Assignment

Corporate Entrepreneurship

Definition:

The concept of corporate entrepreneurship is generally believed to refer to the

development of new ideas and opportunities within large or established businesses,
directly leading to the improvement of organizational profitability and an
enhancement of competitive position or the strategic renewal of an existing
business.

Within that system, the notion of innovation is at the very core of corporate
entrepreneurship - the two inseparably bound together and responsible for driving
calculated and beneficial risk-taking. Taking it one step further, corporate
entrepreneurship may even significantly alter the balance of competition within an
industry or create entirely new industries through this act of internal innovation.
Model:

Two dimensions under direct control of management were identified by Wolcott

and Lippitz (2007), the forming of these dimensions indicates different approaches
of companies towards corporate entrepreneurial activities and particularly their
impact.

1. Organizational Ownership (The main question is whether a particular

department is accountable for new business creation or whether the responsibility
is spread among the entire organization)

2. Resource Authority (Annual Budget allocated to New Business Concepts or ad

hoc financing)

Based on the identified dimensions, a matrix can be created as shown below:

Given the combination of the two dimensions, four different strategic approaches
towards corporate entrepreneurship can be identified, which are the Opportunist
Model, the Enabler model, the Advocate model and last but not least the Producer
model. (Wolcott and Lippitz, 2007)

The Opportunist Model

In the opportunist model neither designated ownership nor designated resources
exist. Success and business creation is mainly driven by so called project
champions, individuals who are driven to achieve beyond expectations. Through
informal exploration among employees ideas are identified.

The Enabler Model

In the enabler model designated resources and processes are preserved for new
business ideas to enable motivated employees to build teams in order to work out
their recognized opportunities. There is no designated ownership in this particular
model and basically all members of the organization can develop and establish
ideas given the only requirement that the concepts are in line with the goals of the
corporate strategy. Mostly, employees are guided by criteria which define desired
concepts and budget applications.

The Advocate Model

In the advocate model business units have designated ownership for new business
creation. The budgets are managed by the business units that have to be allocated
to promising projects. Employees need guaranteed access to non-financial
resources in order to success. DuPont followed the advocate model in from of the
successful Market Driven Growth Initiative which indicates that responsible
employees should get assistance ranging from the idea development to its
commercialization. Feasibility analysis of suggested projects is supported by senior
management that occurs as a project sponsor if considered feasible, which ensures
commitment at later stages. Moreover, upon approval from the relevant SBU
leadership successful projects are discussed on corporate level and application to
other SBUs is evaluated, thus not mandatory.

The Producer Model

In the producer model both designated organizational ownership and designated
resources are common. As the Emerging Business Accelerator (EBA) example at
Cargill indicates, disruptive opportunities that dont fit with the existing products
can however be pursued. Focussed departments as the EBA develop promising
ideas by assisting designated project teams with managing the entrepreneurial
process while involving relevant stakeholders through cross-functional
collaboration. Upon market feasibility projects can be transferred into existing or
new business units.

Status of Corporate Entrepreneurship Global:

Corporate entrepreneurship is, however, a risky proposition. New ventures set up

by existing companies face innumerable barriers, and research shows that most of
them fail. Emerging businesses seldom mesh smoothly with well-established
systems, processes, and cultures. Yet success requires a blend of old and new
organizational traits, a subtle mix of characteristics achieved through what we call
balancing acts. Unless companies keep those opposing forces in equilibrium,
emerging businesses will flounder.

Its no secret that corporations are designed to ensure the success of their
established businesses. Existing operations, after all, account for the bulk of their
revenues. Finely tuned organizational systems support current customers and
technologies. The operating environments are predictable, and executives goals
are stability, efficiency, and making the most of incremental growth.

New businesses are quite different, with cultures all their own. Many are born on
the periphery of companies established divisions; at times, they exist in the spaces
in between. Their financial and operating models are seldom the same as those of
existing businesses. In fact, most new business models arent fully defined in the
beginning; they become clearer as executives try new strategies, develop new
applications, and pursue new customers. Because of the high levels of uncertainty
associated with new ventures, they need adaptive organizational environments to
succeed.

The distinctive features of new businesses present three challenges. First, emerging
businesses usually lack hard data. Thats particularly true when they offer cutting-
edge products or when their technologies arent widely diffused in the
marketplace. The difficulty, as one technology strategist told us, is that its hard to
find marketplace insights for markets that dont exist. Financial forecasts are also
undependable. Large errors are common, a fact that led one printing and publishing
company to call its early-stage financial numbers SWAGs, short for scientific
wild-assed guesses.

After years of downsizing and cost cutting, corporations have realized that they
cant shrink their way to success. Theyve also found that they cant grow rapidly
by tweaking existing offerings, taking over rivals, or moving into developing
countries. Because of maturing technologies and aging product portfolios, a new
imperative is clear: Companies must create, develop, and sustain innovative new
businesses. They must become Janus-like, looking in two directions at once, with
one face focused on the old and the other seeking out the new.

Corporate entrepreneurship is especially crucial for large companies, enabling

these organizations - that are traditionally averse to risk-taking - to innovate,
driving leaders and teams toward an increased level of corporate enterprising. In
addition to the obvious benefits obtained through innovation, this approach also
provides the organizational benefit of setting the stage for leadership continuity.

In a simpler view, corporate entrepreneurship can also be considered a means of

organizational renewal. For in addition to its focus on innovation, there also exists
an equal drive toward venturing. These two work in unison as the company
undertakes innovations across the entire organizational spectrum, from product and
process to technology and administration. In addition, venturing is a primary
component in the process, pushing larger companies to enhance their overall
competitiveness in the marketplace by taking bigger risks. Examples of these risks,
as seen in a large-scale organization, may include: redefinition of the business
concept, reorganization, and the introduction of system-wide changes for
innovation.

http://www.unext.in/assets/Pu18ET3014/Live%20Sessions/Session%20Notes:2/4.
Corporate%20Entrepreneurship.pdf

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