MGT 709 New Venture Creation
Corporate cultureLeadershipStructural features that guide and constrain actionOrganizational systems that foster learning and manage rewardsUse of teams in strategic decision makingWhether the company is product or service orientedWhether the firms innovation efforts are aimed at product or process improvementsThe extent to which it is high-tech or low-tech
Autonomous corporate venturing (work) groupFrees entrepreneurial team members from constraints imposed by existing norms and routinesFacilitates open-minded creativityBut, does isolate the group from the corporate mainstreamNew venture groups (NVGs)Business incubators
Focused Approaches to Corporate EntrepreneurshipAutonomous corporate venturing work group
Goal is to identify, evaluate, and cultivate venture opportunitiesTypically function as semi-autonomous units with little formal structureInvolvement includesInnovation and experimentationCoordinating with other corporate divisionsIdentifying potential venture partnersGathering resourcesLaunching the venture
Business incubators are designed to hatch new businessesIncubators provide some or all of the following functionsFundingPhysical spaceBusiness servicesMonitoringNetworking
Dedication to principles and practices of entrepreneurship is spread throughout the firmAbility to change is a core capabilityStakeholders can bring new ideas or venture opportunities to anyone in the organizationTwo related aspects of dispersed entrepreneurship Entrepreneurial cultureProduct champions
Culture of entrepreneurshipSearch for venture opportunities permeates every part of the organizationEffect is strongest when it animates all parts of the organizationStrategic leaders and the culture generate a strong impetusTo innovateTake risksSeek out new venture opportunities
Product (or project) championsBring entrepreneurial ideas forwardIdentify what kind of market exists for the product or serviceFind resources to support the venturePromote the venture concept to upper managementNew project must pass two critical stagesProject definitionProject impetus
Techniques used to limit the expense of venturing or to cut losses when entrepreneurial initiatives appear doomedComparing strategic and financial goalsAre the products or services offered by the venture accepted in the marketplace?Are the contributions of the venture to the corporations internal competencies and experience valuable?Is the venture able to sustain its basis of competitive advantage?
Techniques used to limit the expense of venturing or to cut losses when entrepreneurial initiatives appear doomedExit championsWilling to question the viability of a venture projectDemand hard evidence and challenge the belief system that is carrying an idea forwardHold the line on ventures that appear shakyReal optionsManaging the uncertainty associated with launching new ventures
How can mature companies act like a startup?Make sure everybody is creating valueReward great people, give them a voiceGet back to market validationEvery presentation around customer painCommunicate a common visionDont waste resources on internal competitionAlign new products with the sales modelHarness entrepreneurial energyReward great ideas, give people autonomy, establish safe havens
How can mature companies act like a startup?Make decisions and act fast speed winsCut the bureaucracy, take risks50% of time in meetingsListen to customers or lead peopleStick to your core competencywork with people who will get the job doneCreate smaller, dynamic units16 person teams in military, minimal org overheadKeep R&D alive
Ecosystem venturingSupports and encourages a network of customers and suppliersValue of benefits for existing businesses divided by invested capital dont lose focusInnovation venturingSpend a proportion of an existing functional budget in a venturing way (e.g. R&D)Focus on commercializing new technologies for existing businessMake sure it stays under a functional head rather than become a general innovation fund
Harvest VenturingConvert existing corporate resources into commercial ventures and then into cashMust not be needed by current or future orgDanger of becoming a new growth unit rather than focusing on existing resourcesPrivate Equity VenturingSetting up a VC operationNeed privileged access to deals in early stage of lifecycle and some value-added for new firmsDanger of being bringing nothing special to the table but thinking you do (hubris)
Focus on low probability projectsLittle attention or commitment from coreNot given enough time or funds (due to competition with core business)Its a tough businessEven VC firms earn below cost of capital on average
The business of discovery is:Doing layers of analysisUnderstanding the political climateResurfacing resistance to sharing informationSeeing the interview as an intervention
Distinguish between the presenting problem and the underlying problemUnderstand the technical problem and how it is being managed (or not)Ask questions about what others are doing to cause or maintain the problemAsk questions about the clients own rolePlan the data collection jointlyInvolve the client in interpreting the dataCondense to a limited number of issuesUse simple languageDevelop a clear and simple picture of what is going onThere may be a similarity between how the client manages you and the organizationTHE PURPOSE OF DISCOVER IS TO GET ACTION, NOT DO RESEARCH
Concentrate on four things beyond the technical considerations:Keep simplifying your inquiry so that is ends up focusing more and more on the next steps the client can takeUse everyday languageGive a great deal of attention to your relationship with the clientInclude the client at every opportunity in deciding how to proceed. Deal with resistance as it arises.Treat technical data as valid and relevant. Also assess how the problem is being managed.The presenting problem is never the real problem!
Ten steps to launch:Reaffirm the proposal content with the buyerBegin doing somethingFind and meet the key playersBegin co-opting resistanceBy-pass islandsPeriodically meet with the buyerMake your successes visible to the organizationShare credit, or even bestow all of itIllustrate closureVisibly make mid-course corrections
Challenge basic premisesIf the internal people had it all figured out, they wouldnt need youSeek documented (objective) validation for bald-faced assertionsEnsure you have alternative sources of information. Dont talk. Listen.Cafeteria, the implementers, customers, suppliers, office staffAsk anyone who volunteers information for examples, frequency, and who else was thereTrust your instincts and history. Search for incongruities.
Avoid being intimidatedEstablish a comfortable first name relationshipNever pose as an expertDont defend yourself with credentials or backgroundTry to meet on neutral turfPush back firmly whenever the situation calls for itNever accept a political role or take sidesBe proactiveDo your homeworkFace setbacks honestlyUnderstand that tomorrows another dayTHE MORE YOU GIVE IN, THE MORE THEYLL EXPECT YOU TO GIVE; THE MORE YOU STAND FIRM, THE MORE THEYLL RESPECT YOU
Avoid intimidating othersDont start by talkingDont start with your process/methodologyStop dropping the buyers nameJoin them in the cafeteriaContribute to company causesObserve social moresDress like everyone elseMaintain confidencesDont take sidesShow humilityNEVER GIVE AN ORDER TO ANY CLIENT PERSONNEL
********Def: attractiveness to marketplace and how it fits corp strategayImpetus: strategic and economic impact is approved by senior managers with expertise on similar projects*****************