Corporate Entrepreneurship (Intrapreneurship): … Sessions/Session Notes:2/4... · Corporate...
Transcript of Corporate Entrepreneurship (Intrapreneurship): … Sessions/Session Notes:2/4... · Corporate...
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Corporate Entrepreneurship
(Intrapreneurship):
Developing the Entrepreneurial Mindset in
Organizations
Prof. Sudipto Bhattacharya
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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.
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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.
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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.
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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
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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
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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
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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.
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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
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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.
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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.
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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.
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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)
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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.
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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.
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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.
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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
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Corporate Entrepreneurship
Assessment Instrument
• Key Entrepreneurial Climate Factors
– Management support
– Autonomy/work discretion
– Rewards/reinforcement
– Time availability
– Organizational boundary
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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
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The Ten Commandments Of An Intrapreneurs
Source: Adapted from Intrapreneuring by Gifford Pinchot III, 1985, 22. Copyright © 1985 by Gifford Pinchot III.
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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.
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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.
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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.
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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.