Corporate Entrepreneurship MBAX 6100 Entrepreneurship & Small Business Management Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado

Corporate Entrepreneurship Today’s Agenda  Corporate Entrepreneurship  Is this a good market?  Read  Building Breakthrough Businesses  Understanding Obstacles  M-3 Is This a Good Market?  Entrepreneurial market research – bring laptops. Joseph Yue

Corporate Entrepreneurship Next Week’s Schedule  Corporate Entrepreneurship – Creativity & Innovation  Case: Emerging Business Opportunities at IBM  Read  Bringing Silicon Valley Inside  Feasibility: M-4 Is This a Good Industry?  Read a magazine you would never, ever read & identify a business opportunity  Entrepreneurship Interview  Hand in paper  Be ready to discuss in class

Corporate Entrepreneurship  Week 5 Obstacles to corporate entrepreneurship  Week 6 Innovation in corporations  Week 7 You as an Intrapreneur

Corporate Entrepreneurship What is Corporate Entrepreneurship?  “Formal or informal activities aimed at creating new businesses in established companies through product and process innovations and market developments.” Zahra  “…centers on reenergizing and enhancing the firm’s ability to acquire innovative skills and capabilities.” Morris & Kuratko  “Cost-effective innovation or intrapreneurship” Pinchot

Corporate Entrepreneurship What Are Companies Good At?

Corporate Entrepreneurship Why Should Companies Be Great Places to Be Innovative?

Corporate Entrepreneurship Why Do Companies Need Rules?  Consistent actions  Guide behavior  Help make decisions  Treat employees fairly  Provide consistent quality & service

Corporate Entrepreneurship What Criteria Used to Make Investment Decisions  Tradition & set of shared assumptions  Typically based on technology, not opportunity, eg Corning & fiber optics in the 1960’s  Instinct is to protect existing business, e.g. must purchase from other parts of business

Corporate Entrepreneurship What is the Process for Making Decisions  Traditional evaluation techniques (ROI, market share, quick payback)?  Need for control - very structured approval process – Why?  Detailed business plan that must follow – don’t like surprises  Leads to paralysis by analysis

Corporate Entrepreneurship How Do Corporations Deal With Uncertainty?

Corporate Entrepreneurship Definitions of an Entrepreneur  “Entrepreneurs are societies rejects, instead of becoming hobos, criminals or professors, the start their own business.” Thereau  “Traits of entrepreneurs are closest to juvenile delinquents.”  “Progress depends upon unreasonable men.” GB Shaw  “If I’m in control, I’m probably going to slow.” Mario Andretti  “Road less traveled”, Robert Frost:  “If you ain’t makin’ waves, you ain’t kickin’ hard enough.”

Corporate Entrepreneurship What Have We Learned About Entrepreneurs?

Corporate Entrepreneurship What Are Entrepreneurial Ventures Good At?

How Start-up Actually Happens Inspiration Goals Plan Fooling Around Doing Plans Mistakes Failure Goals Some Other Action Plan Action Goals Inspiration Success Pinchot & Pellman, Intrapreneurship in Action

Corporate Entrepreneurship How Reconcile the Company’s Need for Rules & Creativity’s Need to Break the Rules?

Corporate Entrepreneurship What Are the Obstacles to Corporate Entrepreneurship?  Systems  Organization Structures  Strategic directions  Policies & Procedures  People  Culture Morris & Kuratko, Corporate Entrepreneurship

Corporate Entrepreneurship What Are the Personal Obstacles of the Corporate Entrepreneur?  Too busy with current job  Lack of managerial skills  Don’t understand financial dynamics  Selling skills  Old dog who can’t learn new tricks  Style of management  Lack political savvy  Lack a sense of urgency  Fear of failure Morris & Kuratko, Corporate Entrepreneurship

Corporate Entrepreneurship Focus on structure & processes Rule- following culture Processes & rigid structure Channeled communication + Process control + Efficiency - Loss of flexibility - Stunted innovation - Wrong products - Predictable strategy Source of Bureaucracy Warning Signals Plusses Minuses The Bureaucratic Trap Brown & Eisenhardt. Competing on the Edge: Strategy as Structured Chaos

Corporate Entrepreneurship Similarities Between Start-up & Corporate Entrepreneurs  Opportunity recognition with a defined window  Driven by passionate individual who uses a team to commercialize a concept  Encounter resistance & obstacles requiring persuasiveness  Must convince people to “invest”  Leverage resources  Ambiguity

Corporate Entrepreneurship Differences Between Start-up & Corporate Entrepreneurs  Entrepreneur takes the risk  Entrepreneur owns concept  Unlimited rewards  One error may mean failure  Independence of entrepreneur  Experimentation & flexibility  Quick decision making  Resource limitations  Corporation assumes risk  Corporation owns; no equity  Clear limits  More room for errors  Interdependence of entrepreneur  Rules, procedures, bureaucracy  Long approval cycles  Access to finances, R&D, sales force, distribution channels Start-up Corporate

Corporate Entrepreneurship What Issues Do Corporations Face When They Want to Be Intrapreneurial?  How establish effective reward systems  How treat failure  Types of people who work well in large organizations  Define success as running a larger organization, corner office & corporate kite  Traditional evaluation techniques don’t work (ROI, market share, quick payback)?  Instincts are to protect existing businesses  Is patient capital possible? Phil Knight “Took 18 years to be an overnight success.”