1. Entrepreneurship & Small Business Management Corporate Venturing
Frank Moyes Leeds College of Business
University of Colorado Boulder, Colorado
Corporate Venturing

2. Today’s Agenda Dancing Elephants Lucent Technologies case
Introduce Part III
Talk to people
Next Week – Spring Break
March 28-29
Entry Strategies
Jim Sharpe case
April 4-5: Topic to be chosen by the class
Corporate Venturing

3. Are Dancing Elephants Possible?
Record of corporate venturing
What are corporations good at? Not so good?
What are entrepreneurs good at?
Corporate Venturing

4. Record of Corporate Venturing
Internal ventures
1965 to 1975 ¼ of Fortune 500 had. 80% disappeared
1980’s & late 1990’s same fate
Average venture life is 4-5 years.
VC funds average life is 4 years
Corporate Venturing

5. Corporate Venture Attempts
GM and Saturn
IBM and PC in Boca Raton
Fleet Street Bank & inner expansion
3M 15% of time on bootleg projects
Public education & charter schools
Corporate Venturing

6. What Are Corporations Good At?
What Are Corporations Good At?
Exploiting well defined, stable markets
Marshalling large resources
Continuous improvement & repetition
Understand profit, cash flow
Developing systems & controls
Maximizing ROI in the short term
Corporate Venturing

7. 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 Venturing

8. 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
Approval process
Large amounts of money
Specialization – engineering, marketing, sales, finance, hr, stakeholder: shareholders, investment community, unions
Mistakes ruin your career
Corporate Venturing

9. How Do Corporations Deal With Uncertainty?
Approval levels
Must follow the plan once approved
Short term time horizon
Analysis to point of paralysis
Establish controls – HR, accounting, legal, marketing
Status reports, special reports
Corporate systems & services
Communications
Corporate Venturing

10. What Issues Do Corporations Face When They Want to Be Intrapreneurial?
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.”
Corp vp deal with tattoo, earring, t-shirt that says “Fuck You”
Brian software engineer come in at 2:00am
Corporate Venturing

11. 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 Venturing

12. What Have We Learned About Entrepreneurs?
Opportunity driven, which means
Understands competition
Understands market: size, trends, accessibility
Understand customers through direct contact
Tolerance for ambiguity
Locus on control
Take risks
Creative
Impatient
Not tied to conventional approach
Corporate Venturing

13. What Are Entrepreneurial Ventures Good At?
Focus all resources & time on creating a successful venture
Trial & error (ready, fire, aim)
Quick decisions
Using OPR’s
Instant communications
Recruiting & motivating world-class employees
Corporate Venturing

14. You Work for Large Corporation. How Do You Get Elephants to Dance?
Corporate Venturing