1 Introduction to Corporate Entrepreneurship Monday 12 April 2010 Stephen Spring

2 Entrepreneurs Which are you? –There are those that make it happen –There are some that watch it happen –Then there are the others that wonder what happened Entrepreneurs ‘Make it Happen’

3 The ‘cave-person’ perspective of entrepreneurship Economic growth Innovation Limited resources Other people’s resources a few thousand years later......

4 Invention vs Innovation "An innovation is distinguished from an invention. An innovation brings something new into use, whereas an invention brings something new into being.” (Rogers, 1962) “The criteria for success of an invention are technical, whereas for an innovation the criteria are commercial.” (Burgelman & Sayles, 1986)

5 Entrepreneurship “The carrying out of new combinations we call enterprise; the individuals whose function it is to carry them out we call entrepreneurs.” Schumpeter 1911 “Entrepreneurship is a process by which individuals – either on their own or inside organizations – pursue opportunities without regard to the resources they currently control.” Stevenson and Jarillo 1990

6 Opportunity Evaluation Roadmap Entrepreneurship Exploitation of Opportunities Innovation Evaluation of Opportunities Creativity Identification of Opportunities

7 Pet Rocks – The Invention

8 Pet Rocks – The Innovation Rock sourcing strategy Packaging strategy Marketing strategy Distribution strategy Funding strategy Economic analysis PROJECTED PROFITS

9 Pet Rocks – Entrepreneurship Get money Get rocks Get packaging made Get printing done Get distribution Get retailers Get promotion Etc. MAKE MORE MONEY Entrepreneurs make it happen!!

10 I have an idea E N T H U S I A S M It works! The customer likes it! It’s not proprietary The field trial worked! Failures in the field trial We have A fix It works! New costs Look great They need all the sizes? The boss hates the project No, he loves it! The market estimate was wrong We have an order! Deliveries Are late We’ll make it They like it We need documentation ‘Several’ failures reported Problems solved Documentation done! We have all the sizes …and the approvals …and inventory …and orders Yes it is! Ref: Thierry Volery 2003 The Entrepreneurship Process

11 Idea Productivity Log scale Raw Ideas (unwritten) Ideas Submitted Small Projects Large Developments Major Developments Launches Success 1 Ref: Thierry Volery 2003

12 Corporate Entrepreneurship "Entrepreneurship is studied for a variety of reasons, but the overriding reason for current interest in the topic is the widespread belief that entrepreneurship activity stimulates general economic development as well as the economic performance of individual firms.” (Covin and Slevin 1991, p. 9)

13 Risk vs Uncertainty “the essence of entrepreneurship involves responsibility for 'uncertainty' - facing un-measurable and unquantifiable risks rather than betting on situations (as in a casino) where the odds have been well established by many prior trials” Knight (1921) 13

14 Why Corporate Entrepreneurship? Most companies don’t survive past 50 years –Demand evolves –Competition develops –They don’t reinvent themselves fast enough CE required to evolve and reinvent –Entry to new markets –Creative destruction of existing business Research suggests CE associated with –Improved corporate financial performance –Reduced systematic risk Ref Zahra 1991, Foster & Kaplan 2001

15 Types of Corporate Entrepreneurship Front-line Entrepreneurship –External Corporate Venturing –Intrapreneuring –Internal Corporate Venturing Top-down Entrepreneurship –Strategic Renewal –Cultural Renewal Ref Covin & Miles 2001, Birskishaw 2004

16 Evolution of CE

17 Independent vs. Corporate Entrepreneurship Independent Entrepreneurship Key Risk –Business Funding –Personal Funding Resource Needs –Funding –Customers –Market Access –Infrastructure Corporate Entrepreneurship Key Risk –Corporate Support –Career Resource Needs –Trust –Reputation/Brands –Staff –Knowledge –Contacts Ref Spring & Gillin 2005 TANGIBLEINTANGIBLE

18 Corporate Entrepreneurship - Focus Corporate Culture –Attitude to risk & uncertainty –Institutional trust –Attitude to failure Management of Intangible Assets

19 Senior Management, Intangibles & CE Top-Down Entrepreneurship Front-Line Entrepreneurship StrategySkillsCultureTrust Implementation Research in progress suggests that management of Intangible Assets is key to CE. Hence…