1 Introduction to Corporate Entrepreneurship Monday 12 April 2010 Stephen Spring sfspring@mac.com

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Introduction to Corporate Entrepreneurship

Monday 12 April 2010

Stephen Spring

sfspring@mac.com

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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’

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The ‘cave-person’ perspective of entrepreneurship

• Economic growth • Innovation• Limited resources• Other people’s resources

a few thousand years later . . . . . .

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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)

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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

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Opportunity Evaluation Roadmap

Entrepreneurship

Exploitation of Opportunities

Innovation

Evaluation of Opportunities

Creativity

Identification of Opportunities

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Pet Rocks – The Invention

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Pet Rocks – The Innovation

• Rock sourcing strategy• Packaging strategy• Marketing strategy• Distribution strategy• Funding strategy• Economic analysis• PROJECTED PROFITS

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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!!

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I havean

idea

E N

T H

U S

I A

S M

It works!

The customerlikes it!

It’s notproprietary

The fieldtrial worked!

Failuresin the field

trial

We haveA fix

It works!

New costsLook great

They need allthe sizes?

The bosshates the

project

No, heloves it!

The marketestimate

was wrong

We have an order!

DeliveriesAre late

We’llmake it

They like it

We needdocumentation

‘Several’ failuresreported

Problems solved

Documentationdone!

We have allthe sizes

…and the approvals

…and inventory

…and orders

Yesit is!

Ref: Thierry Volery 2003

The Entrepreneurship Process

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Idea Productivity

3000

500

100

10

5

Log scale

Raw

Ideas

(unw

ritt

en)

Ideas

Subm

itte

d

Sm

all

Pro

ject

s

Larg

e D

evelo

pm

ents

Majo

r D

evelo

pm

ents

Launch

es

Succ

ess

1Ref: Thierry Volery 2003

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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)

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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)

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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

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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

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Evolution of CE

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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

TANGIBLETANGIBLE INTANGIBLEINTANGIBLE

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Corporate Entrepreneurship - Focus

• Corporate Culture– Attitude to risk & uncertainty– Institutional trust– Attitude to failure

• Management of Intangible Assets

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Senior Management, Intangibles & CE

Top-Down Entrepreneurship

Front-Line Entrepreneurship

Strategy Skills Culture Trust

Implementation

Research in progress suggests that management of Intangible Assets is key to CE. Hence…

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