Strategic Entrepreneurship

Entrepreneurship
Is the process by which individual or groups identify and pursue entrepreneurial opportunities. Entrepreneurial opportunities are the conditions in which new goods or services can satisfy a need in the market
Chance to develop and sell a new product Chance to sell an existing product in a new market
The essence of entrepreneurship is to identify and exploit entrepreneurial opportunities

Strategic Entrepreneurship
Entrepreneurial actions based on a strategic perspective
Focus on finding opportunities in external environment that it can try to exploit through innovation. Identifying opportunities to exploit through innovation (Entrepreneurship part) Determining the best way to manage the firms innovation efforts (strategic part)

Corporate Entrepreneurship
An individual or a group in an organization creates a new venture or develops an innovation

 formerly known as the Minnesota Mining and Manufacturing Company Founded on the North Shore of Lake Superior at Two Harbors, Minnesota in 1902 With over 76,000 employees they produce over 55,000 products, including: adhesives, laminates, passive fire protection, dental products, electrical materials, electronic circuits and optical films

Richard Drew
June 22, 1899 December 14, 1980 American inventor who worked for 3M in St. Paul, Minnesota, where he invented;

Masking tape, Cellophane tape, and

Masking Tape
In 1923 3M employee Richard Drew visited an auto-repair shop in St. Paul, Minnesota. 3M produced and sold sandpaper and Drew was in the shop to test out a new batch. When he entered the shop employees were expressing disappointment at a failed attempt to paint a car in the two-tone style that was becoming popular at the time.

Masking Tape
Typically how the effect was achieved was by painting part of the car in one colour while covering the other parts with butcher paper The butcher paper was usually held in place with a heavy adhesive tape. Unfortunately, removing the adhesive tape peeled away part of the paint job.

Masking Tape
THE IMPORTANT BIT:

Rather than just sympathise with his customers and move on, Drew decided to do something about it.

Masking Tape
His company 3M had a lot of know-how in creating adhesives from making sand paper, so Drew figured he would try to make a paper tape to help solve his customers problems. Drew began experimenting with a range of materials and manufacturing processes to solve this problem.

Masking Tape
Eventually the then-president of 3M, William McKnight, noticed that Drew was spending time & money on this unofficial project. McKnight asked Drew to return to his actual job, improving sandpaper But Drew persisted, diverting funds and time to work on abrasives McKnight eventually realised this, but did nothing

Masking Tape
In 1925 Drew managed to create Masking Tape. This product has sold in the millions for 3M in the past 70 years. And this was just the start of creating an innovation culture in 3M William McKnight learned his lesson from Richard Drew

Spenser Silver
Born 1941 co-creator of the Post-it note In 1966, earned a doctorate in organic chemistry from the University of Colorado in 1966, before taking a position as a Senior Chemist in 3M's Central Research Labs.

Arthur Fry
Born 1931 co-creator of the Post-it note In 1953, while still enrolled in undergraduate school, Fry took a job at 3M (then it was still called Minnesota Mining and Manufacturing Company) as a new product development researcher. He worked in new product development throughout his career at 3M until his retirement in the early 1990s.

Post-It Note
In 1968, Spencer Silver (with the help of Jesse Kops) accidentally developed a "low-tack", reusable pressure sensitive adhesive. For five years, Silver promoted his invention within 3M, both informally and through seminars, but without much success. He was unable to find a marketable use for his invention.

Characteristics of Small Business versus Entrepreneurial Venture

Small Business
Independently owned, operated, and financed Fewer than 100 employees Doesnt emphasize new or innovative practices Little impact on industry

Entrepreneurial Venture
Innovative strategic practices Strategic goals are profitability and growth Seeks out new opportunities Willingness to take risks

Innovation
Is the means by which the entrepreneur either creates new wealth producing resources or endows existing resources with enhanced potential for creating wealth. (Drucker) key outcome firm seek through entrepreneurship Source of competitive advantage
In todays global environment innovation is required to maintain competitive parity than competitive advantage.

 Innovation =
theoretical conception + technical invention + commercial exploitation Types of innovation:
Product Process Organisational Commercial/ marketing Service innovation

Innovations produced in large established firms are often referred to as corporate entrepreneurship

Successful Entrepreneurship
The key to success with entrepreneurship and innovation is moving from: the invention of ideas to effective commercialization & acceptance in the marketplace

Entrepreneurs
Entrepreneurs
Are individuals acting independently or as part of an organization Create a new venture or develop an innovation & take risks entering them into the marketplace
Can be independent individuals Can surface in an organization at any level

 Entrepreneurship can:
Fuel economic growth Create employment Generate prosperity for citizens There is a strong positive relationship between the rate of entrepreneurial activity and economic development in a nation

International Entrepreneurship
Is the process in which firms creatively discover and exploit opportunities that are outside their domestic markets in order to develop a competitive advantage. A global phenomenon.

There must be a balance (in the culture) between

Individual initiative and The spirit of cooperation and group ownership of innovation
Successful entrepreneurial firms

Provide appropriate autonomy Incentives for individual initiative Promote cooperation and group ownership of an innovation

 Entrepreneurship is a top priority in many countries of the world (e.g., Finland, German, Israel, Ireland, and France). Some believe that entrepreneurship is flourishing in New Zealand, a trend having a positive effect on the productivity of the nations economy. A recent study of 29 countries found that the percentage of adults involved in entrepreneurial activity ranged from a high of over 20 percent in Mexico to a low of slightly over 5 percent in Belgium. The U.S. had a rate of about 13 percent. Importantly, this study also found a strong positive relationship between the rate of entrepreneurial activity and economic development in the country.

Internal Corporate Venturing

Autonomous Strategic behaviour
Autonomous strategic behaviour is a bottomup process in which product champions :
Pursue new ideas
Develop and coordinate the commercialization of a new good or service until it achieves success in the marketplace Product champions use their social capital to develop informal networks within the firm

Internal Corporate Venturing

Autonomous Strategic behaviour
A product champion
Is an organizational member with an entrepreneurial vision of a new good or service who seeks to create support for its commercialization

Autonomous strategic behaviour is

Based on a firms knowledge & resources that are the sources of the firms innovation A firms technological capabilities and competencies are the basis for new products and processes

Internal Corporate Venturing

Induced Strategic Behaviour
Induced strategic behaviour is a top-down process whereby:
The firms current strategy and structure foster product innovations Innovations are associated closely with that strategy and structure

Difference
Autonomous Str. Behaviour Bottom Up process Product champion facilitates the commercialization of an innovative good or service Can result in a change to the firms current strategy and structure Radical innovations emerge Induced Str. Behaviour Top-Down process Firms current strategy and Structure facilitates product or process innovations Driven by organisationss current corporate strategy and structure Incremental Innovations

Corporate Entrepreneurship
CE may be formal or informal activities aimed at creating new businesses in established companies through product innovations, process innovations and market developments.

The 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.
Strategic renewal Innovation Corporate venturing

Is your organisation enterprising?

Does your orgn. encourage intrapreneurs? Does your orgn. provide ways for intraprenuers to stay with their enterprises? Are people in your orgn. permitted to do this job in their own way, or are they constantly stopping to explain their actions and ask for permission? Has your orgn. evolved quick and informal ways to access the resources to try new ideas? Is your system set up to encourage risk taking and to tolerate mistakes?

 Can your orgn. decide to try something and stick with the experiment long enough to see if it will work, even when that may take years and several false starts? Are people in your company more concerned with new ideas or defending their turf?
Do intraprenuers in your orgn. Face monopolies, or are they free to use the resources of other divisions and outside vendors if they choose?

Obstacles to corporate venturing

Enforce standard procedures to avoid mistakes Manage resources for efficiency and ROI Control against plan Plan for the long term Manage functionally Avoid moves that risk core business Judge new steps from prior experience Compensate uniformly

Factors that make an organisation enterprising vision and atmosphere Orientation to the market Small, flat organisations Multiple approaches Interactive learning

 Authoritarian mgt. is being replaced by a networking, people style of mgt., characterized by horizontal coordination and support. Intrapreneurship within the orgn. allows employees the satisfaction of developing their ideas without risk of leaving the company. Large firms are taking lessons from small ones on how to be flexible, to promote innovation, and to create spirit.

Hands-on guide for developing an innovative philosophy

Encourage action Use informal meeting whenever possible Tolerate failure and use it as learning Persists in getting an idea to the market Reward innovation Plan the physical layout of the enterprise to encourage informal communication Put people on small teams for future oriented projects Encourage to reduce red-tapism Reward and promote innovative personnel

Internal entrepreneur
Personality Traits:
Integrity Political savvy Honest about mistakes Shares credit

Experience:
Established track record (brings credibility) Long tenure helps General managers, not narrow experts

 Should have the ability to

Discover profitable value propositions Communicate and market the value proposition Network to gain access to resources form across the organisation Assemble and motivate a team of experts with high energy levels Take informed risk, speedy decisions

What should the Sponsor do?

Spot the entrepreneur Provide the right assignment Empower Ensure integrity of mission Believe in the concept Set tough goals Demand results Sell upwards Help access resources Provide political cover Tolerate idea failures Coach/ mentor Plan personal development of entrepreneur

3Ms Innovation Rules

Dont kill a project Tolerate failure Keep divisions small Motivate the champions Stay close to the customer Share the wealth

W.L. Gore & Associates: One of the Most Innovative Company in America?
Operating with 4 divisions (fabrics, medical, industrial, and electronics), W.L. Gore and Associates has over $1.35 billion in annual sales and employs over 6,000 people in 45 global plants and sales locations around the world. Using its expertise with fluorocarbon polymers, the privately held firms highly diversified products provide innovative solutions. The firms organizational structure is flat, allowing frequent and direct communications among all associates through a network of teams. Teams organize around opportunities to create innovative products. Instead of bosses, associates have leaders (elected by their team). Members evaluate each other, creating a sense of ownership and responsibility. Associates are encouraged to spend 10% of their time on speculative ideas. Four principles are central to Gores culture:
(1) fairness (2) freedom to encourage, help, and grow in knowledge, skill, and scope of responsibility, (3) make and keep ones own commitments, and (4) consultation with other associates on matters that could impact the reputation of the company.

Lessons from Wipro

Recruit talented individuals, Self-motivated individuals Operating culture:
Create businesses from scratch

Diligent
Ethical Long-term customer relationships and quality. Speak openly irrespective of hierarchy.

Innovation Council

Lessons from Nokia

1998, Nokia estd. NVO (nokia ventures organisation) at corporate level

Test and develop nascent ideas, potential to generate revenues of $ 500Mn to 1 bn in 4-5 yrs. Operating conditions and incentives were kept same as in other nokia divisions and across markets. New ventures get a space to develop Nokia exemplifies benefits of integration Flexible and adaptable organisational structure.