2. Content
What is Corporate Entrepreneurship
2 Types of CE: Focused and Organization
Wide
Possible Transition?
3. What is Corporate Entrepreneurship?
The process by which individuals inside
organizations pursue opportunities without regard
to the resources they currently control
Internal
Corp. Expected Results
Venturing • Improve competitive
positioning
• Transform
companies, markets, and
CE industries
• Improve organization’s
Strategic growth and profitability
Innovation
Renewal
4. How to develop Corporate
Entrepreneurship?
Organization
Focused
Wide
5. Focused Entrepreneurship – What is it?
• Mature organizations
that do not take risks –
“not upsetting the
apple cart”
• Promote
entrepreneurship by
mandating it as a
corporate objective
7. Focused Entrepreneurship – Limitations
Strict compliance
Difficult to
to financial and
change chemistry Managers =/=
classical
management
and culture of entrepreneurs
organization
controls
Results: Less than sustainable innovation and
entrepreneurship
8. Org. Wide Entrepreneurship – What is
it?
Opportunities Money is Failure is
are perceived Risk-
not a considered
and pursued by taking
motivator normal
entrepreneurs philosophy
9. Org. Wide Entrepreneurship – How to Develop?
Right Risk
Discipline of
Environment containment
parsimony
(kiam siap) (Process)
• Right tone for
innovation • Multi stage • Draw the line between
• Select and rotate resource responsible and
talented managers allocation irresponsible
• High level of Trust • Control the process
• Appreciate views of • Learn from past
individuals experiences
10. Org. Wide Entrepreneurship – Case in Point
Case Study: Wipro
Indian
Information Technology
(IT) Service
Consulting Services
Outsourcing services
11. Azim Hasham Premji
Top 30 all time great
entrepreneurs in the world
(Business week, July 2007)
12. Vegetable oil
(1945-1970’s)
Azim Hasham Premji
Top 30 all time great
entrepreneurs in the world
(Business week, July 2007)
14. Vegetable oil
(1945-1970’s)
(IT) services
(late 70’s)
Azim Hasham Premji
Lab on Hire Top 30 all time great
entrepreneurs in the world
(1991) (Business week, July 2007)
15. Vegetable oil
(1945-1970’s)
(IT) services
(late 70’s)
Lab on Hire
(1991)
Azim Hasham Premji
Extended Offshore (main form of Top 30 all time great
revenue) entrepreneurs in the world
(Business week, July 2007)
16. Vegetable oil
(1945-1970’s)
(IT) services Great
presentation
(late 70’s) bro. High-
five!
Lab on Hire
(1991)
Extended Offshore (main form of
revenue)
Azim Hasham Premji
Top 30 all time great
Quality Consulting Practice (2002)
entrepreneurs in the world
(Business week, July 2007)
17. Org. Wide Entrepreneurship – Why the Success?
Right Discipline of
Environment parsimony (kiam Risk containment
siap)
Free Space for Structured Innovation Program
Innovation
Six Sigma
18. Same Same, but different?
Ideas from HBR Article: Meeting the Challenge of Corporate
Entrepreneurship
19. Similarities (Focused Entrepreneurship)
HBR CE – How?
• Diffused Limited success of
Responsibilities “injecting”
Fizzled Out Entrepreneurship and
• Centralization Parallel Organizations
Isolates
Insight: Established systems ensures success of existing businesses
but hinders building entrepreneurial culture
20. Similarities (Org. Wide Entrepreneurship)
HBR CE – How?
Balancing Right Environment,
Strategy, Operatio Operational discipline
ns and and Focus on Process
Organization
Insight: Enables companies to build, blend and maintain an
entrepreneurial culture to be competitive and grow
21. Is it possible to shift from
Focused Entrepreneurship and
do well with Organization Wide
Entrepreneurship?
Ideas from HBR Article: Meeting the Challenge of Corporate
Entrepreneurship
23. Previous “Focused Entrepreneurship” Culture and Systems
Pre 1999…
Unsuccessful
Corporate
Venture Funds
Potential
Businesses like
“Life Sciences”
cancelled
Applied approach of
leading established
businesses to “new
business
opportunities”
24. Building the “Org. Wide Entrepreneurship” Culture and Systems
Post 1999…Emerging Business Opportunity (EBO)
Strategy Dev: Leadership: Leaders
• Engagement with market selected based on
place through in market experience, skill and knack
experiments. for entrepreneurship
• Reviews based on plan Experiment Operational
targets. with Rigor Experience
• EBO meetings with and with
learning encouraged Discipline Invention
Organization:
Identity with
Monitoring and Evaluation: Integration
Which can be integrated into existing
business divisions?
Scoring based on “clear strategy”, “executable
model” and “winning in the marketplace”.
25. Results
• 25 businesses launched in 5 years, 3
failed
• Revenue contributed $31 billion in
2002-2004
• Integrated successful businesses with
corporate system
26. Lessons Learnt
• Incorporate entrepreneurship through
leadership decisions
• Refrain from force-fitting
entrepreneurship
• Dealing with the challenge of integration
of new business with existing structures
and systems
27. Questions for Discussion
Without the “change agent” leader, do you think
that organization wide entrepreneurship can be
sustained?
Is there a more influential driver to develop/hinder
corporate entrepreneurship? (external)
“The process by which individuals inside
organizations pursue opportunities without
regard to the resources they currently control”
Agree?
Editor's Notes
These individuals create a new organization or instigate renewal or innovation within that organization.CE encompasses three types of phenomena:Internal Corporate VenturingThe creation of new businesses within corporate organizations2. Strategic RenewalThe transformation of existing firms through renewal or reshaping of its key ideas3. Innovation
ExternalHiring external proven independent entrepreneurs 2. InternalAppointing someone within the organization who shows attributes of entrepreneurship
Existing financial control systems lead to frequent intervention and misguided direction during the progress of these ventures Strict compliance with the classical approach of:setting objectivesmotivating people to accomplish themmonitoring accomplishmentsResults:Due to? Managers don’t rly trust employees? Very stringent schedule to follow? Injecting outside-in entrepreneurs will not provide sustainable growth to the organizationLack patience and experience Perception and exploitation of opportunities for innovation go beyond the efforts of one key manager Expected Result: One sole manager is not sufficient to enforce a change of culture, nor keep innovative efforts sustainable enough for long run profits for the company. Perception and exploitation of opportunities of innovation should be done by all employees of companies to make it sustainable
They take initiative. Instead of waiting for the company to give them direction, they give the company direction by taking on new opportunities presented to them. Reward recognition through promoting company’s success stories and the enhanced status to be able to engage in entrepreneurial activity on a bigger scale. Eg: ge to drive new project into new biz divisions. (how many of you agree with this?)in essence, focus is on problem solving and learning from failure rather than apportioning the blame Based on their willingness to bet on entrepreneurs. Of course, the risk is calculated with its adequate analysis.
Companies should have High levels of trust in the entrepreneur. This is required due to the high levels of uncertainty in entrepreneurial activities. Rapid information processing in the sense that there should be high level of interaction between the individual, organization and external environment at all levels, so there can be a high level of synergy amongst all the relevant stakeholders. This means that there will be people in the company who will think your idea is stupid, not viable. It is kinda inevitable, as different people will see value in different ideas differently. So, it is thru the ability to appreciate all these judgments and criticisms as constructive that will enable the organization to become more entrepreneurialNEXT:- Defining the ballpark(area) of innovation (not applicable to all, depending on the company’s culture as well, how willing are they to diversify etc. ). Not simisai also can ask: anyone know the meaning of this word? Instilling discipline of parsimony(kiamsiap) so that investments and costs are minimized until an upside potential is demonstrated. Multistage: like playing game, can lvl up. Link back to kiamsiap- rotation of talented managers to expose them to diff biz territories A process of managing failures failure tolerant leader Although we say failure tolerant, it is not everything also tolerate. If not company will go bust. Risks of E-activity has to be contained. Done thru constructive control mechanisms that help avoid irresponsible behaviour. While allowed to think and act in unconventional ways, what is irresponsible will not be tolerated. To contain risks, mgmt. should control the process and not the specific initiatives,so that if anything goes wrong, they will know where went wrong and avoid that same mistake in that process. Projects will not be judged by outcome, but by the quality of the processes. Can also contain risk by learning from the past experiences,
-started off as a company producing vegetable oil Late 70’s started IT biz when IBM pulled out of indiaProduced their first PC in 1986Had a 100men strong RnD team at that point of time 1991, indian economy opened. Hardware no longer protected. Influx of foreign hardwareShifted RnD focus to service software. Lab on hire business transpired, offer RnD service to companies like intel at a much lower costConcept extended to Offshore development centre with 8000men team From their own internal quality initiatives, it translated to a quality consulting practice Copyrighted 6 sigma for software, draw blueprints for customer orgsIncubates other biz as well. Eg: mindtree consulting and exodus, among others.
-started off as a company producing vegetable oil Late 70’s started IT biz when IBM pulled out of indiaProduced their first PC in 1986Had a 100men strong RnD team at that point of time 1991, indian economy opened. Hardware no longer protected. Influx of foreign hardwareShifted RnD focus to service software. Lab on hire business transpired, offer RnD service to companies like intel at a much lower costConcept extended to Offshore development centre with 8000men team From their own internal quality initiatives, it translated to a quality consulting practice Copyrighted 6 sigma for software, draw blueprints for customer orgsIncubates other biz as well. Eg: mindtree consulting and exodus, among others.
-started off as a company producing vegetable oil Late 70’s started IT biz when IBM pulled out of indiaProduced their first PC in 1986Had a 100men strong RnD team at that point of time 1991, indian economy opened. Hardware no longer protected. Influx of foreign hardwareShifted RnD focus to service software. Lab on hire business transpired, offer RnD service to companies like intel at a much lower costConcept extended to Offshore development centre with 8000men team From their own internal quality initiatives, it translated to a quality consulting practice Copyrighted 6 sigma for software, draw blueprints for customer orgsIncubates other biz as well. Eg: mindtree consulting and exodus, among others.
-started off as a company producing vegetable oil Late 70’s started IT biz when IBM pulled out of indiaProduced their first PC in 1986Had a 100men strong RnD team at that point of time 1991, indian economy opened. Hardware no longer protected. Influx of foreign hardwareShifted RnD focus to service software. Lab on hire business transpired, offer RnD service to companies like intel at a much lower costConcept extended to Offshore development centre with 8000men team From their own internal quality initiatives, it translated to a quality consulting practice Copyrighted 6 sigma for software, draw blueprints for customer orgsIncubates other biz as well. Eg: mindtree consulting and exodus, among others.
-started off as a company producing vegetable oil Late 70’s started IT biz when IBM pulled out of indiaProduced their first PC in 1986Had a 100men strong RnD team at that point of time 1991, indian economy opened. Hardware no longer protected. Influx of foreign hardwareShifted RnD focus to service software. Lab on hire business transpired, offer RnD service to companies like intel at a much lower costConcept extended to Offshore development centre with 8000men team From their own internal quality initiatives, it translated to a quality consulting practice Copyrighted 6 sigma for software, draw blueprints for customer orgsIncubates other biz as well. Eg: mindtree consulting and exodus, among others.
-started off as a company producing vegetable oil Late 70’s started IT biz when IBM pulled out of indiaProduced their first PC in 1986Had a 100men strong RnD team at that point of time 1991, indian economy opened. Hardware no longer protected. Influx of foreign hardwareShifted RnD focus to service software. Lab on hire business transpired, offer RnD service to companies like intel at a much lower costConcept extended to Offshore development centre with 8000men team From their own internal quality initiatives, it translated to a quality consulting practice Copyrighted 6 sigma for software, draw blueprints for customer orgsIncubates other biz as well. Eg: mindtree consulting and exodus, among others.
Why did they succeed?ideas are gathered ‘bottom-up. “Innovation is essentially the application of high creativity. It need not be restricted to just products; it applies to services, employee attitude and across all levels. Innovation is a fundamental mindset pursued seriously by an organization”- Structured innovation program – innovation council to evaluate proposals and provide internal funding. Approach is pragmatic and structured. Sift ideas-indentify themes and set clear goals. innovation goes thru various stages od approval and commitments of funds. Idea has to meet certain set goals. wipro staff also share the gains generated by their ideas ( contrary to the article)Six sigma – finetune, reduce cost, increase pditvity, while maintaining and improving consistency in the quality of the execution – learn from past experiences, control the process and not the initiative
Diffused Responsibility Fizzles OutSuppress new ideas in favour of existing businessNew business does not fit in with existingCentralization IsolatesClash between old and new culturesDifficulty in integration of new initiatives with existing systems
Balance trial-and-error strategy formulation with rigor and discipline. New biz ambiguous environments unknown outcomes managers might not get it right the first time need to experiment but know when to pull the plug. Combine both open minded opportunism and disciplined planning > Narrow the range of choices before diving deep. certain areas of promise. Combining brainstorming (division level) and criteria for reducing number of ideas. > Closely observe small groups of consumers to identify their needs. test on a small scale. Go to consumer homes, “follow me home” by intuit > Use prototypes to test assumptions about products, services, and business models. basis for informed responses > Use nonfinancial milestones to measure progress. project based milestones. “we will conduct 5 customer trials in 3 months” > Know when – and on what basis – to pull the plug on infant businesses. agreement on standards, criteria.Balance operational experience with invention. (something old, something new)Building on strengths (if not no difference from startup) selling to existing customers, staffing with seasoned personnel, established distribution channels. Differentiation by fresh thinking. > Appoint “mature turks” as leaders of emerging businesses. new people to be paired with experienced managers who are successful at running their larger businesses but also are willing to test out new businesses. Handpick or based on personnel evaluation who have high scores on entrepreneurship, risk taking etc. > Win veterans over by asking them to serve on new businesses’ oversight bodies. scenario planning: Microsoft. Alter incentives and promotion criteria. > Consider acquiring select capabilities instead of developing everything from scratch. > Force old and new businesses to share operational responsibilities. Balance new businesses’ identity with integration. (integrate with autonomy)New business might need help from parent company manager assigned with autonomy of operations given hand back to existing business group transition back not so smooth lack of organizational learningWhen to shift back? How to balance identity and integration? Rushed vs time needed to differentiate > Assign both corporate executives and managers from divisions as sponsors of new ventures. mix of freedom and discipline with dual sponsorship > Stipulate criteria for handing new businesses over to existing businesses. quantitative (revenue or market size thresholds) and qualitative (experience, competitive superiority) > Mix formal oversight with informal support by creatively combining dotted- and solid-line reporting relationships. innovative organizational structures. Councils and oversight committees
By September 1999, IBM had achieved financial stability with steady revenue growth. But at only 5.7%, this growth was well below the red-hot technology industry average. When Gerstner learned that funding for one of his key new-business initiatives in Life Sciences had been cancelled by line management in order to contain short-term costs, he “blew his stack.” A corporate venture fund that had been established to support internal growth opportunities had also proved problematic. “We called it bowling for dollars,” Harreld said, “because managers from [lines of business] tried to fund ideas with loose, back-of-the-envelope business plans.”3 The lack of experienced entrepreneurial leadership and processes caused most of these new IBM businesses to fail. result of trying, unsuccessfully, to apply a single approach to organizing and leading— one that was designed for large established businesses—to its high-growth and start-up businesses.
Success against these project-based milestones could include clarifying market demand and willingness to pay by interviewing key customers or reducing technology risk by completing a key phase of the product development process.PlanLeadershipStrategy DevelopmentMonitoring and Evaluation Results25 businesses launched in 5 years, 3 failedRevenue contributed 31 billion in 2002-2004Integrated successful businesses with corporate system
Success against these project-based milestones could include clarifying market demand and willingness to pay by interviewing key customers or reducing technology risk by completing a key phase of the product development process.PlanLeadershipStrategy DevelopmentMonitoring and Evaluation Results25 businesses launched in 5 years, 3 failedRevenue contributed 31 billion in 2002-2004Integrated successful businesses with corporate system
Success against these project-based milestones could include clarifying market demand and willingness to pay by interviewing key customers or reducing technology risk by completing a key phase of the product development process.PlanLeadershipStrategy DevelopmentMonitoring and Evaluation Results25 businesses launched in 5 years, 3 failedRevenue contributed 31 billion in 2002-2004Integrated successful businesses with corporate system