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Corporate Strategy and Entrepreneurship

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E The contemporary business environment can be characterized in terms of: increasing risk decreased ability to forecast fluid firm and industry boundaries new rules of the game new structural forms that not only allow for change but also help create it.

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E Strategic Inflection Points An inflection point occurs when the old strategic picture dissolves and gives way to the new, allowing the adaptive and proactive business to ascend to new heights An inflection point occurs when the old strategic picture dissolves and gives way to the new, allowing the adaptive and proactive business to ascend to new heights How can organizations know when the time is right to make changes? How can organizations know when the time is right to make changes?

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E Strategic Management In essence, strategic management is the formulation of long-range plans for the effective management of external opportunities and threats in light of a companys internal strengths and weaknesses In essence, strategic management is the formulation of long-range plans for the effective management of external opportunities and threats in light of a companys internal strengths and weaknesses Involves a continuous search for competitive advantages Involves a continuous search for competitive advantages

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E Mintzberg (1987) 5 Ps of Strategy Strategy as a Plana consciously intended course of action Strategy as a Plana consciously intended course of action Strategy as a Ploya specific maneuver to outwit competitors or opponents Strategy as a Ploya specific maneuver to outwit competitors or opponents Strategy as a Patterna consistent patterned stream of actions Strategy as a Patterna consistent patterned stream of actions Strategy as a Positiona means of locating the organization within a competitive environment Strategy as a Positiona means of locating the organization within a competitive environment Strategy as a Perspectivea cognitive state-of- mind held by organizational decision-makers Strategy as a Perspectivea cognitive state-of- mind held by organizational decision-makers

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E Dominant Logic refers to the way in which managers conceptualize the business and make critical resource allocation decisions The dominant logic that is optimal for the firm in todays environment may well be inappropriate for the environment that will exist five years hence

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E One means of creating a dynamic dominant logic is to make entrepreneurship the basis upon which the organization is conceptualized and resources are allocated As dominant logic, entrepreneurship promotes strategic agility, flexibility, creativity, and continuous innovation throughout the firm

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E The integration of entrepreneurship with strategy has two aspects: Entrepreneurial Strategy Entrepreneurial Strategy Application of creativity and entrepreneurial thinking to the development of a core strategy for the firm Strategy for Entrepreneurship Strategy for Entrepreneurship The need to develop a strategy for the entrepreneurial activities of the firm

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E Ireland, Covin, and Kuratko (2009) define an entrepreneurial strategy as a vision-directed, organization-wide reliance on entrepreneurial behavior that purposefully and continuously rejuvenates the organization and shapes the scope of its operations through the recognition and exploitation of entrepreneurial opportunity.

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E CV Model 1 BS Observed Configurations of the Corporate Venturing- Business Strategy Relationship CV Model 2 BSCV Model 3 BS CV Model 4 BS Model 5 CV BS CV = Corporate Venturing BS = Business Strategy

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E 1. Where does the firm want to be in the entrepreneurial grid? 2. To what extent is the entrepreneurial emphasis in the company that of growing new business and starting new ventures outside the mainstream of the firm vs. transforming the existing enterprise and its internal operations into a more entrepreneurial environment?

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E 3. In what areas does the firm want to be an innovation leader vs. an innovation follower vis-a-vis the industry? 4. In what areas of the firm is management looking for higher vs. lower levels of entrepreneurial activity?

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E 5. What is the relative importance over the next three years of product vs. service vs. process innovation? 6. To what extent is innovation expected to come from senior management, middle management, or first-level management?

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E Management attempts to draw a balance across five metrics: 1. High risk, high-return projects against lower- risk, lower return projects 2. Discontinuous or dynamically continuous innovations against continuous innovations and imitations 3. Projects with shorter development cycles and payoffs against ones with longer-term outcomes 4. Products/services intended for markets the firm currently serves against ones for markets that are new to the firm 5. Projects utilizing new and emerging technologies against those relying on technologies with which the firm is familiar

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E Moderate Innovation Success Probability High Innovation Success Probability Highest Innovation Success Probability Low Innovation Success Probability Moderate Innovation Success Probability High Innovation Success Probability Lowest Innovation Success Probability Low Innovation Success Probability Moderate Innovation Success Probability High Medium Low MediumHigh Firms Knowledge Pertaining to the New Products/Services Targeted Market Firms Knowledge Pertaining to the New Products/Services Core Technology

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E Technology represents both an opportunity and threat for entrepreneurial activity Technology has shortened product life cycles, leading to smaller windows of opportunity in which innovation can occur. This has forced entrepreneurs to have an exit strategy even as the innovation is in the development stages.

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E Technology allows firms to achieve sustainable competitive advantages if management determine: 1. How the firm will use technology to position its products/services in the marketplace 2. How the firm will use technology to enhance its internal processes

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E Sustaining Technologies maintains a rate of improvement, giving customers more or better in the attributes, cannot get much better Speed, quality, size Speed, quality, size Disruptive Technologies introduces a different sets of attributes than ones customers historically value Introduction of microwave oven Introduction of microwave oven Creates new markets or new applications Creates new markets or new applications

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E Technology-push employees within the firm (usually technically qualified engineers or scientists) see a technical possibility and strive to capitalize on it. These individuals see a new way in which a technology might be applied. Market-pull innovations start with the customer and are typically driven by marketing people. Customers are often the source of the new idea.

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E Strategic Positioning Strategic Positioning is concerned with how the firm wants to be perceived in the marketplace is concerned with how the firm wants to be perceived in the marketplace Entrepreneurial strategy is all about positioning. It is a process of perceiving new positions that attract customers from established ones or draw new customers into the market Entrepreneurial strategy is all about positioning. It is a process of perceiving new positions that attract customers from established ones or draw new customers into the market Effective strategic positioning is critical for competitive advantage Effective strategic positioning is critical for competitive advantage

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E Strategic Flexibility and Adaptation Strategic flexibility involves a willingness to rethink continuously and make adjustments to the firms strategies, action plans, and resource allocations and to the company structure, culture, and managerial systems Strategic flexibility involves a willingness to rethink continuously and make adjustments to the firms strategies, action plans, and resource allocations and to the company structure, culture, and managerial systems

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E The following 5 factors contribute to building strategic leadership: A unique set of dynamic core competencies A unique set of dynamic core competencies Creative approaches to human capital Creative approaches to human capital Effective incorporation of new and emerging technologies Effective incorporation of new and emerging technologies Strategic alliances and a global market presence Strategic alliances and a global market presence Company structures that are flattened and cultures that stress learning and accountability for innovation Company structures that are flattened and cultures that stress learning and accountability for innovation

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E Exercise Strategic Leadership Build Dynamic Core Competencies Focus and Develop Human Capital Contingency workers and outsourcing Contingency workers and outsourcing Developing employee skills Developing employee skills Effectively use New Technologies Manufacturing technologies Manufacturing technologies Information technologies Information technologies Engage in Valuable Strategies Exploit global markets Exploit global markets Use cooperative strategies Use cooperative strategies Develop New Organization Structures and Culture Horizontal organization Horizontal organization Learning and innovative culture Learning and innovative culture Manage as a bundle of assets Manage as a bundle of assets Strategic Flexibility Competitive Advantage

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E Strategic Leverage Leveraging refers to doing more with less Leveraging refers to doing more with less Corporate entrepreneurs and entrepreneurial companies are brilliant leveragers of resources Corporate entrepreneurs and entrepreneurial companies are brilliant leveragers of resources Getting to the future first is more a function of resourcefulness than resources Getting to the future first is more a function of resourcefulness than resources

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E Resource leveraging has a number of dimensions: Stretching resources much further than others have done in the past Stretching resources much further than others have done in the past Getting uses out of resources that others are unable to realize Getting uses out of resources that others are unable to realize Using other peoples/firms resources to accomplish the entrepreneurs own purpose Using other peoples/firms resources to accomplish the entrepreneurs own purpose

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E Complementing one resource with another to create higher combined value Complementing one resource with another to create higher combined value Using certain resources to obtain other resources Using certain resources to obtain other resources

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E Flaw 1: Misunderstanding industry attractiveness Flaw 2: No real competitive advantage Flaw 3: Pursuing an unsustainable competitive position Flaw 4: Compromising strategy for growth Flaw 5: Failure to explicitly communicate strategy internally

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E Developing an entrepreneurial vision Increasing the perception of opportunity Institutionalizing change Instilling the desire to be innovative Investing in peoples ideas Sharing risks and rewards with employees Recognizing the critical importance of failure