Presentation on theme: "The Unique Nature of Corporate Entrepreneurship"— Presentation transcript:
1 The Unique Nature of Corporate Entrepreneurship Chapter 2The Unique Nature of Corporate Entrepreneurship
2 Question 1: What are the six (6) steps of the entrepreneurial process?
3 Entrepreneurial Realities: Understanding the Process This process consists of six stages:Identifying the opportunityDefining the business conceptAssessing the resource requirementsAcquiring the necessary resourcesImplementing and managing the conceptHarvesting the venture
4 Question 2: What are three (3) key questions that an entrepreneurial manager must consider when looking for opportunities?
5 Entrepreneurial Realities: Understanding the Process Identifying the opportunityAn opportunity is “a favorable set of circumstances creating a need or an opening for a new business concept or approach”Most new product failures are the result of little to no market demand or need, no matter the innovative, state-of-the-art advancesKey opportunity-based questions facing managers: (1) source(s) of opportunity; (2) size of opportunity; and (3) sustainability of opportunity
6 Entrepreneurial Realities: Understanding the Process Defining the business conceptA business concept is “an innovative approach for capitalizing on an opportunity”New product or serviceNew process for accomplishing a taskA good business concept should:Fulfill a user’s need(s)UniqueNot easy to imitateReasonably implementedProfitable
7 Question 3: What are some non-financial resources required or recommended for entrepreneurial success?
8 Entrepreneurial Realities: Understanding the Process Assessing the Resource RequirementMoney is necessary, but not sufficient to an entrepreneurial ventureEntrepreneurial success if often a function of other resourcesInsight/opportunity recognition abilitiesContact network (e.g., customers, suppliers, etc.)Prior knowledge/skillsMotivated employees/team membersMany other things…
9 Question 4: What is “resource leveraging” Question 4: What is “resource leveraging”? How can it help entrepreneurs develop a concept?
10 Entrepreneurial Realities: Understanding the Process Acquiring the Necessary ResourcesBeyond simply purchasing resources, entrepreneurs obtain resources in novel ways (e.g. resource leveraging)Their unconventional ability to acquire resources without letting go of precious financial capitalResources developed by entrepreneurs are more likely to create advantages (Barney, 1986)Lessens risk and increases the firm’s flexibility
11 Entrepreneurial Realities: Understanding the Process Implementing and Managing the ConceptTypically a hectic, uncertain, and ambiguous propositionImportant to have tolerance and adaptabilityGiven a significant time horizon for most innovations, successful entrepreneurs often set intermediate targets to track progress; “firefighting” mentality = loose sight of overall goal
13 Entrepreneurial Realities: Understanding the Process Harvesting the ventureProduct/service life cycles decreasing and resources are becoming more quickly obsoleteThreats to business are increasing, but so are opportunitiesHarvesting a venture involves how returns will be realized, over what time period, and the eventual outcome of the ventureE.g., absorbed/purchased other business entity, spun off, replaced, eliminated, “die”, etc.
14 How Corporate Entrepreneurship Differs “Entrepreneurship is the process of creating value by bringing together a unique combination of resources to exploit an opportunity.”The Entrepreneurial Context is never defined, thus, entrepreneurship can occur in:Start-up venturesSmall firmsMid-sized companiesLarge conglomeratesNon-profit organizationsPublic sector agencies
15 Question 6: What are some of the similarities between traditional start-up entrepreneurs and corporate entrepreneurs? What are some of the differences?
16 How Corporate Entrepreneurship Differs Similarities between start-up and corporate entrepreneurshipBoth involve opportunity recognition and definitionBoth require a unique business concept that takes the form of a product, service or processBoth are driven by an individual champion who works with a team to bring the concept to fruitionBoth require that the entrepreneur be able to balance vision with managerial skill, passion with pragmatism, and proactiveness with patienceBoth involve concepts that are most vulnerable in the formative stage, and that require adaptation over time
17 Similarities (continued): Both entail a window of opportunity within which the concept can be successfully capitalized uponBoth are predicated on value creation and accountability to a customerBoth find the entrepreneur encountering resistance and obstacles, necessitating both perseverance and an ability to formulate innovative solutionsBoth entail risk and require risk management strategiesBoth find the entrepreneur needing to develop creative strategies for leveraging resourcesBoth involve significant ambiguityBoth require harvesting strategies
18 How Corporate Entrepreneurship Differs Major differencesStart-up EntrepreneurshipCorporate EntrepreneurshipEntrepreneur takes the riskCompany assumes the risks, other than career-related riskEntrepreneur “owns” the concept or innovative ideaCompany owns the concept, and typically the intellectual rights surrounding the conceptEntrepreneur owns all or much of the businessEntrepreneur may have no equity in the company, or a very small percentagePotential rewards for the entrepreneur are theoretically unlimitedClear limits are placed on the financial rewards entrepreneurs can receiveOne mis-step can mean failureVulnerable to outside influenceMore room for errors, company can absorb failureMore insulated from outside influenceIndependence of the entrepreneur; although the successful entrepreneur is typically backed by a strong teamInterdependence of the champion with many others; may also have to share credit with any number of people
19 Major differences continued Start-up EntrepreneurshipCorporate EntrepreneurshipFlexibility in changing course, experimenting or trying new directionsRules, procedures and bureaucracy hinder the entrepreneur’s ability to maneuverSpeed of decision-makingLonger approval cyclesLittle securityJob securityNo safety netDependable benefit packageFew people to talk toExtensive network for bouncing around ideasLimited scale and scope initiallyPotential for sizeable scale and scope fairly quicklySevere resource limitationsAccess to finances, R&D, production facilities for trial runs, an established sales force, an existing brand, distribution channels that are in place, existing databases and market research resources, and an established customer base
20 Question 7: How might these differences help or hinder corporate entrepreneurship? In other words, what differences make CE easier or harder for entrepreneurial managers?
21 Question 8: What role does company politics or political skill play on corporate entrepreneurship?
22 How Corporate Entrepreneurship Differs Corporate entrepreneurs face three major challenges linked to the need for interorganizational political skills:Achieving credibility or legitimacy for the concept and the entrepreneurial teamObtaining resourcesOvercoming inertia and resistance
23 Question 9: What are the three (3) main reasons successful corporate innovators continue to work for established businesses as opposed to starting their own venture? How can that help managers identify ways to keep entrepreneurial employees and encourage entrepreneurial attitudes and behaviors?
24 How Corporate Entrepreneurship Differs Corporate entrepreneurs remain in the corporate environment rather than starting their own ventures for three main reasons:The size of the resource base that they can tap intoThe potential to operate on a fairly significant scope and scale fairly quicklyThe security they enjoy when operating in an existing companyOrganizational politics is one of the main reasons corporate entrepreneurs leave the company
25 How Corporate Entrepreneurship Differs To cultivate an environment of entrepreneurship within an organization, managers must:Create environments where employees have a sense that resources can be accessed if a idea is soundFind ways to reinforce the ability of anyone in the firm to champion an idea and get it implementedInvest in the development of people
26 Rules for Fostering an Innovative Organization Rule #1 - Unreasonable ExpectationsRule #2 - Elastic Business DefinitionRule #3 - A Cause, Not a BusinessRule #4 - New VoicesRule #5 - An Open Market for IdeasRule #6 - Create an Open Market for CapitalRule #7 - Open a Market for TalentRule #8 - Low-Risk Experimentation
27 Question 10: What are the seven (7) primary ways entrepreneurship appears in organizations? Briefly describe them.
28 Where to Find Entrepreneurship within a Company Seven Ways in Which Entrepreneurship is Manifested in Established CompaniesTraditional R&DAd Hoc Venture TeamsNew Venture Divisions or GroupsChampions and the MainstreamAcquisitionsOutsourcingHybrid Forms
29 Question 11: According to the Guth and Ginsburg (1990) model, what two types of processes are within the domain of corporate entrepreneurship? What are the four (4) factors that drive their activity and performance?
30 General Frameworks for Understanding Corporate Entrepreneurship Fitting Corporate Entrepreneurship Into Strategic ManagementENVIRONMENTSTRATEGICORGANIZATIONORGANIZATIONCompetitiveLEADERSCONDUCT / FORMPREFORMANCETechnologicalCharacteristicsStrategyEffectivenessSocialValues/BeliefsStructureEfficiencyPoliticalBehaviorProcessStakeholderSatisfactionCulture(2)(3)(4)(5)(1)CORPORATEENTREPRENEURSHIPInnovation / VenturingStrategic Renewalwithin Establishedof EstablishedCorporationsCorporationsSource: William D. Guth and Ari Ginsberg, “Corporate Entrepreneurship,” Strategic Management Journal 11 (Summer 1990): 5-15.
31 General Frameworks for Understanding Corporate Entrepreneurship A Model of Sustained Corporate EntrepreneurshipExternalTransformationalTriggerCorporateEntrepreneurialActivityOrganizationalAntecedentsRewardsManagement SupportResources (i.e. time availability)Supportive Organizational StructureRisk TakingIndividualBehaviorPerceivedActivity-OutcomeRelationshipPerceived DecisionOutcome-RelationshipOutcomesexistenceperception(Individual Comparison)(Firm Comparison)
32 Question 12: What are the three (3) main drivers of corporate entrepreneurship activity according to Ireland, Covin, and Kuratko (2009)? And FYI, Duane Ireland is a proud TTU alumni!