corporate entrepreneurship (intrapreneurship): … sessions/session notes:2/4... · corporate...

Corporate Entrepreneurship

(Intrapreneurship):

Developing the Entrepreneurial Mindset in

Organizations

Prof. Sudipto Bhattacharya

The Entrepreneurial Economy

• Factors in the emergence of the entrepreneurial

economy:

– The rapid evolution of knowledge and technology promoted

high-tech entrepreneurial start-ups.

– Demographic trends adding fuel to the proliferation of newly

developing ventures.

– The venture capital market became an effective funding

mechanism.

– Industries began to learn how to manage entrepreneurship.

Who Are Intrapreneurs?

• Intrapreneurs are sometimes captured by the description as “a dreamer who does.”

– They tend to be action oriented.

– They can move quickly to get things done.

– They are goal oriented, willing to do whatever it takes to achieve their objectives.

– They are also a combination of thinker, doer, planner, and worker.

– They combine vision and action.

The Nature of Intrapreneurship

• Defining The Concept

– Corporate Entrepreneurship

• Activities that receive organizational sanction and

resource commitments for the purpose of innovative

results.

– A process whereby an individual or a group of individuals, in association

with an existing organization, creates a new organization or instigates

renewal or innovation within the organization.

– A process that can facilitate firms’ efforts to innovate constantly and cope

effectively with the competitive realities that companies encounter when

competing in international markets.

The Need for Corporate Entrepreneurship

• Rapid growth in the number of new and sophisticated competitors

• Sense of distrust in the traditional methods of corporate management

• An exodus of some of the best and brightest people from corporations to become small business entrepreneurs

• International competition

• Downsizing of major corporations

• An overall desire to improve efficiency and productivity

Entrepreneur vs. Intrapreneur

• An entrepreneur is

independent in his operations

• An entrepreneur himself raises

funds required for the

enterprise

• Entrepreneur bears the risk

involved in the business

• An entrepreneur operates from

outside

• Intrapreneur is dependent on

the entrepreneur i.e. Owner

• Funds are not raised by the

intrapreneur

• An intrapreneur doesn’t fully

bear the risk involved in the

enterprise

• Intrapreneur operates from

within the organization itself

Successful Innovative Companies

• Factors in large corporations that are successful

innovators:

– Atmosphere and vision

– Orientation to the market

– Small, flat organizations

– Multiple approaches

– Interactive learning

Reengineering Corporate Thinking

• Steps to develop policies that will help innovative

people reach their full potential:

1. Set explicit goals

2. Create a system of feedback and positive reinforcement

3. Emphasize individual responsibility

4. Give rewards based on results

5. Do not punish failures.

Encouraging an Intrapreneurial Environment

• Steps to help restructure corporate thinking and

encourage an intrapreneurial environment:

1. Early identification of potential intrapreneurs

2. Top management sponsorship of intrapreneurial projects

3. Creation of both diversity and order in strategic activities

4. Promotion of intrapreneurship through experimentation

5. Development of collaboration between intrapreneurial

participants and the organization at large

Benefits of an Entrepreneurial Philosophy

• Leads to the development of new products and

services and helps the organization expand and grow.

• Creates a work force that can help the enterprise

maintain its competitive posture.

• Promotes a climate conducive to high achievers and

helps the enterprise motivate and keep its best people.

Conceptualizing a

Corporate Entrepreneurial Strategy

• Corporate Entrepreneurship (CE) Strategy

– 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.

– It requires the creation of congruence between the entrepreneurial vision of the organization’s leaders and the entrepreneurial actions of those throughout the organization.

Conceptualizing a

Corporate Entrepreneurial Strategy (cont’d)

• Critical steps of a corporate entrepreneurial strategy:

– Developing the vision

– Encouraging innovation

– Structuring for an intrapreneurial climate

– Developing individual managers for corporate entrepreneurship

– Developing venture teams.

Corporate Entrepreneurship Strategy Process

Source: R. Duane Ireland, Donald F. Kuratko, and Jeffrey G. Covin, “Antecedents, Elements, and Consequences of Corporate

Entrepreneurship,” Best Paper Proceedings: National Academy of Management (August 2003)

Model of the

Corporate Entrepreneurship Strategy Process

• Corporate entrepreneurship strategy is manifested

through the presence of three elements:

– An entrepreneurial strategic vision

– A proentrepreneurship organizational architecture

– Entrepreneurial processes and behavior as exhibited

across the organizational hierarchy.

Shared Vision

Source: Jon Arild Johannessen, “A Systematic Approach to the Problem of Rooting a Vision in the Basic Components of an

Organization,” Entrepreneurship, Innovation, and Change (March 1994): 47.

Structuring for a

Corporate Entrepreneurial Environment

• Reestablishing the drive to innovate:

– Invest heavily in entrepreneurial activities that allow new

ideas to flourish in an innovative environment.

– Provide nurturing and information-sharing activities.

– Employee perception of an innovative environment is critical.

• Corporate Venturing

– Institutionalizing the process of embracing the goal of growth

through development of innovative products, processes, and

technologies with an emphasis on long-term prosperity.

Developing Individual Managers for Corporate

Entrepreneurship

• Corporate Entrepreneurship Training Program (Corporate Breakthrough Training)

1. The Breakthrough Experience

2. Breakthrough Thinking

3. Idea Acceleration Process

4. Barriers and Facilitators to Innovative Thinking

5. Sustaining Breakthrough Teams

6. The Breakthrough Plan

Corporate Entrepreneurship

Assessment Instrument

• Key Entrepreneurial Climate Factors

– Management support

– Autonomy/work discretion

– Rewards/reinforcement

– Time availability

– Organizational boundary

Facilitating Intrapreneurial Behavior

• Organizations foster intrapreneurial behavior by:

– Encouraging—not mandating—intrapreneurial activity

– Proper control of human resource policies related to “selected rotation”

– Sustaining a commitment to intrapreneurial projects long enough for momentum to occur.

– Bet on people, not on analysis.

• Rewarding intrapreneuring:

– Allow inventor to take charge of the new venture

– Grant discretionary time to work on future projects

– Make intracapital available for future research ideas

The Ten Commandments Of An Intrapreneurs

Source: Adapted from Intrapreneuring by Gifford Pinchot III, 1985, 22. Copyright © 1985 by Gifford Pinchot III.

Developing Venture Teams

• Venture Team

– A semiautonomous, self-directing, self-managing, high-performing group of two or more people who formally create and share the ownership of a new organization.

– The leader is called a “product champion” or an “intrapreneur.”

• Collective Entrepreneurship

– Individual skills are integrated into a group; this collective capacity to innovate becomes something greater than the sum of its parts.

An Interactive Model of Corporate Entrepreneuring

Source: Jeffrey S. Hornsby, Douglas W. Naffziger, Donald F. Kuratko, and Ray V. Montagno, “An Interactive Model of the Corporate

Entrepreneurship Process,” Entrepreneurship Theory and Practice (spring 1993): 31.

Sustaining Corporate Entrepreneurship

• Sustained Corporate Entrepreneurship Model

– Based on theoretical foundations from previous strategy and entrepreneurship research.

– Considers the comparisons made at the individual and organizational level on organizational outcomes, both perceived and real, that influence the continuation of the entrepreneurial activity.

– Transformational trigger• Something external or internal to the company (e.g., corporate

entrepreneurial activity) that causes a change to take place) initiates the need for strategic adaptation or change.

Corporate Entrepreneurship at IBM

• Emerging Business Opportunity (EBO) Program

Key Rules:

– Think big . . . really big.

– Bring in the A-team.

– Start small.

– Establish unique measurement techniques.