Corporate Entrepreneurship

1. The Nature of Corporate Entrepreneurship

• 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.
2. 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

3. INNOVATION
Types of Innovation
• Radical Innovation – The launching of inaugural breakthroughs. – These innovations take
experimentation and determined vision, which are not necessarily managed but must be
recognized and nurtured.
• Incremental Innovation – The systematic evolution of a product or service into newer or
larger markets. – Many times the incremental innovation will take over after a radical
innovation introduces a breakthrough.
4. Rules for an Innovative Environment
1. Encourage action.
2. Use informal meetings whenever possible.
3. Tolerate failure and use it as a learning experience.
4. Persist in getting an idea to market.
5. Reward innovation for innovation’s sake.
6. Plan the physical layout of the enterprise to encourage informal communication.
7. Expect clever bootlegging of ideas—secretly working on new ideas on company time as
well as personal time. 8. Put people on small teams for future-oriented projects. 9. Encourage
 personnel to circumvent rigid procedures and bureaucratic red tape. 10. Reward and promote
innovative personnel.
5. STRATEGY
Conceptualizing Corporate Entrepreneurship Strategy
• Corporate Entrepreneurship 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.
6. 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.
7. CORPORATE VENTURING
• 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.
8. Developing Individual Managers for Corporate Entrepreneurship 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
9. Preparing for Failure • “Learning from Failure” – Recognizing the importance of managing
the grief process that occurs from project failure. – Understanding how organizational
routines and rituals are likely to influence the grief recovery. – Ensuring that the
organization’s social support system can encourage greater learning, foster motivational
outcomes, and increase coping self-efficacy in affected individuals.
10. SUCCESSFUL CORPORATE ENTREPRENEURSHIP – Think big . . . really big. – Bring
in the A-team. – Start small. – Establish unique measurement techniques.
Apple, Motorola, Mitsubishi, 3M, and Johnson and Johnson are all well known examples of
large organizations that practice corporate entrepreneurship today and have been successful with it.
By implementing it in their organizations, they can now design new products that customers want,
rather than products entrepreneurs think customers want.

To better understand the concept of corporate entrepreneurship it is important to look the practical
example of 3M that how corporate entrepreneurship was implemented at 3M. 3M has benefited
from this culture as it has brought it closer to the actual customers resulting in 3Mbeing able to meet
its customers’ requirements. 3M has developed a culture that encourages its employees (corporate
entrepreneurs) to be creative and come up with new ideas which may or may not work. They have
set aside 15 percent of the company’s time each day to allow their employees (corporate
entrepreneurs) the freedom to work on their own projects. They call this their ‘innovation rule’.
They have created a management control system that provides the (corporate) entrepreneurs with
various resources that they might require for developing and experimenting new products and
services. They have allowed their employees the freedom to fail as it encourages them to be creative
and come up with new ideas. The employees are not afraid to be creative as they know they would
not be punished for any mistakes they make. They also have a system in place that rewards
employees (corporate entrepreneurs) for being creative and generating new innovative ideas.

By creating a flat decentralized structure, communication has been made more effective and open
between all. The company acknowledges that open communication has helped them get where they
are today as communication leads to innovation flow throughout the organization. Thereby, making
decisions quicker and easier as communication is direct throughout the company. 3M encourages
change as it is seen as a buzz word for entrepreneurs within, who are encouraged to challenge the
status quo of the company at all times, as they are always discontent with it.
3M’s Vice President Larry Wendling (2007) has contributed to the literature of 3M’s
entrepreneurial culture. It has been successfully implemented over the years and is still today being
successful due to their buzz word innovation, being believed by everyone throughout the company
starting with the CEO. They understand many benefits this system brings because of their shared
vision and by doing so, they have created an example that other companies can follow.
Undoubtedly, 3M has proved to be a torch-bearer and an illuminating example reaping the benefits
of corporate entrepreneurship for others all around the world.

Tools of Corporate Entrepreneurship

Some of you asked to talk about the “tools for implementing corporate entrepreneurship. Paul
Burns and I had another discussion, which is enclosed for your review and feedback. It all sounds
very jazzy and cool to talk about introducing corporate entrepreneurship in an organization and
yes, it can bring positive changes such as:
 Creation of a new business within an existing business
 Transforming existing businesses through renewal of key ideas
 Innovation
But actually implementing it – is not an easy task. Before proceeding with the introduction of this
concept in the organization, it is important to bring all the members of the organization on board.

In order for corporate entrepreneurship to be effective and work well it must be operated and be
accepted at all levels within the organization starting with the CEO. It is, therefore, about everyone
in the organization, including the CEO, working towards and meeting the organization’s mission,
their aims and objectives, as a result of their innovative culture, structure, and systems that have
been created and implemented into the organization in order to generate new innovative business.

Once organizations become old they lose that zest and spirit for innovation. Everyone becomes set
in their own practices and procedures. Many times this leads to stalement and missed opportunities.
Once everyone settles in that comfortable position it can become hard to pull them out of it and
make them excited about change and innovation. Therefore it is important that to have corporate
entrepreneurship, a company must introduce such strategies and procedures that motivate people to
continuously look towards creating new and exciting things. Innovation should be part of the
organization’s culture so everyone would feel compelled to work towards the same shared goal.

Two kinds of entrepreneurships can be introduced in a company based on the type and age of the
company: surface entrepreneurship and deep entrepreneurship. These two lie at the ends of the same
spectrum. In implementing surface entrepreneurship, some specific steps are taken that are meant to
focus on parts of an organization rather than on the whole. This is usually done by mature
organizations that do not want to upset their existing systems. They form an entrepreneurial team
that can come up with new and innovative products and services without affecting the existing
procedures. These new products/services can be added to the existing portfolio. This could also be
used as a first step in implementing deep entrepreneurship.

The latter approach is usually taken by young organizations which have not become so set in their
ways. They try and create an environment of entrepreneurship; it could be seen as a shared vision
by the employees and the management. It’s what drives the organizational spirit. The important point
is to create an environment that would be conducive to such initiatives.

3M, the pioneering intrapreneurship firm, in the spotlight at the DBS Corporate Entrepreneurship
Club

The Strategic Planning and Corporate Marketing Manager, Fernando Soria, and Head of R+D at 3M
Iberia, Estrella Cabrero, explained some of the characteristics that 3M has managed to combine and
maintain throughout its history at the March session of the Entrepreneurship Club. The
multinational's key feature is its brand image associated with the idea of innovation.

The 3M Iberia executives' talks were introduced by the Director of Deusto Business School Madrid,
Iñaki Ortega, and moderated by Prof. Francisco González-Bree, expert in innovation. They stressed
that ideas do not appear out of the blue but require work to turn them into innovations and, above
all, that we must invest in them. Furthermore, this investment must be continuous to achieve success.
For this reason, the firm invests 5.8% of its income at the international level in R&D on a daily
basis.

Both Fernando Soria and Estrella Cabrero highlighted that innovation forms an integral part of the
firm’s business strategy across the world and that efforts to stimulate it have been ongoing since its
foundation in 1902. This US firm first put the famous 15% time into practice in the 90s. This is the
percentage of spare time that each employee has to develop an idea in an area different from his/her
department.

Soria and Cabrero stated that 3M centres on boosting innovation to develop solutions and products
to improve people's lives. And they recalled the company’s tagline: “3M. Science applied to life”.

The 3M executives emphasised the importance of transferring innovation to the consumer because
"a scientist invented post-it notes but somebody had to put them on the market".
The monthly Deusto Business School Entrepreneurship Club meetings feature talks by leading
corporate entrepreneurship and open innovation firms. This discussion and knowledge forum is held
regularly on the best international practices in open innovation. Its aim is to prompt better change
management in big companies with help from entrepreneurs and innovators.