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Passage 3

You should spend about 20 minutes on Questions 27-40, which are

based on Reading Passage 3 on pages 10 and 11.

The role of accidents in business

In 1894 Dr John Kellogg and his brother, Will, were supervising a

hospital and health spa in Michigan. The patients were on a
restricted diet. One day, the brothers left cooked wheat untended
for more than 24 hours. When they returned, they saw what they
had done. It was no good to eat, but they decided to run the stale
wheat through rollers, just to see how it would turn out. Normally,
the process produced long sheets, but they were surprised to
discover that this time the rollers created flat flakes. They baked
them, and then tried the same thing with corn. From this accidental
discovery came the cornflakes that generations have now been
eating for breakfast.

Accidents happen; there is nothing predictable and orderly about

innovation. Nobel laureate Sir Alan Hodgkin, who discovered how
nerve cells transmit electrical impulses between the skin and the
brain, commented: 'I believe that the record of my published papers
conveys an impression of directedness and planning which does
not at all coincide with the actual sequence of events.'

The same rule applies in business. The mistake that gave us

cornflakes keeps repeating itself in the history of disruptive
innovation, the kind that transforms markets. Louis Daguerre, for
instance, discovered the technique that gave us photography in the
1830s, when drops of mercury from a shattered thermometer
produced a photographic image. The microwave was discovered
when Peroy Spender, a scientist with Raytheon, was testing a new
vacuum tube and discovered that the sweet in his pocket had
melted. The artificial sweetener, saccharin, was the unintentional
result of a medical scientist's work on a chemical treatment for
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gastric ulcers. While working for the firm 3M, researcher Art Fry had
no idea he was talking the first steps towards Post-It Notes when he
used bits of adhesive office paper that could be easily lifted off the
page to replace the scrap paper bookmarks that kept falling out of
his hymn book.

Breakthrough and disruptive innovation are rarely driven by orderly

process. Usually they come out of a chaotic, haphazard mess,
which is why big companies, full of managers schooled in business
programmes designed to eliminate random variation and mistakes,
struggle with them. In these sorts of environments, accidents are
called failures and are discouraged.

It is no surprise then that research from the late British economist

Paul Geroski and London Business School's Constantinos
Markides found that companies that were skilled at innovation were
usually not that skilled when it came to commercialisation, and vice
versa. Their book, Fast Second, divides businesses into 'colonists
and consolidators'. Small and nimble, colonists are adept at
creating market niches but are terrible institution builders.
Consolidators, with their strong cultures of discipline and cost
control, know how to take clever ideas from other firms and turn
them into mass-market items. Microsoft is a prime instance of this.

With companies spending hundreds of billions of dollars on

research and development, US academics Robert Austin and Lee
Devin examined how managers can encourage productive slip-ups.
In their article Accident, Intention and Expectation in the Innovation
Process, they argue that business processes actually prevent
helpful mis-steps from occurring. According to their catalogue of
accidents, not all false steps and mishaps are equal. Accidents,
they say, come from unlikely mental associations such as memories
and vague connections, looking for something and finding it in an
unexpected way, looking for one thing and finding something else,
and not looking for anything but finding something valuable.

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Accident-prone innovation, they say, requires companies to get

outside the 'cone of expectation'. It means throwing together groups
from diverse backgrounds, and combining ideas in unpredictable
ways. Other strategies also include having systems that watch out
for accidents and examine them for value, generating them when
they don't happen often enough, seizing on the useful ones,
capturing their valuable features, and building on them to add value
and give potential for useful accidents.

All this, however, requires thinking that is often counter-intuitive to

the way businesses operate. In other words, it is the kind of thinking
that goes against the beliefs of most business managers. It runs
counter to the notion frequently pushed by consultants that you can
'harness' creativity and direct it to line up with intention. 'The cost of
accidents that do not prove valuable are often of concern to people
in business, they write. 'In business, people tend to call such efforts
failure.

There are tentative signs that more companies are starting to

realise that failure can lead to commercial gain, and that this is part
of the risk-taking that underpins innovation. Australia's largest
brewing company, for example, made a bad error when it launched
a new beer called Empire Larger, pitched at younger consumers.
Having spent a fortune creating a beer with a sweeter taste,
designing a great-looking bottle and a television campaign, Foster's
was left with a drink that no-one wanted to buy. The target market
was more interested in brands built up by word of mouth.

Instead of wiping the unsuccessful product launch, Foster's used

this lesson learned to go on and develop other brands instead. One
of them, Pure Blonde, is now ranked as Australia's fifth - largest
beer brand. Unlike Empire Lager, there has been almost no
promotion and its sales are generated more by word of mouth.

Other companies are taking similar steps to study their own slip-
ups. Intuit, the company behind financial tools such as Quicken,
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holds regular 'When Learning Hurts' sessions. But this sort of

transformation is never easy. In a market that focuses on the Short-
term, convincing employees and shareholders to tolerate failure and
not play it safe is a big thing to ask.
Questions 27-31

Do the following statements agree with the claims of the writer in

Reading Passage 3?
In boxes 27-31 on your answer sheet, write

YES if the statement agrees with the claims of the writer

NO if the statement contradicts the claims of the writer
NOT GIVEN if it is impossible to say what the writer thinks about
this

27.The delay in the process used by the Kellogg brothers affected

the final product.
28.Sir Alan Hodgkin is an example of someone whose work
proceeded in a logical and systematic way.
29.Daguerre is an exception to the general rule of innovation.
30.The discovery of saccharin occurred by accident during drug
research.
31.The company 3M should have supported Art Fry by funding his
idea of Post-It Notes.

Questions 32-35

Complete each sentence with the correct ending, A-H, below.

Write the correct letter, A-H, in boxes 32-35 on your answer sheet.

32.The usual business environment

33.Geroski and Markides's book
34.Microsoft is an example of a company which
35.The origin of useful accidents
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A can be found in unusual thoughts and chance events.

B can be taught in business schools.
C has made a success from someone else's invention.
D is designed to nurture differences.
E is unlikely to lead to creative innovation.
F say that all mistakes are the same
G shows that businesses are good at either inventing or selling
H suggests ways of increasing the number of mistakes

Questions 36-40

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

Write the correct letter in boxes 36-40 on your answer sheet.

36.How do Austin and Devin advise companies to get out of the

'cone of expectation'

A by decreasing the number of company systems

B by forming teams of different types of people
C by hiring new and creative people
D by holding regular brainstorming meetings

37.In recommending 'counter-intuitive' thinking, what do Austin and

Devin imply?

A that failing at business is bad for staff morale

B that innovation cannot be planned for
C that most businesses should be devoted to avoiding mistakes
D that the cost of mistakes is an important consideration

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38 The wrier describe the Empire lager disaste in arder to show that
A success can come out of a business failure.
B the majority of companies now value risk-taking.
C TV advertising works better on older people

D young beer drinkers do not like a sweet taste.

39 Pure Blonde has been more successful than Empire Lager
because

A digital media other than TV were used.

B it was advertised under a different brand name
C it was launched with very little advertising.
D the advertising budget was larger.

40 The writer concludes that creating a culture that learns from

mistakes

A brings short-term financial gains

B can be very difficult for some companies
C holds no risk for workers
D is a popular move with shareholders