Outline of the Lecture

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Outline of the Lecture

• Corporate Entrepreneurship
• Short break
• Video covering a new business development.

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Corporate Entrepreneurship

• Speaker
• BARRIE K. CROSSLEY

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Corporate Entrepreneurship

• Introduction
• (linking with other concepts of entrepreneurship)
• Venturing
• (company activities)
• Intrapreneurs
• (individuals, drivers and barriers)

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INTRODUCTION
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Business Life Cycle and Entrepreneurship
New Entrepreneurial stage needed ?
Sales
Maturity
Consolidation
Entrepreneurial Approach ?
Entrepreneurial ?
Growth
Survival
Inception
Time
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Businesses are faced with...

• Changing dynamic markets
• Globalisation
• Shorter product life cycles
• High rates of technological change
• Pressures to reduce costs
• Changes in business organisation (int. ext.)

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A Possible Response

• Some large firms responded to the changing
  environment by addressing their necessary
  response to working with a dynamic environment
  involving attitudes to
• risk
• innovation
• flexible, rapid response
• changes in management and organisation

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Innovation
Creativity and Innovation are NOT
synonymous. Innovation Creativity
Invention Exploitation Source Rosenfeld and
Serco. 1990
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Role of Innovation
An enterprise that does not daily innovate
inevitably ages and declines even in a
successful business the disease of bureaucracy
and complacency is ever present.
(Drucker). Firms create competitive advantage
by perceiving or discovering new and better ways
to compete in an industry and bringing them to
market, which is ultimately an act of innovation
Michael Porter. The Competitive Advantage of
Nations.
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Schumpeterian Innovation

• Schumpeter (1934). By recombining the factors
  of production to create something new the
  entrepreneur creates a demand
• Innovation could take different forms
• Creation of a new or alternative product
• A new method of production
• Opening a new market
• Capture of a new source of supply
• A new organisation

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• Birkinshaw (2003) identifies four common themes
  in corporate entrepreneurship.
• Corporate Venturing
• Intrapreneuring
• Bringing the Market Inside
• Entrepreneurial Transformation

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Hierarchy of terminology in Corporate
Entrepreneurship
Entrepreneurship
Independent Entrepreneurship
Corporate Entrepreneurship
After Sharma and Chrisman (1999)
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Hierarchy of terminology in Corporate
Entrepreneurship
Entrepreneurship
Independent Entrepreneurship
Corporate Entrepreneurship
Corp. Venturing
Innovation
Strategic Renewal
Int.. Corp. Venturing
Ext.. Corp. Venturing
After Sharma and Chrisman (1999)
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Take care!

• (Corporate Entrepreneurship / Intrapreneurship)
  mean different things to different researchers
• Examples of their use
• The development of an overall entrepreneurial
  climate
• Intra-corporate venturing
• Development initiatives by employees (often
  without asking permission)
• Rationalisation of the business
• See Carter Jones-Evans (2000) for further
  discussion

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Business Level

• VENTURING

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Venturing
Venture Chance, luck, hazard, an undertaking
whose issue is uncertain or dangerous an attempt
- Chambers Dictionary. Key Elements Risk /
uncertainty Innovation / creativity
requiring striving / reward seeking
behaviour. Corporate Venturing The creation of
new businesses Making smaller, high growth
businesses out of large, mature ones
Utilising Internal organic growth, acquisition,
joint ventures or alliances.
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Why venture?

• Growth
• Improved financial returns (e.g. ROI)
• Image (Corporate renewal)
• Technology pressure
• Diversification

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Reasons for venturing
Reasons for venturing US Co. Japanese
Co. Maturity of the base business 70 57 To
meet strategic goals 76 73 To provide
challenges to managers 46 15 To develop future
managers 30 17 To survive 35 28 To
provide employment 3 24 Source Zenas Block
Ian MacMillan Corporate Venturing, Harvard
Business Press 1993
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Policy Ideas - Venturing
Joint Venture
Ext. Co.
External Environment
Merger
Suppliers
Int. venture
Contractors
Encourage Entrepreneurship
Customers
Buy stake
Spin out
Acquisition
Take stake
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Intrapreneurs
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Intrapreneur

• Used by Norman Macrae in an article in the
  Economist. (Christmas Ed. 1976). Applied term to
  managers, professionals and artisans who set up
  small businesses within old and existing
  organisations.
• Some texts suggest that Pinchot was the person
  who first used the term

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Intrapreneur

• Developed by Pinchot (1986)
• An intrapreneur is an entrepreneur within an
  already established organisation. Used to
  describe entrepreneurism within a large
  organisation, rather than establishment of small
  businesses within a large organisation.

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• Gibb (1988) An Intrapreneur is an employee of a
  large organisation who has the entrepreneurial
  qualities of drive, creativity, vision and
  ambition.
• Gibb goes on to state that these people differ
  from entrepreneurs as they wish to retain the
  security of the large organisation.
• A number of authors define Intrapreneur and
  related terms. See Sharma and Chrisman (1999).

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Intrapreneurs
May have these characteristics in common with
independent entrepreneurs
Ability to work amidst confusion Ability to
anticipate change Ability to make intuitive
leaps High energy levels Creativity in problem
solving Action orientation
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.. But want ...
BUT may differ .
Want less restrictive but supportive
environment Want recognition Want their ideas to
be a vehicle for advancement Want the security
(pay cheque, pension etc)
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Intrapreneurs and entrepreneurs share.

• Entrepreneurial characteristics
• Vision Flexibility
• Action Orientated
• Dedicated
• Persistent / overcome failure
• Self determined goal setters
• Source Pinchot 1986.
• Intrapreneuring. Harper Row.

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Intrapreneurs need in addition

• An ability in a Multi-disciplinary role
• To understand the environment
• To encourage open discussion
• Be able to create management options
• To build a coalition of supporters.

• Source Pinchot 1986.
• Intrapreneuring. Harper Row.

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Corporate Entrepreneurs as Change Masters

• Change Master A term used by Rosabeth Moss
  Kanter
• Three Stages of the journey
• Formulate and Sell,
• Power to advance,
• Maintain Momentum.

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Intrapreneurs as Change Masters

• A term used by Rosabeth Moss Kanter
• Three Stages of the journey Formulate and Sell,
  Power to advance, maintain Momentum.
• Skills Personal and Interpersonal
• Step outside of conventional thinking
• Often generalists with kaleidoscopic thinking,
  vision communicators, persistent individuals,
  coalition team builders, willing to share credit

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Rosebeth Moss Kanters View

• Corporate entrepreneurs are people who envision
  something new and make it work. Being a corporate
  entrepreneur, what I call a change master is
  much more challenging and fun than being a
  non-entrepreneur. It requires more of a person,
  but it gives back more self-satisfaction.
• Rosabeth Moss Kanter (1988). Handbook for
  Creative and Innovative Managers. McGraw Hill.

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Intrapreneurial Behaviour

• May be seen as good news
• High achievement motivation
• High task commitment

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Intrapreneurial Behaviour

• May be seen as mild irritants
• High levels of informal networking
• Informal recruitment (This could be a major
  problem)

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Intrapreneurial Behaviour

• May be seen as serious problems
• Independence
• Non-acceptance of rules and boundaries
• Non-compliance with planning and control systems
• Conflict with authority

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Developing Intrapreneurship
FRAMEWORK CONDITIONS
Encourage Individual Intrapreneurs
Encourage Entrepreneurial Enterprise
Encourage General Entrepreneurial Culture
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Barriers to an Intrapreneurial Culture

• Barriers Include
• Senior management feel alienated
• hierarchical nature of the organisation
• Corporate culture
• Short term performance requirements
• Planning procedures
• Source Gibb 1990

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Barriers to an Intrapreneurial Culture

• Barriers (continued) Include
• Lack of ownership of the problem
• Mobility of managers
• lack of flexibility in the organisation
• methods of compensation
• Source Gibb 1990

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An Intrapreneurial culture needs

• Sponsors
• Continuous involvement
• Autonomy of the intrepreneurial team
• Ability to cross boundaries
• See Pinchot (1986)

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An Intrapreneurial culture needs

• (needs continued)
• A tolerance of risk and failures
• Long term objectives
• Making resources available
• Introducing suitable compensation schemes.
• See Pinchot (1986)

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Druckers Entrepreneurial Practices

• Druker suggests some key management practices are
  vital in the development of entrepreneurship in
  an existing business.
• Management focuses on opportunity
• Generation and maintenance of entrepreneurial
  spirit
• Top-down and cross functional interaction
• Source Drucker, P. Innovation Entrepreneurship.
  Pan 1986

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The final word ..
Intrapreneurs cannot exist if their passionate
commitment is ignored and their visions given to
people who dont understand them. Without
intrapreneurs, innovation flounders Source
Pinchot (1986)
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Video

• Consider
• Entrepreneurial characteristics of the characters
• Involvement of the owners
• Reactions to change
• Problems and how they are addressed
• How networks are used.
• How learning takes place.
• Attitude to risk.