PAMANTASAN LUNGSOD

NG PASIG

Entrepreneurial Mind
Chap. 3. Corporate Entrepreneurial
Mind Set

Professor: Dr. Ronaldo A. Poblete, CFMP

 Chapter Objectives
1. To understand the entrepreneurial mindset in organizations
2. To illustrate the need for entrepreneurial thinking in organizations
3. To define the term “corporate entrepreneurship”
4. To describe the corporate obstacles preventing innovation
within corporations
5. To highlight the considerations involved in reengineering
corporate thinking
6. To describe the specific elements of a corporate entrepreneurial
strategy
7. To examine the methods of developing managers for corporate
entrepreneurship
8. To illustrate the interactive process of corporate entrepreneurship
1–2
 The Entrepreneurial Mindset
in Organizations
 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.
 American industry began to learn how to
manage entrepreneurship. 3–3
 Reengineering Corporate
Thinking
 Steps that will help innovative people to
develop an entrepreneurial mindset:
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.
3–4
 Assessing Support for
Innovation
 Does the firm encourage entrepreneurial thinking?
 Does the firm provide ways for innovators to stay with
their ideas?
 Are people permitted to do the job in their own way, or
are they constantly stopping to explain their actions
and ask for permission?
 Has the firm evolved quick and informal ways to
access the resources to try new ideas?
 Has the firm developed ways to manage many small
and experimental innovations?
3–5
 Assessing Support for
Innovation
 Is the system set up to encourage risk
taking and to tolerate mistakes?
 Are people in your company more
concerned with new ideas or with
defending their turf?
 How easy is it to form functionally
complete, autonomous teams in the
firm’s corporate environment?
3–6
 Table
3.1 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.
3–7
 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
3–8
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.
3–9
 The Corporate
Entrepreneurship Process
Strategic
Strategic Corporate
Corporate
Innovation
Innovation
Renewal
Renewal Venturing
Venturing

Corporate
Corporate
Entrepreneurship
Entrepreneurship

3–10
 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. 3–11
Figure
3.1 Defining Corporate
Entrepreneurship

3–12
 The Need for Corporate
Entrepreneuring
 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

3–13
 Table
3.2 Sources of and Solutions to
Obstacles in Corporate Venturing
Traditional Management Adverse Recommended
Practices Effects Actions
Enforce standard procedures Innovative solutions blocked, Make ground rules specific
to avoid mistakes funds misspent to each situation
Manage resources for efficiency Competitive lead lost, Focus effort on critical issues
and ROI low market penetration (e.g., market share)
Control against plan Facts ignored that should replace Change plan to reflect new learning
assumptions
Plan for the long term Nonviable goals locked in, Envision a goal, then set interim milestones,
high failure costs reassess after each
Manage functionally Entrepreneur failure and/or Support entrepreneur with managerial and
venture failure multidiscipline skills
Avoid moves that risk Missed opportunities Take small steps, build out from strengths
the base business
Protect the base business Venturing dumped when base Make venturing mainstream,
at all costs business is threatened take affordable risks
Judge new steps from Wrong decisions about competition Use learning strategies,
prior experience and markets test assumptions
Compensate uniformly Low motivation and inefficient operations Balance risk and reward,
employ special compensation
Promote compatible individuals Loss of innovators Accommodate “boat rockers”
and “doers”

3–14
 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
 Skunkworks
3–15
 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. 3–16
 Model of the Corporate
Entrepreneurship Strategy Process
 Corporate entrepreneurship strategy is
manifested through the presence of three
elements:
 An entrepreneurial strategic vision
 A pro entrepreneurship organizational
architecture
 Entrepreneurial processes and behavior as
exhibited across the organizational hierarchy.

3–17
 Model of the Corporate
Entrepreneurship Strategy Process
 Linkages in the model:
1. Individual entrepreneurial cognitions of the
organization’s members
2. External environmental conditions that invite
entrepreneurial activity
3. Top management’s entrepreneurial strategic vision for
the firm
4. Organizational architectures that encourage
entrepreneurial processes and behavior
5. The entrepreneurial processes that are reflected in
entrepreneurial behavior
6. Organizational outcomes resulting from entrepreneurial
actions. 3–18
 Figure
3.2 An Integrative Model of
Corporate Entrepreneurship Strategy

3–19
 Conceptualizing a Corporate
Entrepreneurial Strategy
 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.
3–20
Figure
3.3 Shared Vision

3–21
 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.
3–22
 Table
3.3 Objectives and Programs for
Venture Development
Objectives Programs
Make sure that current systems, structures, and Reduce unnecessary bureaucracy, and encourage
practices do not present insurmountable roadblocks communication across departments and functions.
to the flexibility and fast action needed for innovation.

Provide the incentives and tools for intrapreneurial Use internal “venture capital” and special project
projects. budgets. (This money has been termed intracapital to
signify a special fund for intrapreneurial projects.)
Allow discretionary time for projects (sometimes
referred to as “bootlegging” time).

Seek synergies across business areas so new Encourage joint projects and ventures among
opportunities are discovered in new combinations. divisions, departments, and companies. Allow and
encourage employees to discuss and brainstorm new
ideas.

3–23
 Table
3.4 Developing and Supporting
Radical and Incremental Innovation
Radical Incremental

Stimulate through challenges and puzzles. Set systematic goals and deadlines.

Remove budgetary and deadline constraints when Stimulate through competitive pressures.
possible.

Encourage technical education and exposure Encourage technical education and exposure
to customers. to customers.

Allow technical sharing and brainstorming sessions. Hold weekly meetings that include
key management and marketing staff.

Give personal attention—develop relationships of trust. Delegate more responsibility.

Encourage praise from outside parties. Set clear financial rewards for meeting goals
and deadlines.

Have flexible funds for opportunities that arise.

Reward with freedom and capital for new projects and

interests. 3–24
 3M’s Innovation Rules
 Don’t kill a project
 Tolerate failure
 Keep divisions small
 Motivate the champions
 Stay close to the customer
 Share the wealth

3–25
 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
3–26
Figure
Intrapreneurial Development:
3.4
Joint Function of Individual and
Organizational Factors

3–27
 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.
3–28
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
3–29
 Corporate Entrepreneurship
Assessment Instrument (CEAI)
 Key Internal Climate Factors in an
Organization’s Readiness for
Entrepreneurial Activity
 Management support
 Autonomy/work discretion
 Rewards/reinforcement
 Time availability
 Internal organizational boundaries
3–30
 Facilitating Corporate
Entrepreneurial Behavior
 Organizations foster entrepreneurial behavior
by:
 Encouraging—not mandating—innovative activity
 Human resource policies for “selected rotation”
 Committing to projects long enough for momentum
to occur.
 Bet on people, not on analysis.
 Rewarding Entrepreneuring:
 Allow inventor to take charge of the new venture
 Grant discretionary time to work on future projects
 Make intracapital available for future research
ideas 3–31
 Table
3.5 Corporate Innovator’s
Commandments
1. Come to work each day willing to give up your job for the innovation.
2. Circumvent any bureaucratic orders aimed at stopping your innovation.
3. Ignore your job description, do any job needed to make your innovation work.
4. Build a spirited innovation team that has the “fire” to make it happen.
5. Keep your innovation “underground” until it is prepared for demonstration to the
corporate management.
6. Find a key upper level manager who believes in you and your ideas and will serve as a
sponsor to your innovation.
7. Permission is rarely granted in organizations, thus always seek forgiveness for the
“ignorance” of the rules that you will display.
8. Always be realistic about the ways to achieve the innovation goals.
9. Share the glory of the accomplishments with everyone on the team.
10. Convey the innovation’s vision through a strong venture plan.
3–32
 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 that
3–33
 Developing Innovative (I)
Teams
 Innovative (I) Team
 A semi-autonomous 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
“corporate entrepreneur.”
 Collective Entrepreneurship
 Individual skills are integrated into a group; this
collective capacity to innovate becomes
something greater than the sum of its parts. 3–34
Figure
3.5 A Model of Sustained
Corporate Entrepreneurship

3–35
 Corporate Entrepreneurship
at IBM
 Emerging Business Opportunity (EBO)
Program’s Key Rules:
 Think big . . . really big.
 Bring in the A-team.

 Start small.

 Establish unique measurement techniques.

3–36
 Key Terms and Concepts
 entrepreneurial economy
bootlegging
 champion innovation
incremental
 collective entrepreneurship
innovation (I) team
 corporate entrepreneurship
interactive learning
 Corporate Entrepreneurship Assessment Instrument
intracapital
 (CEAI)
intrapreneurship

 corporate venturing
radical innovation
 intrapreneurship
 skunkworks
 top management support
3–37