MBAX 6100 Entrepreneurship

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MBAX 6100Entrepreneurship Small Business
Management

• Frank MoyesLeeds College of Business
• University of ColoradoBoulder, Colorado

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Todays Agenda

• Corporate Entrepreneurship II Creativity
  Innovation
• Feasibility Is this a good industry?
• Case Emerging Business Opportunities at IBM
• Read
• Bringing Silicon Valley Inside
• Feasibility M-4 Is This a Good Industry?
• Entrepreneurship Interview

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Next Weeks Schedule

• Corporate Entrepreneurship III You as an
  Intrapreneur
• Case Lucent Technologies
• Feasibility Sustainable competitive advantage
• Speaker Aaron Kennedy of Noodles
• How has Noodles been innovative?
• What problems does Noodles face to be innovative
  in the future?
• What are your recommendations for Kennedy?

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Is this a Good Industry?

• Five forces Michael Porter
• Ease of entry
• Supplier power
• Buyer power
• Threat of substitutes
• Competitive rivalry
• Define your industry broadly
• Good industries are competitively forgiving

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Corporate Entrepreneurship

• Week 5 Obstacles to corporate entrepreneurship
• Week 6 Innovation in corporations
• Week 7 You as an Intrapreneur

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Some Notes on Corporate Entrepreneurship

• Opportunity driven
• Not a lack of ideas execution is key
• Experimentation
• Iterative innovation process
• Learning from failure
• A team with B plan
• Sharing risks rewards

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Some Notes on Corporate Entrepreneurship II

• Venture teams self-directed, self-managing
  high performance
• Support from top management
• Forget, borrow, learn
• Resource attraction
• Do not use corporate services to save money only
  when it gives you a competitive advantage

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What Are the Obstacles to Corporate
Entrepreneurship?

• Systems
• Organization Structure
• Strategic directions
• Policies Procedures
• People
• Culture

Morris Kuratko, Corporate Entrepreneurship
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Systems Obstacles

• Reward evaluation systems
• Oppressive Control systems
• Inflexible budgeting systems
• Arbitrary cost allocation systems
• Rigid planning system

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Systems Decisions

• Reward systems
• Division managers
• Corporate entrepreneurship group
• Intrapreneurs
• Planning systems
• Controls on capital
• How provide sustained funding? How get patient
  capital?
• How avoid decisions that could sink the company?

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Organizational Structure Obstacles

• Too many hierarchical levels
• Responsibility w/o authority
• Top down mgmt
• Restricted communication channels
• Lack of accountability

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Organizational Structure Decisions

• Spin-off separate from divisions part of
  divisions
• Who responsible top management? How handle change
  at top?
• Where locate?
• How measure performance?
• Drive existing divisions out of business?

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Strategic Direction Obstacles

• No innovation goals
• No strategy for Entrepreneurship
• No vision
• Lack of commitment from senior execs
• No Entrepreneur role models at top

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Strategic Direction Decisions

• Time frame for success
• Focus is on short term results
• Profit per share growth vs. higher P/E
• Criteria for success
• Innovation goal
• How choose the ventures?
• IBM cross-IBM resource needs, maturity of their
  strategies and business plans, potential market
  size, valued to be added by corporate insight
• Outside validation?

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Policies Procedures Obstacles

• Long, complex approval cycles
• Extensive documentation requirements
• Unrealistic performance criteria

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Policy Procedures Decisions

• Restrictions on hiring number compensation
• Accounting systems
• Reports environmental, equal opportunity

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People Obstacles

• Fear of failure
• Resistance to change
• Turf protection
• Short-term orientation
• Inappropriate skills/talents

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People Decisions

• Hire entrepreneurs from outside?
• How train intrapreneurs to provide skills?
• Assign experienced leaders or train young people?
• What skills are needed traditional
  entrepreneurial or ability to navigate the
  organization, secure cooperation or support
• How handle turf protection?
• 15 rule

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Culture Obstacles

• Ill-defined values
• No consensus on priorities
• Values that conflict with Entrepreneur's approach
  (innovation, calculated risk taking,
  pro-activeness)
• Definition of success promotion every 3 years,
  corner office, corporate kite
• Entrepreneurial ventures attract mavericks risk
  takers

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Culture Decisions

• How to not trigger the corporate immune system?
• How deal with failure?

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(No Transcript)
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Why Is It So Hard to Predict the Future?
"I think there is a world market for maybe five
computers. Thomas Watson, chairman of IBM, 1943
"This 'telephone' has too many shortcomings to be
seriously considered as a means of communication.
The device is inherently of no value to us."
Western Union internal memo, 1876.
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Why Is It So Hard to Predict the Future?
"The concept is interesting and well-formed, but
in order to earn better than a 'C,' the idea must
be feasible."
"Heavier-than-air flying machines are
impossible." Lord Kelvin, president, Royal
Society, 1895.
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Why Is It So Hard to Predict the Future?
"So we went to Atari and said, 'Hey, we've got
this amazing thing, even built with some of your
parts, and what do you think about funding us?
Or, we'll give it to you. We just want to do it.
Pay our salary, we'll come work for you.' And
they said, 'No.' So, then, we went to
Hewlett-Packard, and they said, 'Hey, we don't
need you. You haven't got through college yet.
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Develop Corporate Innovation Strategy

• Morris Kuratko Obstacles
• Building Breakthrough Businesses Forget,
  Borrow, Learn
• Bringing Silicon Valley Inside resource
  attraction
• IBM case EBOs