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Corporate entrepreneurship:
teaching managers to be
entrepreneurs

Corporate
entrepreneurship

329

Neal E. Thornberry
School of Executive Education, Babson College, Babson Park,
Massachusetts, USA

Received August 2002

Accepted September
2002

Keywords Corporate entrepreneurialism, Management development, Training,

Business development, Innovation
Abstract In good and bad economic times, innovation is a requisite for companies seeking to
remain competitive especially in uncertain and turbulent times. Many organizations are
increasingly looking to corporate entrepreneurship as a way of combating the lethargy and
bureaucracy that often accompany size. But can mangers, who are expected to act like
entrepreneurs really be trained to do so? The purpose of this study, then, was to determine whether
large companies, through management education and action learning projects, could indeed turn
mangers into corporate entrepreneurs. Four large organizations, that had embarked on
formalized corporate entrepreneurship management development programs formed the basis
for this field research. Results indicate that many managers can indeed be trained to act like
entrepreneurs and that these actions can result in significant new value creation. However,
companies who embark on corporate entrepreneurial development programs also need to be aware
of the pitfalls and problems that can happen, when newly trained corporate entrepreneurs re-enter
the organization.

Introduction
In the last decade, we have seen unprecedented organizational transformation,
especially in North America and Europe. Global competition has forced many
large companies to adopt the Jack Welch model at GE of becoming lean and
agile. Restructuring, reengineering, downsizing, rightsizing, delayering, etc., these are the business buzz words and processes that we have
all become familiar with, both in the literature and the realities of life in a large
corporation.
In the late 1980s, large companies like IBM, DEC, Siemens and others found it
increasingly difficult to compete with the multitude of smaller, faster, more
opportunistic companies challenging them in the market place, with lower prices,
faster service, newer designs, and faster product development. This phenomenon
of the smaller feeding on the larger has not been confined solely to the high-tech
industry alone. Although the declines of some of these large companies were
more dramatic in this industry, the assault of smaller, more agile competitors has
also affected manufacturing and finance as well. Many large banks had to buy
their smaller rivals in order to survive, and manufacturing in the USA had to
reinvent itself in order to compete on worldwide bases.

Journal of Management Development

Vol. 22 No. 4, 2003
pp. 329-344
q MCB UP Limited
0262-1711
DOI 10.1108/02621710310467613

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The competitive pressures on large companies to become lean and agile have
helped many of them survive. Many are leaner and more agile; with fewer
management layers, increased dependence on lateral relations and team
structures, and increasingly enabled by technology. Leanness can, and often
does, have a dramatic effect on the bottom line, but it does not automatically
translate into growth or the development of a long-term competitive advantage
(Covin and Miles, 1999), since almost everyone with a benchmarking kit can
now learn how to become more efficient.
The proliferation of dot.coms has also brought tremendous pressure to
companies still operating in old economy models. Amazon.com, for example,
has forced Barnes & Noble to seriously re-evaluate and change the major
elements of its business model. Peapod.com has changed the way many people
shop for groceries, and Autobytel.com has forced GM and others to put up their
own Web sites in direct competition with their own dealerships. Even though a
number of these dot.coms have struggled or stumbled as of late, their new
business models are clearly here to stay.
Corporate entrepreneurship is quickly becoming a weapon of choice for
many of these large companies. Corporate entrepreneurship is an attempt to
take both the mindset and skill set demonstrated by successful start-up
entrepreneurs and inculcate these characteristics into the cultures and activities
of a large company. Corporate entrepreneurship can be a powerful antidote to
large company staleness, lack of innovation, stagnated top-line growth, and the
inertia that often overtakes the large, mature companies of the world. At the
same time, teaching managers to behave like start-up entrepreneurs is a tall
order, but a number of large companies have already embarked on this path.
While the idea of corporate entrepreneurship has been around for a number
of years (Covin and Slevin, 1991; Stopford and Baden-Fuller, 1993, 1994;
Pinchot, 1985; Block and MacMillan, 1993), large companies are looking anew
at this concept, in their increasing search for real growth mechanisms. Four
broad typologies or categories of corporate entrepreneurship have been
identified in the literature, namely:
(1) corporate venturing;
(2) intrapreneuring;
(3) organizational transformation; and
(4) industry rule-breaking.
Corporate venturing involves the starting of businesses within a business,
usually emanating from a core competency or process. A bank, for example,
which has a core competency in transaction-processing, turns this into a
separate business and offers transaction-processing to other companies who
need mass processing of information. Thermo-Electron in the Boston area took
its core competency in industrial and medical laser technology and started a
new venture involving hair removal salons utilizing their laser technology.

Intrapreneuring, first espoused by Pinchot (1985), is an attempt to take

Corporate
the mindset and behaviors that external entrepreneurs use to create and entrepreneurship
build businesses, and bring these characteristics to bear inside an existing
and usually large corporate setting. Start-up entrepreneurs are often
credited with being able to recognize and capture opportunities that others
have either not seen or not thought worth pursuing. Companies wishing to
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spur innovation and find new market opportunities are most often
interested in trying to inculcate some of these entrepreneurial values into
their culture by creating intrapreneurs. In an attempt to improve
shareholder value, Motts, the well-known food manufacturer, tried to create
a cadre of internal entrepreneurs to spur innovation and new business
development. They selected 18 candidates who were carefully screened to
serve in this capacity.
The third type involves corporate renewal or transformation. This type
of entrepreneurship only fits the original Schumpeterian definition if the
transformation involves innovation, a new arrangement or combination of
resources, and results in the creation of sustainable economic value. A
middle manager at Sun Financial Group reorganized the internal value
chain of his department in order to create a new and unique service
proposition to their agents. As a result, the companys service delivery was
given both a speed and cost advantage over their competitors. In fact, this
manager wound up using fewer resources in developing his new business
model.
The fourth type of corporate entrepreneurship is a subset of transformation,
but involves not only transformation of the enterprise but also the competitive
environment of the industry into something significantly different than it was.
Stopford and Baden-Fuller (1993, p. 522) label this behavior as frame-breaking
change. Toyota, for example, in the automobile industry, changed the rules of
the game by producing low cost automobiles with exceptionally high quality.
US and European auto manufacturers were forced by Toyota and other
Japanese automakers to follow suit. Thus, Toyota not only transformed itself,
but also helped to start a wholesale transformation of the industry. Many of the
aforementioned dot.coms have brought about even more dramatic changes in
the rules of industry competition. Amazon.com is probably the best-known new
economy company that successfully changed the rules of engagement for
booksellers.

Commonalties
Despite the differences in typologies and some lack of clarity around the
concept of corporate entrepreneurhship (Stopford and Baden-Fuller, 1993), the
various types described earlier share common elements with each other and
with external or start-up entrepreneurship. These common elements are:

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(1) The creation of something new that did not exist before. This
something new could be a new business-within-a-business, a product,
a service, a delivery system, or a new value proposition to the customer.
(2) These new things require additional resources and or changes in the
pattern of resource deployment within the organization.
(3) Learning takes place in both the creation of the new thing and its
implementation which results in the development of new organizational
competencies and capabilities.
These three commonalties are cited most often in the research. Less cited,
however, are the following common threads, which seem equally important in
remaining true to the original concept of entrepreneurship (Schumpeter, 1934):
.
The new business product or service is intended to result in long-term
economic value and the creation of wealth, be it for the shareholders,
owners, or society.
.
The financial returns resulting from the new thing are predicted to be
better than the returns resulting from the current deployment of
resources. (This last item comes from the authors view, and is evident in
those companies that formally support corporate entrepreneurship.)
Otherwise companies would turn their assets into cash and put the money
into savings accounts or secure investment instruments.
.
There is increased risk for the organization because the new thing is
unproven. Even if the organization is creating something new for itself,
but not new to the marketplace, the ability to actually implement is
unproven, and therefore there is increased risk that the new thing either
wont work correctly, be too late to the market, or cost too much to
produce, etc.
Developing corporate entrepreneurship
There is something quite seductive about the notion of building entrepreneurial
thinking and acting inside a large organization. We generally view external or
start-up entrepreneurs, who become famous and wealthy as a result of their
own grit and determination, as people to be envied and perhaps emulated.
Having a few of these people inside the organization might bring a breath of
fresh air and challenge to the bureaucracy. Start-up entrepreneurs are usually
passionate to a fault with their idea and are single minded in removing barriers
to its realization (Timmons, 1989). Most of us wouldnt mind a few employees
like this in a large company. Start-up entrepreneurs are generally more
concerned about the results than following the proper processes in getting
these results. What companies wouldnt prefer action to analysis paralysis?
Entrepreneurs are innovative. They find opportunities that others either miss
or perceive as unattainable. What CEO wouldnt want an employee to exploit

an opportunity that his competitors have missed? Thus the idea of corporate
Corporate
entrepreneurship has a certain cache that is hard to resist.
entrepreneurship
But what is the reality? Can corporate entrepreneurship really be instilled
into a bureaucratic culture? How different are corporate entrepreneurs from
external entrepreneurs, and how well does the entrepreneurial mindset fit
within a hierarchical corporate structure? There are few empirical answers to
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these questions. The literature abounds with examples, but unfortunately the
examples often revolve around a few high profile examples like 3M, and
Disney. These companies have had long histories of innovation and
opportunity focus as cultural values, and have had numerous processes that
institutionalized these values (Greco, 1999; Roepke et al., 2000; Schrage, 1999).
There is relatively little field research regarding the successes or failures of
large companies who have tried to systematically instill corporate
entrepreneurship within their walls.
The purpose of this paper, then, is to discuss the results and lessons learned
from field research involving the attempt to create internal or corporate
entrepreneurship within four large companies Siemens-Nixdorf, Colonia-Axa
Insurance, the Venezuelan Oil Company (PDVSA), and Motts (a part of
Cadbury Schweppes) struggling to be more innovative. Two of these
organizations favored a corporate venturing approach, while the other two
followed more of an intrapreneuring approach.
Background
Corporate venturing
Both Siemens-Nixdorf Information Systems Company (SNI) and Motts
followed a corporate venturing path.
SNI came to Babson College in 1995 with an RFP to create a management
education program for its unit managers. The main purpose of the program
was to create a group of 300 corporate entrepreneurs within SNI who would
learn to be opportunity-focused, not just resource-focused. Gerhard
Schulmeyer, President of SNI, had embarked on an organization-wide change
program to turn a rather staid, conservative, risk-averse culture into a more
opportunistic, market-focused, fast, flexible organization in order to compete
more effectively with the likes of H-P, IBM, Arthur Anderson, and the small
aggressive boutique IT vendors increasingly present in the marketplace.
Both SNI and Motts followed a corporate venturing path.
Schulmeyer had already brought in new board members from the outside,
and was involved in a number of internal change efforts when Babson College
was approached to design and deliver the corporate entrepreneurship program.
The entrepreneurial development program was considered a cornerstone in
SNIs change efforts because it was meant to make corporate entrepreneurs out
of managers who had just been assigned to the newly-created position of unit
manager. The unit managers job sat at the intersection between the the line of

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business manager and the companys regional or country manager. SNI had
created this new matrix for the specific purpose of increasing lateral
communication, co-operation, and rapid decision-making. The unit manager
position was conceived of as the catalyst for these enhanced interactions and as
the best place to start building opportunity focus.
We developed a five-week course, which was conducted for 12 separate
groups of newly-appointed entrepreneurs. The program was carried out over a
two-year period. SNI had a solid reputation with a respected product line and
talented people, but they needed to become more customer-focused and
aggressive in the highly competitive IT marketplace. Entrepreneurial thinking
and acting were seen as key drivers in the future success of the organization.
The SNI program asked each participant to work on an intense project, which
involved the real identification, development, and capture of an entrepreneurial
business opportunity. The project required the completion of a formal business
plan for the new venture, presentation to the executive board, and competition
for internal venture capital.
Motts also wished to create new businesses within their current businesses.
Motts, a subsidiary of Cadbury Schweppes, for example, has recently
embarked on a journey to develop a more creative, innovative and
entrepreneurial culture. Motts was a conservative, successful organization,
but they had agreed to double shareholder value every three years. This
tremendously aggressive goal couldnt be reached through different colored
apple sauce for kids. They needed to develop new businesses and new markets.
Motts, like SNI, wanted to identify a cadre of internal managers who might
have entrepreneurial tendencies, and train them in entrepreneurial thinking
and acting, hoping they would also be able to identify, develop, and capture
new business opportunities. Motts approach to developing corporate
entrepreneurs, however, differed significantly from SNI on one key
dimension. SNI nominated employees to be entrepreneurs, while Motts
opened up their entrepreneurial training program to anyone in the company
who was interested, from the secretary to the VP of strategic planning. Those
interested had to submit a letter to a design team consisting of internal senior
managers and program faculty. A sub-set of applicants was chosen from those
who submitted written applications, to be interviewed for acceptance to the
program. Out of 35 original applicants, 20 were chosen to attend the first pilot
class.
The training program was designed much like that of SNI but for a shorter
duration. It also revolved around the three major activities of entrepreneurs,
namely: opportunity identification; shaping; and capturing. And, we agreed to
approach the training much like venture capitalists would. If no good ideas or
opportunities emanated from the first module on opportunity identification,
then we would review what had happened and why, and decide to continue to
invest in more ideation work, or decide to stop further investment. This model

was very much akin to a seed money mentality. Another unique element of
Corporate
the Motts program was the conscious decision to use the entrepreneurial entrepreneurship
training program as a tool for change. Many large companies have cultures
with built-in antibodies to entrepreneurship. They punish risk-taking, favor
conservatism and security, and symbolically shoot people for trying innovative
things. Motts designed their program so that, as participants ran into cultural
335
walls, these would be identified and surface at the board level. The board then
had to decide whether to deal with these barriers, or stop funding the program
if they werent serious about creating greater entrepreneurship within the
organization.
PDVSA and Colonia-Axa Insurance
Both of these companies were interested in creating more entrepreneuriallyoriented managers. While new business development was a keen consideration,
these two companies believed that entrepreneurially-minded managers would
be more attuned to new market opportunities and would stimulate a more
innovative and risk-taking culture within their respective parts of the
organization. It was hoped that the resultant change in the managers
behaviors and entrepreneurial orientation would eventually have an
infectious impact on the overall organization. So, their approach was to
teach the managers not to be corporate venturers themselves, but to spur more
opportunity focus and therefore orientation within their respective companies
as a whole. One study (Pearce et al., 1997) has shown that managers who adopt
more entrepreneurially-focused behaviors, like encouraging the destruction or
circumventing of red tape, or stimulating people to try new ways of doing their
work, can have an impact on both customer and employee satisfaction as well
as bottom line results.
The content of the PDVSA and Colonia-Axa Insurance training programs
was much the same as for SNI and Motts, but the end goal was for these
managers to act as catalysts and coaches for more entrepreneurial thinking and
acting, within their own areas or functions. Their theory was that a critical
mass of newly trained entrepreneurial leaders would have a significant
impact on the risk-taking culture and innovativeness within their respective
organizations.
Program design challenges
In all of these programs, we asked ourselves several key research questions.
(1) What aspects of entrepreneurship can actually be learned by middle and
upper middle managers? Many people believe that entrepreneurship
cannot be learned at all, and thus, trying to teach people how to become
entrepreneurs doesnt really make any sense.

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(2) Is it better to try and identify people within the company who already
have entrepreneurial leanings, or can any competent, motivated manager
learn to act and think like an entrepreneur?
(3) Is corporate entrepreneurship really an oxymoron? Can people actually
be trained and then allowed to act like start-up entrepreneurs within an
already, well-established company. Or, as stated before, are there too
many corporate antibodies in place to allow such a phenomenon?
(4) If there are such antibodies at work, how do large companies learn to
identify and overcome them?
(5) Finally, is there a real return on investment in such educational
endeavors? Do any new, truly entrepreneurial ventures come to fruition
that justify both the programs expense and the managers time away
from other potentially more productive and certain activities? Ultimately,
will increased entrepreneurial behavior actually lead to the capturing of
higher margin, durable new business opportunities by the company?
Summary of findings
For purposes of confidentiality, the author has chosen to consolidate the
general findings from these four companies. Several sources of data served as a
foundation for the following results. First, many of these programs have
required that participants develop full-blown business plans and then compete
with others in front of an executive team for resources and support. Thus, there
is some hard data regarding business plans that have actually developed into
successful businesses. We also have feedback from senior management, HR
representatives and the participants themselves as to how much they actually
learned and could apply within their own businesses. While there are some
company specific differences in results, the degree of similarity in the findings
was impressive.
Nature v nurture
Perhaps the first question is the most critical one for companies considering
teaching managers to be entrepreneurs. We now believe, beyond any doubt,
that much of what start-up entrepreneurs do can be taught to relatively
ordinary but motivated individuals. So what do start-up entrepreneurs know
and do that can potentially be learned by others?
Start-up entrepreneurs do three things very well. They identify
opportunities, shape and develop these opportunities, and then they create a
business structure to turn these opportunities into successful business
ventures. The starting point is an idea that is new. This new idea could be
revolutionary or evolutionary and it might not even be theirs, but there is
something different about it. Start-up entrepreneurs then begin to learn about
this idea to see if is just an idea or an opportunity. They change it, shape it,
modify, and sometimes discard it for something better. Once they are satisfied

that their idea has commercial merit, they begin to build an organization of
Corporate
people and resources to go about capturing the opportunity.
entrepreneurship
Identifying and shaping ideas can be learned. We have many great examples
of managers who never considered themselves creative or innovative, who
found significant new business opportunities as a result of their entrepreneurial
training. A Siemens manager, for example, found a unique way to stop credit
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card fraud through fingerprinting technology. A PDVSA team identified a
huge commercial market for one of their waste products that they used to
throw away. A Motts employee identified a way to start a spin-off business,
based on Motts back-office competencies. None of these opportunities would
have been discovered had these participants not been exposed to a training
milieu, in which ideas were not only encouraged and supported but challenged
as well. So, the ability to think creatively and to be innovative is a human
condition. Some people exhibit these tendencies naturally while others need a
catalyst for these inherent capabilities to emerge. Education and particularly
coaching turned out to be two of the most important ways in which innovation
and creativity were stimulated to emerge. What the entrepreneurship training
did most effectively, was give participants the tools, techniques, and discipline
to distinguish between a good idea and a good opportunity.
Clearly, the most teachable aspect of the opportunity process is the
business plan. Business plans have both clear structure and clear content
requirements. In fact, the business plan was perhaps our most important
teaching tool. All the theory, case studies, and group discussions could not
replace the tremendous amount of learning that went on when participants were
required to turn their idea into a full-blown business plan. The written business
plan is one of the few ways that we could determine whether the participants
idea was just that, an idea, or a commercial opportunity. Every participant who
completed a business plan said it was the most important (and perhaps one of
the most painful) learning experience about being an entrepreneur that they had
ever had. Managers who have gone through the development of a completed
business plan are not the same when they finish. They have had to learn about
marketing, finance, value, cash flow projections, etc., to a point where they can
stand in front of their peers, senior managers or venture capitalists and convince
them that their opportunity is worth investing in.
It was also interesting that many of the program participants said they
either knew how to write a business plan or had already written one prior to
coming to the program. It was clear from our experience that very few of these
people actually had business planning skills that would pass muster in front of
a venture capitalist or an internal venture officer.
Identifying people with the right stuff
One of our most surprising results, and one that we had not predicted, was that
we were not able to predict with any reasonable certainty which managers

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would emerge as the most entrepreneurial. Neither background, education, or

past successes were good predictors of corporate entrepreneur success. Two
examples will make this abundantly clear. One of our first entrepreneurial
training program participants was a 50 year-old engineer with no prior history
of innovation or entrepreneurial orientation in his work history. He was a good
hands on engineer, quiet and anal-retentive in personality, and was forced
to be in the program by his boss; clearly not the best of candidates from an
educational training perspective. We all wrote him off at the beginning of the
course as a never-to-be corporate entrepreneur. However, he became one of a
minority of participants who actually came up with a great idea, shaped it into
a viable opportunity and wound up running a successful spin-off business for
the corporation. In his own words, he got switched on. He was clearly not
happy to be on the course at the outset, but fell in love with a very innovative
idea he and another participant had cooked up, and then he became
unstoppable in his pursuit of this idea. He claimed that the training program
gave him the courage and confidence to try his hand as a corporate
entrepreneur. The more he learned, the more he was coached, and the more we
demystified the entrepreneurial process, the more confidence he gained.
The second example involved one participant who was an exceptionally
high achiever in the company with impeccable MBA credentials from an
extremely prestigious business school. We all predicted that he would outentrepreneur everyone in the class. Unfortunately, he could never come to grips
with leaving the security of his functional position. He demanded that the
company guarantee his salary, bonuses, and position, no matter what
happened if he pursued his venture idea. He wanted no downside for being a
corporate entrepreneur, only an upside; clearly, not the kind of stuff that
entrepreneurs are made of. In this company, potential entrepreneurs were
encouraged to drop the course if it became obvious to us or to them that they
were not cut out for this role. He was one of the first to drop the course for
which he had so eagerly volunteered.
Corporate antibodies
Our experiences with these four companies attempting to inculcate
entrepreneurship demonstrated the importance of company culture and toplevel leadership as extremely important ingredients for developing managers
as entrepreneurs. All of the aforementioned companies embarked on their
various journeys into corporate entrepreneurship with the sincere belief that
they were committed to this goal and ready to support it. But only two out of
the four were able to go the distance in terms of full support for those whose
ideas had merit. The other two stopped short of their goals for a number of
reasons, but four key barriers or challenges stood out.
(1) If an organization is to teach managers to act like entrepreneurs, they
must also be willing to pay them as entrepreneurs. Two of our sample

companies were either unwilling or unable to change their pay structures

Corporate
in order to support corporate entrepreneurship. Pay structures in large entrepreneurship
companies are often quite structured and systematic and therefore easy
to administer but equally hard to change. They are often geared to
equity and fairness, not the creation of internal entrepreneurs. Personnel
people have often spent extraordinary amounts of time fine-tuning these
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pay programs to ensure both external and internal equity. However, few
if any, of these pay systems are capable of dealing with an internal
entrepreneur. It is not the purpose in this article to discuss
entrepreneurial pay schemes but they involve current payment on the
promise of future success, and they often involve some equity stake by
the internal entrepreneur in the future venture. For these reasons alone
some companies prefer to spin out the venture so that it will not be
constrained by the companys often fair but constraining policies,
especially those of pay.
(2) A second barrier involved time. In all four of our companies,
managers were expected to do their day jobs and develop an
opportunity to the point where it would either be funded or killed. On
the surface, this approach makes sense from a vetting point of view.
If you dont really love your idea and see it as a real opportunity, then
you wont have the motivation to do your day job and work on a new
venture at the same time. Start-up entrepreneurs also often work for a
large company, and in their spare time pursue their dream of starting
their own business. Unfortunately, for most of our company wouldbe entrepreneurs, their day jobs were almost overwhelming. All the
downsizing and increased pressure for short term quarterly results
had pushed many of the managers with whom we worked into ten
and 12 hour days. So there was precious little time or energy left to
pursue another opportunity especially if the rewards were not clear for
doing so.
(3) A third and quite surprising obstacle that we discovered from our work
with these companies involved the peers of the program participants. It
was surprising how many of these managers peers hoped they failed in
their efforts to become corporate entrepreneurs. Because this
phenomenon (no head shall rise above the rest, unless its mine)
existed across all four of our companies we have been led to conclude
that this may be a human condition in many companies. Competition for
jobs, promotions, etc., undoubtedly causes many of us to judge our worth
in terms of others successes. In large bureaucratic organizations where
it is difficult to differentiate oneself or to stand out, the prospect of seeing
someone else chosen as a corporate entrepreneur with the potential to
run their own businesses and get rewarded accordingly, can create
intense jealousy. Many of our would-be entrepreneurs found this change

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in their peers behavior difficult to cope with. We uncovered several

instances of peers going to their joint boss to complain that the
entrepreneur was not holding up his/her part of the workload and
therefore should be taken out of the entrepreneurial training program.
The bosses on the other hand had not seen this supposed downturn in
productivity.
(4) The fourth and biggest obstacle was the corporate entrepreneurs direct
line boss. In all four of our companies, senior management was
committed to trying to create greater innovation and new business
development through the development of corporate entrepreneurship.
Unfortunately, many of the bosses a level or two down from these senior
executives were not so committed. We had numerous reports of direct
line bosses telling their managers in our program to forget what you
were taught, all I care about is meeting our quarterly results. It often
took strong executive team intervention to dissuade these direct bosses
from acting in this manner. Obviously many of these direct bosses were
either poorly informed about what the company was trying to do, or they
had not bought into the processes for obvious and often legitimate
reasons.
Does corporate entrepreneurship really make a difference?
First, lets look at what success means. One end of the continuum would be a
change in the managers behavior, which fosters more innovation, creative
problem solving, and circumvention of red tape. The manager is not really a
corporate entrepreneur in terms of creating a new business venture, but he or
she is now much more appreciative of the importance of new ideas, and then
acts to create a more innovative culture for his/her employees. We have created
an experimental Entrepreneurial Orientation Survey, which we hope will allow
us to assess this type of change in behavior from a pre/post program
perspective. As previously stated, there is some fairly strong evidence that
acting more entrepreneurially as a manager can have a significant impact on
both attitudinal and financial measures, even if the manager does not create a
new business (Pearce et al., 1997).
At the other end of the spectrum is the creation of a completely new
business, which is durable and generates a great deal of money for the
organization, much like the returns venture capitalists seek.
But, at the end of the day, the real test of a corporate entrepreneurship
training is whether significant new businesses or new business results from
this type of educational immersion. As one might expect, we have several
spectacular successes and many failures. But, perhaps our sample of
statistics from these four companies is no different than what would be
expected from looking at the number of successful ventures funded by
venture capitalists.

First, a couple of the spectacular successes:

Corporate
(1) One of our managers-turned-entrepreneur proposed a new business that entrepreneurship
would focus on oil company distributors to help them manage both front
and back end logistics better. In addition, his new business was one of
the first to create the speed pass idea that allows motorists to wave a
microchip in front of the gas pump as a method of payment. Within the
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first three years of his new companys creation, it was grossing over 250
million dollars in revenues.
(2) Another example involved an entrepreneurial team whose innovative
idea of turning waste oil products into a new business for xxxx resulted
in yyyy revenues.
Clearly, these examples are impressive and they happened in companies where
the overall cultures were not particularly entrepreneurial, thus dispelling the
notion that cultural change has to happen before the fruits of entrepreneurial
interventions can be realized. But, they must also be seen in the light of the
overall approach to training entrepreneurs. Over the past six years we have
probably run corporate entrepreneurship programs for well over 1,000 managers.
While many of these managers describe the educational process and the
development of a business plan as the most significant business education
experience they have ever had, relatively few, perhaps 10-15 percent of these
entrepreneurial plans ever led to successful new ventures. Again, this data seems
to square with the notion that most (90 percent) new start-up businesses fail.
The deck seems to be stacked equally against corporate entrepreneurs as
well as start-up entrpreneurs. On the other hand, the venturing process does
result in the generation of many new ideas, the education of people regarding
differences between good ideas and good opportunities, and many times new
corporate knowledge and competencies which did not exist before. Our
example of the thumb-printed credit card created new technological
competencies that have been leveraged elsewhere within the company. It is
unlikely that this technology would have been commercialized had Siemens not
empowered this manager to think and act in a more entrepreneurial manner.
Lessons learned
.
Pockets or islands of entrepreneurial activity can develop and thrive, at
least for a while, in cultures that are not in themselves entrepreneurial.
Clearly, researchers are right when they claim that organizational culture
plays a key role in a companys ability to develop corporate
entrepreneurship (Morris, 1998; Hood and Young 1993; Bygrave, 1997).
But, successful ventures can develop in non-entrepreneurial companies
with the right kind of tactical interventions. This is good news for
companies who are told that it takes five to eight years to change culture.
Perhaps, it only takes a critical mass of switched-on corporate

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entrepreneurs, with some championing at the senior level, to start to see

results.
A lot of ordinary corporate citizens can learn to act as corporate
entrepreneurs with the right education, training, and support. The most
critical piece is that they are helped to develop an idea that they
themselves are turned on to. Without this passion, it would be hard to
imagine anyone willing to fight the uphill battle that many of our wouldbe entrepreneurs had to do. This really speaks to the mindset of the
entrepreneur. Passion cant be taught, but it can be encouraged. The skill
set, however is much easier to teach. Market analyses, cash flow analysis,
operations management etc., can be taught, as we know from working
with MBAs and other executives.
Catalytic coaching and the business planning process were the two most
important educational tools for the development of new business
opportunities. Catalytic coaching sounds like an oxymoron, but it
involved pushing managers to move from an iterative focus to a platform
focus. Most managers, when asked to think about new business
opportunities, tend to start close to home with iterative, relatively small
changes to products or services. It takes a push from a coach who
aggressively challenges this close to home mentality typically found in
the ideation phase. We saw many mediocre ideas blossom into truly
entrepreneurial ideas as a result of this type of coaching. In addition, this
is where some of the real passion developed within the corporate
entrepreneur. They started to fall in love with their ideas, especially when
they became really interesting and more risky. Many of Motts people
started off with ideas about packaging and apple sauce color. At the end
of the program they were thinking about day care centers and managing
brands for the World Wide Wrestling Federation, a far cry from blue
apple sauce. These types of ideas are more of a platform of ideas in that
they leverage the corporations capabilities, but into significantly
different product offerings or markets. The importance of the business
plan is obvious. Great ideas without the discipline of the business
planning process are generally not great opportunities. This was the most
important tool for differentiating the two and further shaping the
opportunity. One of our entrepreneurs came to us in a perturbed state
because his business plan was telling him that he could not make any
money with his original idea. He was afraid that he would some how fail
the entrepreneurial course. We soundly congratulated him for not
spending the companys money on a bad idea and told him to find another
one. This little story says a lot. Being entrepreneurial also means knowing
when to pull the plug.
Entrepreneurs can come from anywhere in the organization. One of our
biggest lessons was our inability to predict who could become a corporate

entrepreneur. When experience, creativity tools, coaching, and a persons

Corporate
own confidence and desire collide with market knowledge, customer entrepreneurship
intimacy information, and technological changes, entrepreneurial
opportunities are identified. We could not predict with any accuracy
who would be in the intersection at the right time, but providing this
intersection in a planned way did result in brand new businesses and
343
significant innovation in current businesses. In addition, we could not
predict which of our would-be entrepreneurs would be motivated. Our
MBA star arrived motivated, became unmotivated and then quit. Our
older engineer arrived unmotivated, got excited and stayed. So the
interesting research question is, what are the key ingredients for causing
the right kinds of collisions at the intersection. We know some of the
elements but not others.
Decoupling ideation and opportunity identification from implementation.
As we looked at our four companies, we discovered that some individuals
really do have the right stuff to identify, develop, and implement a new
business venture from start to finish. They are akin to many start-up
entrepreneurs. We also encountered people who were good at the creative
opportunity identification and shaping phases, but who could not or did
not want to implement their idea. For them, the fun was in the
conceptualization piece, not the implementation piece. Thus, any
corporate entrepreneurship process must first be framed around the
question of whether a company wants to develop corporate
entrepreneurship processes or corporate entrepreneurs. The process
approach means that a company does not expect the same people to
develop and then implement a new business, but they want the structures
and processes in place, which help to identify, shape, and then capture a
new business opportunity. Many companies are starting to build or
already have, some form of entrepreneur process in place. Intel, Proctor &
Gamble, Ford, Dow and others are exploring and testing these various
machines of innovation. Obviously not all of these structures work
(Altman, 2000) but companies seeking greater innovation are increasingly
exploring new avenues. An emphasis on identifying and supporting a
corporate entrepreneur who is expected to follow a new opportunity
from start to finish is a relatively new model and one that does not require
the same investment in fixed assets. We do know that passion counts and
institutionalized processes do not always take this into account. Perhaps
companies seeking innovation need to pursue both paths.
The last lesson is that a little difference can make a big difference. Not
every manager needs be an entrepreneur to help a company spawn
significant new business opportunities. Several of our examples,
particularly the $250 million dollar one, attest to this. So companies
need to be realistic about how much corporate entrepreneurship is

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enough. Do companies really need to change their culture, or get a couple

of big wins every few years? Perhaps many organizational consultants
have put too much effort into organizational change as a pre-requisite to
venturing. Maybe more emphasis on venturing first, and a few wins,
would do more to change the culture than the other way around.
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