synthesis
ANS: C PTS: 1 KEY: pg 141

44. A gap or difference between expectations and reality defines


a. process needs. c. demographic changes.
b. incongruities. d. changes in perception.
ANS: B PTS: 1 KEY: pg 127

45. Process needs


a. exist when and entrepreneur can meet a new source of demand.
b. exist to satisfy government regulations.
c. exist when a venture capitalist provides money only for a project filling its needs.
d. exist when the economy suffers a downturn.
ANS: A PTS: 1 KEY: pg 127

46. The phase of the creative process when the idea or solution the individual is seeking is discovered is the
a. background or knowledge accumulation. c. idea experience.
b. incubation process. d. evaluation and implementation.
ANS: C PTS: 1 KEY: pg 132

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47. Shifts in consumer tastes and attitudes are an example of
a. a marketing opportunity. c. the fickle consumer.
b. industry and market changes. d. problems for the entrepreneur.
ANS: B PTS: 1 KEY: pg 128

48. Overnight package delivery can be an illustration for which source of innovation?
a. Incongruities c. process needs
b. unexpected occurrences d. change in perception
ANS: A PTS: 1 KEY: pg 127

49. Retirement centers for older people reflect which source of innovation?
a. industry changes c. perception changes
b. demographic changes d. unexpected occurrences
ANS: B PTS: 1 KEY: pg 128

50. Which of the following is considered a myth of innovation?


a. Creativity relies on blue sky ideas.
b. Small projects develop into successful innovations.
c. Innovations are unpredictable.
d. Creativity can be learned.
ANS: A PTS: 1 KEY: pg 142

51. Which of the following is not considered a principle of innovation?


a. Be action oriented. c. Invest in securities.
b. Start small. d. Reward heroic activity.
ANS: C PTS: 1 KEY: pg 142

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SHORT ANSWER

1. List and briefly explain each of the phases in the creative process.

ANS:

The first phase is known as background or knowledge accumulation. This is the process of
reading, conversations with others working in the field, and general absorption of information relative
to the problem or issue under study. The second phase is the incubation process. This involves the
subconscious, which processes information gathered previously. The third phase is idea experience.
This is when the idea being sought is discovered. Sometimes the idea comes while performing
unrelated tasks. The final phase is known as evaluation and implementation. This phase requires
courage, self-discipline, and perseverance. Ideas are often reworked to obtain a final form. Most
importantly, the entrepreneur doesnt give up.

2. Creative talents can be improved through practice and awareness of habits that can cause problems.
However, there are ways to increase creativity; one area is to recognize relationships. Explain what is
meant by this.

ANS:

Many inventions and innovations are a result of the inventor seeing new and different relationships
between objects, processes, materials, technologies, and people.

3. Creativity is most likely to occur when the climate is right. The text listed several important
characteristics of this climate. What is the right climate?

ANS:

It is a climate where communication flows between a variety of people and fear of management is
rare or nonexistent. This environment displays a willingness to change and rewards innovation.

4. Describe the innovation process.

ANS:

The process begins with a conscious, purposeful search for new opportunities, followed by an
analysis of the sources of new opportunities.

5. The Small Business Innovation Development Act directs that small firms get at least a fixed minimum
percentage of research and development awards made by federal agencies with sizable R&D budgets.
What are the implications of this act?

ANS:

This means that small high-technology firms will receive more federal R&D awards than before.
This will help small businesses remain competitive with larger companies. Under this Act, the SBIR
(Small Business Innovation Research) program was established. Proposals are solicited from small
high technology firms by eleven federal agencies. There are three phases of an R&D award in the
SBIR programs. In Phase I awards are made for research projects intended to evaluate the scientific
and technical merit and feasibility of an idea. These awards generally are $100,000 or less and the
phase lasts about six months. Funding for those projects with the most potential are continued. In
Phase 2 awards of $750,000 or less are made for further development of the innovation. This phase
usually lasts about two years. Phase 3 is characterized by private-sector investment and support that
will bring the innovation to the marketplace.