Entrepreneurship: Donald F. Kuratko
Entrepreneurship: Donald F. Kuratko
Entrepreneurship: Donald F. Kuratko
Donald F. Kuratko
Corporate Entrepreneurship
Chapter#3
Chapter Objectives
1. To understand the entrepreneurial mindset in organizations
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Corporate Entrepreneurship
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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.
industry began to learn how to manage
entrepreneurship.
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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.
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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?
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Assessing Support for Innovation
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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 ideas (copy of a copyright product, an
illegal trader of goods, stealing) —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 (avoid) rigid procedures and
bureaucratic red tape.
10. Reward and promote innovative personnel.
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Encouraging an Intrapreneurial Environment
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Benefits of an Entrepreneurial Philosophy
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The Corporate Entrepreneurship Process
Strategic Corporate
Innovation
Renewal Venturing
Corporate
Entrepreneurship
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Definition of Corporate Entrepreneurship
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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
• Departure of some of the best and brightest people from
corporations to become small business entrepreneurs
• International competition
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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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Skunkworks:
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Corporate Entrepreneurship Strategy
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Model of the Corporate Entrepreneurship
Strategy Process
• Corporate entrepreneurship strategy is manifested
through the presence of three elements:
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Model of the Corporate Entrepreneurship
Strategy Process
• Linkages in the model:
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Conceptualizing a Corporate
Entrepreneurial Strategy
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Types of Innovation
• Radical Innovation
The launching of inaugural (opening) 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.
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Radical or Incremental?
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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 Hold weekly meetings that include
sessions. key management and marketing staff.
Encourage praise from outside parties. Set clear financial rewards for meeting goals
and deadlines.
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Table
Objectives and Programs for Venture Development
Objectives Programs
Make sure that current systems, structures, Reduce unnecessary bureaucracy, and
and practices do not stop flexibility and fast encourage communication across
action needed for innovation. departments and functions.
Provide the incentives and tools for Use internal “venture capital” and special
intrapreneurial projects. project budgets. (This money has been
termed intracapital to signify a special fund
for intrapreneurial projects.) Allow
discretionary time (judgment/idea) for
projects.
Seek synergies across business areas so new Encourage joint projects and ventures
opportunities are discovered in new among divisions, departments, and
combinations. companies. Allow and encourage employees
to discuss and brainstorm new ideas.
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3M’s Innovation Rules
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Structuring for a Corporate Entrepreneurial
Environment
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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.
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Developing Individual Managers
for Corporate Entrepreneurship
• Corporate Entrepreneurship Training Program
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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
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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.
• Rewarding Entrepreneurship:
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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Table
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.
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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 that initiates
the need for strategic adaptation or change.
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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.
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Figure
A Model of Sustained Corporate Entrepreneurship
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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.
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Key Terms and Concepts
• bootlegging • entrepreneurial economy
• champion • incremental innovation
• collective • innovation (I) team
entrepreneurship • interactive learning
• corporate • intracapital
entrepreneurship • intrapreneurship
• Corporate
• radical innovation
Entrepreneurship
• intrapreneurship
Assessment Instrument
(CEAI) • skunkworks
• corporate venturing • top management support
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