Internal Entrepreneurship at the Dow Chemical Company Case BA 560 Fall, 2005 Prof. Dowling

“If you always do what you’ve always done, you’ll always get what you’ve always gotten.”

What is the genesis of the epoxy.com project? Class Question: What is the genesis of the epoxy.com project?

Class Question: What were important skills, characteristics and abilities of Ian Telford prior to the e-epoxy.com venture?

How did you vote on the request from Telford for $100,000? Class Question: How did you vote on the request from Telford for $100,000?

Case Question #1 If you had been a member of the ELT in November 1999 when Ian Telford asked for initial funding of $100,000, would you have voted ‘for’ or ‘against’ providing the funding? Your answer needs to focus on why you voted for or against.

Case Question #1 -- Class Discussion Questions What are the arguments for funding the $100,000? What are the arguments against funding the $100,000?

Additional Class Discussion Question Given the number of reasons against Telford’s venture, why did Vermaak approve the project?

Case Question #2 What is your evaluation of Ian Telford, the internal (corporate) entrepreneur? Make your evaluation criteria clear.

Case Question #2 -- Class Discussion Questions What evaluation criteria should be applied to Telford? Based on these criteria, how did you evaluate Telford?

Case Question #3 How would you judge the performance of the corporate sponsors (within Dow Chemical) of Telford’s project? Focus on the top 4 or 5 key issues/factors. Make your evaluation criteria clear.

Key Sponsor Issues/Factors HR development: Encourage & reward entrepreneurial activities Identify potential entrepreneurs Match the right opportunity with the right entrepreneur Empower but also be hands-on as coach and mentor Plan personal development of entrepreneurs

Key Sponsor Issues/Factors Execution Skills: Ensure integrity of the project Personal belief and public support of the concept (‘skin in the game’) Set tough but realistic goals, budget & schedule Demand results Tolerate ‘idea’ failures

Key Sponsor Issues/Factors Political skills: Sell upwards effectively Key linkage to corporate resources: financial, HR, time Provide political cover Provide exposure and career building opportunities for internal entrepreneurs Provide project leadership/sponsorship continuity

Case Question #4 What are the ‘lessons learned’ from the performance of Ian Telford that would be helpful to you as a potential internal (corporate) entrepreneur?

Class Discussion Question What are the key ‘lessons learned’? How might these lessons be applied to other situations? What caution should be exercised in applying these lessons to other situations?

Application to Other Situations … The engine for internal growth is the internal entrepreneur Internal entrepreneurs need to be developed/hired, nurtured, and rewarded commensurate with results The internal entrepreneur needs a network to function effectively. This social capital needs to be built/earned. It cannot easily be imported from outside.

Application to Other Situations … “Small wins” encourage others to become more entrepreneurial Sponsors are key to success; more importantly sponsors and entrepreneurs need to be matched proactively The most critical variable in creating a long-term environment for internal entrepreneurship is a supportive organizational context set by top execs in the firm

Cautions ... Sponsors come and go during a new internal venture; the successful entrepreneur needs to carefully cultivate new support for the venture over time as key players change (as Telford did) Corporate growth can be top down driven or bottom-up (organic). Organic growth is almost impossible without a supportive culture and top management leadership

Characteristics of Effective Internal Entrepreneurs Personality Traits: Integrity Political savvy Honest about mistakes; takes feedback from sponsors Shares credit Breaks rules but always stays true to the corporate vision and values

Characteristics of Effective Internal Entrepreneurs Experience: Established track record; brings credibility and social capital Long tenure within firm helps General manager not a narrow expert; ability to think laterally

Characteristics of Effective Internal Entrepreneurs Behaviors: Ability to discover a profitable value proposition Ability to communicate and market the value proposition; energy & passion Ability to mobilize resources; networking ability Ability to assemble and motivate a team of experts.

Characteristics of Effective Internal Entrepreneurs Behaviors: Ability to deliver results Ability to take informed risks, make timely decisions, and be unafraid of consequences of breaking the rules and the possibility of failure Ability to ramp up (execution skills) or pull the plug (provide career ‘escape routes’ for team members)