Boosting Business Through Innovation: Insights from Top Companies

The Reading section of the IELTS exam often includes passages on diverse topics, challenging the test-taker’s comprehension abilities. Today, we will delve into a real IELTS reading passage centered on company innovation. This article will provide a comprehensive analysis of the passage, followed by a series of questions, detailed answers, common pitfalls, and a vocabulary list to help you master this section.

Real IELTS Reading Passage: Company Innovation

Company Innovation

A
In a shabby office in downtown Manhattan, a group of 30 AI (artificial intelligence) programmers from Umagic are attempting to mimic the brains of a famous sexologist, a celebrated dietitian, a popular fitness coach, and a bunch of other specialists. Umagic Systems is an up-and-coming firm, which sets up websites that enable their clients to seek advice from the virtual versions of those figures. The users put in all the information regarding themselves and their objectives; then it’s Umagic’s job to give advice that a star expert would give. Even though the neuroses of American consumers have always been a marketing focus, the future of Umagic is difficult to predict. However, companies such as Umagic are starting to intimidate major American firms because these young companies regard the half-crazy ‘creative’ ideas as the portal to their triumph in the future.

B
Innovation has established itself as the catchword of American business management. Enterprises have realized that they are running out of things that can be outsourced or re-engineered. Winners of today’s American business tend to be companies with innovative powers such as Dell, Amazon, and Wal-Mart, which have come up with concepts or goods that have reshaped their industries.

Company Innovation

C
According to a new book by two consultants from Arthur D. Little, during the last 15 years, the top 20% of firms in Fortune magazine’s annual innovation survey have attained twice as much the shareholder returns as their peers. The desperate search for new ideas is the stimulus for a large part of today’s merger boom. The same goes for the money spent on licensing and purchasing others’ intellectual property. Based on the statistics from Pasadena-based Patent & Licence Exchange, trade volume in intangible assets in America has gone up from $15 billion in 1990 to $100 billion in 1998, with small firms and individuals taking up an increasing share of the rewards.

D
And that terrifies big companies: it appears that innovative work is incompatible with them. Some major famous companies that are always known for ‘innovative ideas’, such as 3M, Procter & Gamble, and Rubbermaid, have recently had dry spells. Peter Chernin, who runs the Fox TV and film empire for News Corporation, points out that ‘In the management of creativity, size is your enemy.’ It’s impossible for someone who’s managing 20 movies to be as involved as someone doing 5. Therefore, he has tried to divide the studio into smaller parts, disregarding the risk of higher expenses.

E
Nowadays, ideas are more likely to prosper outside big companies. In the old days, when a brilliant scientist came up with an idea and wanted to make money out of it, he would take it to a big company first. But now, with all this cheap venture capital around, he would probably want to commercialize it by himself. So far, Umagic has already raised $5m and is on its way to another $25m. Even in the case of capital-intensive businesses like pharmaceuticals, entrepreneurs have the option to conduct early-stage research and sell out to the big firms when they’re faced with costly, risky clinical trials. Approximately 1/3 of drug firms’ total revenue is now from licensed-in technology.

F
Some of the major enterprises such as General Electric and Cisco have been impressively triumphant when it comes to snatching and incorporating small companies’ scores. However, other grants are concerned about the money they have to spend and the way to keep those geniuses who generated the idea. It is the dream of everyone to develop more ideas within their organizations. Proctor & Gamble is currently switching their entire business focus from countries to products; one of the goals is to get the whole company to accept the innovations. In other places, the craving for innovation has caused ‘a frenzy for entrepreneurship,’ transferring power by establishing internal idea-workshops and tracking inventory so that the talent will stay.

G
Some people don’t believe that this kind of restructuring is sufficient. Clayton Christensen argues in their new book that big firms’ many advantages, such as taking care of their existing customers, can get in the way of the innovative behavior that is necessary for handling disruptive technologies. That’s why there’s been the trend of cannibalization, which brings about businesses that will confront and jeopardize the existing ones. For example, Bank One has set up Wingspan, which is an online bank that in fact competes with its actual branches.

H
There’s no denying that innovation is a big deal. However, do major firms have to be this pessimistic? According to a recent survey of the top 50 innovations in America by Industry Week, ideas are equally likely to come from both big and small companies. Big companies can adopt new ideas when they are mature enough and the risks and rewards have become more quantifiable.

I
Can all the creative destruction, cannibalization, and culture tweaking render the big firms more innovative? David Post, the founder of Umagic, cast doubt on this issue, “The only successful intrapreneurs are ones who leave and become entrepreneurs.” He also recalls with glee the look of incomprehension when he tried to convince the idea lab of a big corporation such as IBM of his “virtual experts” idea three years ago—though, he delightfully adds, “of course, they could have been right. Innovation, unlike sex, parenting, or fitness, is one area where a computer cannot tell people what to do.”

Questions

Paragraph Information Questions (Q28-33)

Each question below is associated with a specific paragraph, A-I. Identify which paragraph contains the relevant information.

28. __ an approach to retaining the best employees
29. __ increasing spending on attaining innovative ideas
30. __ a certain counter-effect produced by integrating outside firms
31. __ an example of three famous innovative American companies
32. __ an example of a company changing its focus
33. __ an example of a company resolving financial difficulties itself

True/False/Not Given Questions (Q34-37)

Decide whether the following statements agree with the information in the passage. Write TRUE if the statement agrees with the information, FALSE if it contradicts the information, and NOT GIVEN if there is no information on this.

34. __ Umagic is the most successful innovative company in this new field.
35. __ Amazon and Wal-Mart exchanged their innovation experience.
36. __ In the past, the originators of new ideas took them to small companies.
37. __ IBM failed to understand Umagic’s proposal of a new idea.

Multiple-Choice Questions (Q38-40)

Choose the correct letter, A, B, C, or D.

38. What is the author’s opinion on innovation in paragraph C?
    A. It only works for big companies.
    B. Fortune magazine has a globally huge influence.
    C. It is becoming increasingly important.
    D. Its effects on American companies are more evident.

39. What is Peter Chernin’s point of view on innovation?
    A. Small companies are more innovative than big ones.
    B. The film industry needs more innovation than other industries.
    C. We need to cut the cost when risks occur.
    D. New ideas are more likely to go to big companies.

40. What is the author’s opinion on innovation at the end of this passage?
    A. Umagic’s success lies in the accidental ‘virtual expert’.
    B. Innovation is easy and straightforward.
    C. IBM sets a good example of innovation.
    D. The author’s attitude is uncertain on innovation.

Answer Keys and Explanations

Paragraph Information Questions (Answers)

28. F – Proctor & Gamble is trying to retain talent by accepting innovations.
29. C – Increased spending on licensing and purchasing others’ intellectual property.
30. G – Disadvantages when big firms adopt innovative behaviors.
31. B – Examples of Dell, Amazon, and Wal-Mart.
32. F – Proctor & Gamble changing focus from countries to products.
33. E – Umagic raising its funds independently.

True/False/Not Given Questions (Answers)

34. False – There’s no indication that Umagic is the most successful.
35. Not Given – The passage doesn’t provide information on this exchange.
36. False – Great ideas were initially taken to big companies.
37. True – IBM did not understand Umagic’s idea.

Multiple-Choice Questions (Answers)

38. C – Innovation is becoming increasingly important.
39. A – Small companies are seen to be more innovative due to less bureaucracy.
40. D – The author casts doubt on whether big firms can truly innovate.

Common Mistakes

1. Misinterpreting Statements: Often, students wrongly interpret the statement’s intent or content. Carefully read the text before concluding.

2. Omitting Inferential Questions: Some questions require reading between the lines. Practice inferential reasoning to avoid mistakes.

3. Ignoring Details: Skipping minor details can lead to wrong answers. Pay attention to specifics provided in the passage.

Vocabulary List

• Outsource (verb) /ˈaʊt.sɔːrs/ – To obtain goods or services from an outside source.
• Reshape (verb) /riːˈʃeɪp/ – To change the form or structure of something.
• Cannibalization (noun) /ˈkæn.ɪ.bəl.aɪˌzeɪ.ʃən/ – The process where new products eat into the sales of existing products.
• Disruptive (adjective) /dɪsˈrʌp.tɪv/ – Innovative in a way that disturbs traditional methods.

Grammar Structures

Complex Sentences

Structure: [Main Clause] + [Subordinate Clause]
Formula: Main Clause + (because, despite, although, etc.) + Subordinate Clause
Example: Although innovations are crucial, big firms often struggle to implement them.

Passive Voice

Structure: [Object] + [Verb to be] + [Past Participle]
Formula: Object + is/are/was/were + Past Participle + (by Subject)
Example: New ideas are often generated by small companies.

By dissecting each aspect of this reading passage, you’ll be better equipped to handle similar tasks in the IELTS exam. Happy studying!