Corporate Entrepreneurship

what five key company capabilities is a sustainable competitive advantage believed to derive from?

- adaptability: the ability to adjust on a timely basis to new technologies, customer needs, regulatory rules and other changes in conditions without losing focus on causing significant disruption of core operations and commitments (external) - flexibility: the ability to design company strategies, processes, and operational approaches that can simultaneously meet the diverse and evolving requirements of customers, distributors, suppliers, financiers, regulators, and other key stakeholders (internal) - speed: the ability to act quickly on emerging opportunities, to develop new products and services more rapidly, and to make critical operational decisions without lengthy deliberations - aggressiveness: an intense, focused, and proactive approach to eliminating competitors, delighting customers, and growing employees - innovativeness: a continuous priority on developing and launching new products, services, processes, markets, and technologies, and on leading the marketplace

product innovation frontier

- can meet a need of a consumer that has yet to be met by other products and be completely new - it could also just consist of a minor modification or improvement to an existing products (IPhone)

strategic entrepreneurship

- comes in multiple forms - all forms involve organizationally consequential innovations that are adopted in the pursuit of competitive advantage - can happen at any time, anywhere in the company

seeker firms

- companies that displayed a number of appropriate innovation practices, but came up short in terms of innovation performance and company-wide commitment to innovation - tend to lack communication

spectator firms

- companies who tended to acknowledge the importance of innovation but provided little support for it - they shunned formal programs for innovation and were reluctant to seek outside ideas and perspectives - most problems stem from poor CEO or management practices

multiplicative conceptualization

- consists of multiplying the degree of innovation by the degree of risk-taking by the degree of proactiveness - each degree is rated on a scale of 1 to 5 therefore a company will be scored on a scale of 1-125 - scoring is restrictive and weights each score based upon other scores

imitation

- copying, adapting or mimicking the innovations of other firms - to the left of the innovativeness and risk-taking parabola meaning that there is a high degree of risk

domain framework

- corporate entrepreneurship is made up of two processes: internal innovation, and strategic renewal > internal innovation: "venturing through the creation of new businesses within existing organizations (Toyota creating the Lexus brand) > strategic renewal: "the design of corporate initiatives that transform organizations (Netflix)

Growth Crisis

- deals with the challenge of achieving sustainable entrepreneurship

risk-taking

- defined as "the willingness to pursue opportunities that have a reasonable likelihood of producing losses or significant performance discrepancies" - in corporate entrepreneurship the emphasis is on taking calculated, moderate risks rather than extreme and uncontrolled ones - entrepreneurs need to be aware and understanding of the "financial, technical, market, and personal" risks involved - the greatest risks occur when a company refuses to take risks and be innovative

traditional R&D

- department that works improving current products and creating new ones - sole source of innovation for the comany

what is the primary lesson of the organizational life cycle

- entrepreneurial spirit is key - for a business to be successful they must make changes according to the situational contingencies that accumulate overtime before they become too old and too big eventually dying out.

resource leveraging

- entrepreneurs do not own or even control every resource but rather the resources can be "rented, leased, shared, contracted for, outsourced, or employed temporarily - the idea of leveraging allows the entrepreneur to have more limited financial commitment, limit their risk and increase the flexibility that the firm is able to have because they have less money tied up in their resources

implementing and managing the concept stage

- fifth stage in the entrepreneurial process - this stage involves the entrepreneur "creating the new" - there is a great deal of uncertainty for the entrepreneur in this stage because it is new to everyone - it is important for the entrepreneur to possess two major keys: "tolerance of ambiguity... and adaptibility"

growth through collaboration stage

- fifth stage of Greiner's organizational life cycle - in this stage the company generally simplify procedures, reduce the staff within the head office, create matrix structures, encourage experimentation, etc. - this is where the growth crisis occurs

start up and early growth stage

- first stage of Greiner's organizational life cycle - this is were the initial venture is launched and penetrates the market - work environment is fun and exciting but also tiring and stressful - in this stage, some companies hit the Leadership Crisis

identifying the opportunity

- first stage of the entrepreneurial process - entrepreneurship begins with an opportunity rather than a creative idea - there needs to be a sustainable market for any idea to be successful

acquiring necessary resources

- fourth stage in the entrepreneurial process - entrepreneurs can leverage resources

growth through coordination stage

- fourth stage of Greiner's organizational life cycle - coordination takes place by centralizing all operations - the head office will coordinate marketing, human resource management, research and development, etc. -this coordination will lead to a smooth running company with sustained growth - red tape crisis

star firms

- high-performance companies that had successfully integrated innovation and creativity into their daily business practices (Apple, Ideo, etc)

Red Tape Crisis

- in this crisis the companies rigid structure is often to restricting and therefore hinders innovation

continuous innovation

- incremental or step at a time innovation - performance of an existing product is enhanced, new features are added, etc. - slightly to the left of the innovativeness and risk-taking parabola meaning that there is a low degree of risk - i.e. making a light bulb burn for an extra 100 hours

what is the probable shape of the relationship between innovativeness and risk-taking?

- innovativeness is on the x-axis and risk-taking is on the y-axis - upward facing parabola - on the left of the parabola is "little to no innovative activity" which yields a high amount of risk - on the right side of the parabola is high levels of innovation (home run strategy) which also yields a high amount of risk - in the middle of the parabola is a moderate level of innovation (lots of trials and experiments/balanced portfolio of projects) which yields the lowest level of risk

what does corporate entrepreneurship represent

- it represents a framework for facilitating ongoing change and innovation in established organizations - also represents the opportunity-given process of value creation for organizations large and small to achieve the goal of gaining a competitive advantage over one another > this process represents the shift of a manager from being reactive into becoming proactive when reacting to environmental changes

process frontier

- main goal is to find new and better ways to accomplish a task or function - products in this frontier may not be unique but this frontier can lower costs, speed up production or delivery, and improve customer service (Wendy's)

New Venture Divisions or Groups

- more permanent source of innovation - works as epicenter for entrepreneurship for the company - the problem with this is the innovations may not go in the same direction or be supported by the mainstreams company

external corporate venturing

- new businesses are created by parties outside the corporation and subsequently invested or acquired by the corporation - these businesses are typically in their growth stages

internal corporate venturing

- new businesses that are created and owned by the corporation - typically resides within the corporate structure

Leadership Crisis

- occurs during the start up and early growth stage - where the company is growing in size and is starting to need someone or a group of people to make decisions about things such as professional management, formal structures, administrative systems, budgets, and controls

Autonomy Crisis

- occurs in the growth through direction stage - as the company grows it is major need of a hierarchy where a person or group is able to take charge and delegate jobs to the people the "employees"

proactiveness

- occurs when a company acts on their environment, rather reacting to it - works to influence their environment, highlighting the fact that people can influence their environment as much as their environment can influence them - requires a good amount of perseverance and adaptability of the entrepreneur in order to get their idea implemented

Ad Hoc Venture Teams

- reactive way to respond to competitive threats - "here's the concept, the budget, and a deadline--go for it"

cooperative or joint corporate venturing

- refers to entrepreneurial activity in which new businesses are created and owned by the corporation together with one or more external partners - typically outside the corporate structure

additive conceptualization (authors prefer this method)

- scoring is independent and does not weight each score based upon the other scores - scores for each degree range from a 1 to 5 and added up - therefore the range of scores that a firm can get go from 3-15

defining the business concept

- second stage in the entrepreneurial process - characteristics are > being unique and hard to imitate > giving the user an overt benefit > it has to be feasible > it can be implemented > needs to be profitable

growth through direction stage

- second stage of Greiner's organizational life cycle - during this stage the company is move as a whole unit in a direction that is advantageous or beneficial to the company - this is where companies meet the Autonomy Crisis

harvesting the venture

- sixth and final stage in the entrepreneurial process - harvesting has to deal with "how returns will be realized, over what time period, and the manner in which the concept will eventually be absorbed by some other business entity, spun off, replaced, eliminated, or allowed to die a natural death"

corridor principle

- states that "with every venture launched, new unintended opportunities arise" - this principle is associated with the "most entrepreneurial initiatives fail" myth of entrepreneurship

less restrictive definition of a new business

- suggests that firms need not move from their current positions on both the market and product dimensions in order to enter - in other words, it is a small adjustment or change in what the firm is currently doing

three reasons why corporate entrepreneurs do not leave the firm and start their own ventures

- the ability to obtain the necessary resources needed to start up a new venture - the potential to operate on a fairly significant scope and scale fairly quickly - job security

corporate venturing

- the adding of a new business (or portions of new businesses via equity investments) to the corporation - main idea is that the corporation is creating an entirely new business - can occur in 3 modes: 1. internal 2. cooperative or joint 3. external > a firm does not have to choose just one method but could combine two or all three - a firm's total venturing activity is equal to the sum of the ventures enacted through these three modes

Champions and the Mainstream

- the authors main focus in the textbook - provides the entire organization with the opportunity to innovate - "its up to everyone, including you"

new or improved services frontier

- the companies in the service industry must be continually innovating and improving because services can be replicated to easily (Uber)

start-up entrepreneurship

- the entrepreneur is taking the risk and owns the concept - potential rewards are theoretically unlimited - high vulnerability from outside influences (little security - limited access to resources

degree of entrepreneurship

- the extent to which events are innovative, risky, and proactive - can be measured through multiplicative conceptualization and additive conceptualization

what are the two key environments that must be considered in order to understand modern corporations and to construct effective strategies

- the external environment: "everything outside the company including the competitive, customer, technological, economic, regulatory, social, labor, and supplier environments - the internal environment: "the structures, systems, processes, and culture that make up the climate with which people do the work of a company" (it is the job of the manager to continually adapt the strategy of the company in order to meet the need of the constantly changing external invironment)

results of the latest PDMA "Best Practices Survey"

- the more a company emphasizes innovation, creativity, and aggressiveness (risk-taking), the more successful the company will be - most successful companies need to rely heavily on efficient communication throughout the entire company - most new products commercialized by firms are not radically different from that firms existing products (Dyson Vacuums)

what is the entrepreneurial imperative

- the new role that management must take in order to stay with the exponential changes happening to the business environment

entrepreneurship

- the process of creating value by bringing together a unique combination of resources to exploit an opportunity > can be applied to any organizational context > create value in the organizations and market place > put unique resources together > involves opportunity driven behavior

management

- the process of setting objectives and coordinating resources, including people, in order to attain those objectives > it is a transformation process where technical, human and conceptual skills are used to transform inputs into outputs > they need to be planners, organizers, communicators, coordinators, leaders, motivators, controllers, and most importantly and facilitator > most successful organizations have a good balance between entrepreneurship and management. this allows the firm to operate in a effective and efficient manner. (therefore, managers must become entrepreneurs)

frequency of degree

- the question of how many entrepreneurial events take place within a company over a given period of time

how a company keeps corporate entrepreneurs

- they must create an environment of entrepreneurial freedom where the employee is very minorly limited

assessing the resource requirements

- third stage in the entrepreneurial process - although money is an important resource it is not the only one - other resources include > well established contacts and networks > a patent > a good location > support from a senior executive, etc.

growth through delegation stage

- third stage of Greiner's organizational life cycle - senior management focuses on strategic moves and acquisitions through delegation - in this stage delegation takes the form of creating different divisions and units - this is where companies meet the Control Crisis

discontinuous innovation

- this is a breakthrough innovation - results in a product or service that address a need that has not been addressed before or that change the way customers go about addressing a need - to the right of the innovativeness and risk-taking parabola meaning that there is a high degree of risk - i.e. integrated circuit, cellular telephone, and microwave oven

Control Crisis

- this is the part where senior management feels as if they are losing control of the company because it is becoming so big and diversified - in this crisis there is a large lack of communication which causes the company to duplicate processes and send mixed signals to other divisions of the company and customers.

rest firms

- those firms that fail to meet the three requirements of a best firm

the entrepreneurial grid

- two dimensional matrix that has the number of entrepreneurial events on the vertical axis and the degree to which these events are innovative, risky and proactive on the horizontal axis - 5 scenarios: 1. periodic/incremental 2. continuous/incremental 3. periodic/discontinuous 4. dynamic 5. revolutionary

corporate entrepreneurship

- used to describe entrepreneurial behavior inside established mid-sized and large corporations > involves the generation, development and implementation of new ideas and behaviors by a company > it is the use of innovation, strategic renewal, and corporate venturing - the company assumes all the risks > the company owns the concept and typically the intellectual rights surrounding the concept > clear limits are placed on the financial rewards entrepreneurs can receive > they are more protected from outside influence > can take their time exploring options with the concept

leveraging

- used to exploit existing corporate competencies in new product or market arenas - all about effectively and efficiently using all of the resources and competencies that a firm has in order to build a "new business" - associated with "current resource exploitation" because the intention is to squeeze every last bit out of a resource so that nothing goes to waste.

revolutionary

- when there is a high frequency and high degree of entrepreneurial events occurring - located in the top right corner of the entrepreneurial grid

continuous/incremental

- when there is a high frequency and low degree of entrepreneurial events occurring - located in the top left corner of the entrepreneurial grid

periodic/discontinuous

- when there is a low frequency and high degree of entrepreneurial events occurring - located in the bottom right corner of the entrepreneurial grid

periodic/incremental

- when there is a low frequency and low degree of entrepreneurial events occurring - located in the bottom left corner of the entrepreneurial grid

dynamic

- when there is a moderate frequency and moderate degree of entrepreneurial events occurring - located in the middle of the entrepreneurial grid

three frameworks or models that integrate corporate entrepreneurship into strategic management

1. Domain framework 2. Sustaining framework 3. strategic integration framework

two types of managers in terms of the entrepreneurial grid's dichotomy

1. The change adapter (Ray Kroc; McDonald's) 2. The change creator (Steve Jobs; Apple)

two categories that the latest PDMA "Best Practices Survey" placed firms into

1. best firms 2. rest firms

two categories of phenomena that represent the major forms that corporate entrepreneurship can take

1. corporate venturing 2. strategic entrepreneurship

four types of innovation

1. discontinuous innovation 2. dynamically continuous innovation 3. continuous innovation 4. imitation

six stages of the entrepreneurial process

1. identify the opportunity 2. define the business concept 3. assess the resource requirements 4. acquire necessary resources 5. implement and manage concept stage 6. harvest the venture

three underlying dimensions of entrepreneurship

1. innovation 2. risk-taking 3. proactiveness

two sets of motives defined by the Tidd & Taurins (1999) study

1. leveraging 2. learning

two dimensions of the corporate growth strategy that together define a "new business"

1. product focus 2. market focus

three innovation frontiers (in which innovation can take form)

1. product innovation 2. new or improved services 3. process

two types of risk associated with the timing of an entrepreneurial venture

1. sinking the boat 2. missing the boat

three categories of firms produced by the 1993 Synectics analysis

1. stars 2. seekers 3. spectators

what are the stages of Greiner's (1972) organizational life cycle

1. start up and early growth stage 2. growth through direction stage 3. growth through delegation stage 4. growth through coordination stage 5. growth through collaboration stage

what are the seven ways that entrepreneurship can be manifested within established companies (they are not mutually exclusive)

1. traditional R&D 2. Ad Hoc Venture teams 3. New Venture Divisions or Groups 4. Champions and the mainstream 5. Acquisitions 6. Outsourcing Innovation 7. Hybrid forms

Hybrid form

a combination of some of the ways to manifest entrepreneurship

what is the fundamental choice that established companies are being faced with

they are faced with the choice of becoming victims to the "new ventures, products, technologies, and patents or join the "revolution" and not let the the start-up companies overtake existing markets - this means that companies have to continually adapt to their markets, consumers, and competitors and always maintain a competitive advantage.

best firms (3 requirements)

those firms: 1. that were most successful or in the top third of their industry's success rate for new product development initiatives - above the mean for overall sample in terms of 2. reported innovation programs, success rates 3. percentage of sales and profits generated from recently introduced products

what is the fundamental purpose of this book

to address the question of "what does it take to transform a non-entrepreneurial company into a highly entrepreneurial company"

what is the purpose of this course

to answer the question of "what it takes to transform a non-entrepreneurial company into a highly entrepreneurial company" by learning the fundamentals of entrepreneurship and how it can be applied within a company

what is the ultimate objective that managers seek as they sift through the various theories, concepts, technologies and tools available to them

to continually have a sustainable competitive advantage

definition of opportunity

- "a favorable set pf circumstances creating a need or an opening for a new business concept or approach"

definition of business concept

- "an innovative approach for capitalizing on an opportunity"

sustaining framework

- "focuses on an organization's ability to sustain entrepreneurship on an ongoing basis" - this is not achieved by the organization but rather the individuals within the organization

strategic integration framework

- "focuses on the ongoing integration of entrepreneurship throughout the entire organization, which is very different than viewing it as a discrete activity or event or behavior"

why is it important to understand the similarities between start-up entrepreneurship and corporate entrepreneurship

- "it helps dispense the notion that corporate entrepreneurship is just a popular management fad and that interest in it will fade once the consultants and popular business writers move on to the next tool, concept, or perspective" - " it is vital that both the senior executives who commit the company to an executive path, as well as the champions within organizations expected to carry out the entrepreneurial mission, understand the phenomenon with which they are dealing" (they must continue taking risks and being innovative) - "virtually all of the research on entrepreneurship has emphasized the start-up context" (don't forget where you came from)

Outsourcing Innovation

- "lets have someone else develop it for us, and then we'll make the money" - saves money on employee costs, real-estate costs - frees up current workforce

most restrictive definition of a new business

- "that which results from diversification" - in other words, it is created when a firm develops a new product that they have never worked with before and distributes and sells this product to a new market that they have not yet reached out too

innovation

- "the concern is with the relative emphasis on concepts or activities that represent a departure from what is currently available" - expresses concern with the question "to what extent is the company doing things that are novel, unique, and different?" - one reason why companies tend to avoid innovation is because some of the new products tend to cannibalize the companies current products

Acquisitions

- "we can buy growth and obtain the products, markets, and technologies of others

what do established companies need to do

- a company must first find their entrepreneurial imperative (spirit) - they must then reflect on the various aspects of their business asking the question "what more can we possibly ring out of the business?" - then they must apply their radical entrepreneurial approach to these aspects in question

dynamically continuous innovation

- a dramatic improvement over a state-of-the-art solution - slightly to the right of the innovativeness and risk-taking parabola meaning that there is a low degree of risk - i.e. first electric tooth brush, laptop computer

missing the boat

- a form of risk that consists of not pursuing a course of action that would have proven profitable - generally occurs when a competitor jumps on the opportunity faster

sinking the boat

- a type of risk that deals with a poorly thought-out concept, bad timing, an already satisfied market, inadequate marketing and distribution approaches and inappropriate price levels

three major challenges associated with the political factor that face the corporate entrepreneur

- achieving credibility or legitimacy for the concept and the entrepreneurial team - obtaining resources - overcoming inertia and resistance (the greatest challenge)

two models of entrepreneurial growth

- acquiring growth through another entity - organic growth: where companies are innovative themselves and take chances at the new opportunities they find (Walmart)