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Corporate entrepreneurship is often defined
as:-a process that goes on inside an existing firm -and that may lead to new business ventures, the development of new products, services or processes and the renewal of strategies and competitive postures
12-4
Corporate Entrepreneurship
Need for Corporate Entrepreneurship
• Rapid Growth in the number of new and sophisticated competitors
• Sense of distrust in the traditional methods of corporate management
• An exodus of some of the best and brightest people from corporations to become small business entrepreneurs
• International competition• Downsizing of major corporations• An overall desire to improve efficiency and productivity
Approaches of Corporate Entrepreneurship
Two distinct approaches to corporate Entrepreneurship
1. Focused approach to corporate entrepreneurship
2. Dispersed Approach to Corporate Entrepreneurship
1. Focused approach to corporate entrepreneurship
–Autonomous corporate venturing workgroup separated from the rest of the firm
–Frees entrepreneurial team members from constraints imposed by existing norms & routines, facilitates open-minded creativity
–Does isolate the group from the corporate mainstream via•New venture groups•Business incubators
Cont...• New venture groups
– Are semi-autonomous units with an informal structure
– Innovate and experiment– Coordinate with other corporate divisions
– Identify potential venture partners– Gather resources & launch the venture
• Business incubators hatch new businesses– Provide funding, physical space, business services, monitoring, networking
2. Dispersed Approach to Corporate Entrepreneurship
• Dedication to principles and practices of entrepreneurship is spread throughout the firm– Ability to change is a core capability– Stakeholders can bring new ideas or venture opportunities to anyone in the organization
• Two related aspects of dispersed entrepreneurship • Entrepreneurial culture• Product champions
Entrepreneurial Culture
• Culture of entrepreneurship– Search for venture opportunities permeates every part of the organization
– Effect is strongest when it animates all parts of the organization
– Strategic leaders and the culture generate a strong impetus• To innovate• Take risks• Seek out new venture opportunities
Product Champions• Product (or project) champions
– Bring entrepreneurial ideas forward– Identify what kind of market exists for the product or service
– Find resources to support the venture
– Promote the venture concept to upper management
• New project must pass two critical stages– Project definition– Project impetus
Specific Elements of a Corporate Entrepreneurial
Strategy• Developing the Vision• Encouraging Innovation• Structuring for an Entrepreneurial Climate
• Developing individual managers for corporate entrepreneurship
• Developing Venture Teams
Assessing Support for Innovation
• Does the firm encourage self-appointed Intrapreneurs?
• Does the firm provide ways for Intrapreneurs to stay with their enterprises?
• Are people permitted to do the job in their own way, or are they constantly stopping to explain their actions and ask for permission?
• Has the firm evolved quick and informal ways to access the resources to try new ideas?
• Has the firm developed ways to manage many small and experimental products and businesses?
• Is the system set up to encourage risk taking and to tolerate mistakes?
• Are people in your company more concerned with new ideas or with defending their turf?
Encouraging Innovation
• Encourage action
• Use informal meetings whenever possible
• Tolerate failure and use it as a learning experience
• Persist in getting an idea to market
• Reward innovation for innovation’s sake
• Put people on small teams for future-oriented projects
• Encourage personnel to circumvent rigid procedures and bureaucratic red tape
• Reward and promote innovative personnel
3M’s Innovation Rules
• Don’t kill a project• Tolerate failure• Keep divisions small• Motivate the champions• Stay close to the customer• Share the wealth
Structuring for Entrepreneurial climate
• Key Entrepreneurial Climate Factors
– Management support
– Autonomy/work discretion
– Rewards/reinforcement
– Time availability
– Organizational boundary
• Steps to help restructure corporate thinking and encourage an Intrapreneurial environment:⁻ Early identification of potential
Intrapreneurs⁻ Top management sponsorship of
Intrapreneurial projects⁻ Creation of both diversity and order in
strategic activities
⁻ Promotion of Intrapreneurship through experimentation
⁻ Development of collaboration between Intrapreneurial participants and the organization at large
Developing Individual Managers for Corporate
Entrepreneurship• Corporate Entrepreneurship Training Program (Corporate Breakthrough Training)⁻ The Breakthrough Experience⁻ Breakthrough Thinking⁻ Idea Acceleration Process⁻ Barriers and Facilitators to
Innovative Thinking⁻ Sustaining Breakthrough Teams⁻ The Breakthrough Plan
Developing Venture Teams• Venture Team
– A semiautonomous, self-directing, self-managing, high-performing group of two or more people who formally create and share the ownership of a new organization
– The leader is called a “product champion” or an “intrapreneur”
• Collective Entrepreneurship– Individual skills are integrated into a group; this collective capacity to innovate becomes something greater than the sum of its parts
Reference• Corporate entrepreneurship and innovation, Entrepreneurial development within organization, 2nd edition, Michael H.Morris, Ph.D. , Donald F. Kuratko, Ph.D. , Jeffrey G. Colvin, Ph.D