Presentación Carlos Baradello

Corporate Entrepreneurship: Fundamentals Carlos S. Baradello, PhD Associate Dean Corporate & International Programs School of Business & Management

Corporate Entrepreneurship Corporate Entrepreneurship: Creating a Company within a Company AGENDA – Introduction to Corporate Entrepreneurship (CE) – Globalizationn: opportunties and risks. – CE Vocabulary – Project Definition – CE Models – Project Evaluation – Integration of Concepts – Concluding Remarks g

Corporate Entrepreneurship Corporate E t C t Entrepreneurship (CE): hi (CE) Creating a Company within a Company THEMES Theme #1: The impact of Globalization over the corporation h i Theme #2: CE Fundamentals Theme #3: Creating a Process for CE Theme #4: CE Project Templates Theme #5: Models of CE Theme #6: Th #6 Integrating all Concepts I t ti ll C t

Corporate Entrepreneurship THEME #1 The I Th Impact of t f Globalization over the Corporation

PROFESSIONAL AREAS Corporate Entrepreneurship OF INTEREST Global Paradigm Shifts Innovation Flat Digital & Society Entrepreneurship Invisible Markets 3

NetworkingEntrepreneurship Corporate : Ecosystem IS KEY in Value Creation

Olas de innovación Corporate Entrepreneurship tecnológica Evolución de Silicon Valley 1950 – 20xx? BioTech GreenTech Re. Energy Water, etc. => Outsource SWR & SVC => Outsource PCB’s => Outsource Metal/Mechanical 1950 1960 1970 1980 1990 2000 2010 7

Corporate Entrepreneurship Global Growth will not be uniform: Market shifts are coming and will affect most economies (Country GDP Rank in Billions of Real (2003) U.S. Dollars) 2000 2010 2020 2030 2040 2050 U.S. U.S. U.S. U.S. U.S. China Japan Japan China China China U.S. Germany Germany Japan Japan India India U.K. U.K. Germany India Japan Japan France China U.K. Russia Russia Brazil Italy France India U.K. Brazil Russia China Italy France Germany U.K. U.K. Brazil India Russia France Germany Germany India Russia Italy Brazil France France Russia Brazil Brazil y Italy Italy y Italy y Source: Global Insight World Service and Goldman Sachs

Corporate Entrepreneurship Tecnology + Innovation + Sucess $$$

Corporate Entrepreneurship Globalization imperatives Opportunities: Threats/Risks: • Global markets • New competitors • Global supply chain • Interdependencies • Idea circulation • New P/S in your local • New partnerships N t hi market • Access to new technology • Speed/Acceleration and talent • New personal/ • Accelerated growth professional requirements • Personal Development • Increase pressure for talent

Corporate Entrepreneurship Perspectives on the Nature of Entrepreneurship(1) p p p Wealth Entrepreneurship involves assuming the risks associated with the facilitation of production in exchange for profit. Creation Enterprise Entrepreneurship entails the founding of a new business venture where non existed before. Creation Innovation Entrepreneurship is concerned with unique combinations of resources that make existing methods or products obsolete. Creation Change Entrepreneurship involves creating change by adjusting, adapting, and modifying one’s personal repertoire, approaches, and skills to Creation meet different / t diff t /new opportunities available i th environment. t iti il bl in the i t Employment Entrepreneurship is concerned with employing, managing, and developing the factors of production, including the labor force. Creation Value Entrepreneurship is a process of creating value for customers by exploiting untapped/unseen opportunities. Creation Growth Entrepreneurship is defined as a strong and positive orientation towards growth in sales, income, assets, and Creation employment. (1) Entrepreneurial Intensity, Michael H. Morris

Corporate Entrepreneurship THEME #2 CE Fundamentals F d t l

Corporate Entrepreneurship Environmental Turbulence Creates a Need for new Management Practices(1) Customers Technology • Fragmented markets Firms required to change how they operate • Increasing customer expectations lead to internally and compete externally d t i t ll d t t ll due to: customize (products, customer support & • New Information management communication) vs. standardization. • New production and svc. delivery tech. • Higher cost of customization lead to • New customer management tech. cultivate long-term customer relationships • New logistics and inventory mangt. tech. • Sustainable growth require learning new • New sales f N l force management t ht tech. skills in serving global markets • New product development tech. The Embattled Corporation Legal, Regulatory, and Ethical Standards Competitors • Increased accountability, visibility and • Competitors lead customers to new markets transparency to multiple stakeholders. increased expenditures in product develpmt. • Increased litigious environment raises the • Hard to differentiate, competitors stakes on product liability, increase costs aggressively/ quickly mimicking new prod/svc and restrain innovation. • Increased competition with companies in • Regulatory restrictions limit choices while other industries forcing to change rules or force firms to learn new ways to compete even the game! • Society holding firms more responsible for • Competitors specializing in narrow, profitable the environmental and social implications niches avoid costs of competing across a of their actions broader product and customer range, while attacking most profitable areas of business (1)Corporate Entrepreneurship and Innovation, Michael H. Morris, PhD., Donald F. Kuratko, PhD., Jeffrey G. Covin, PhD.

Corporate Entrepreneurship Corporate Entrepreneurship: WHY? Renew y Regenerate the Corporation New Revenues & Personal Profits Professional Increased Portfolio of Growth P/S & markets k Increased competitiveness, sophistication, I d titi hi ti ti able to “average-out the local turmoil's”

Corporate Entrepreneurship Disruptive Technologies… …Disrupt Global Markets Customers/Markets DISRUPTIVE INNOVATIONS  Present new risks and require TRADITIONAL Earns the new approaches to doing business Emerging right to  Different customer needs, Bus. Development lower ability to pay and compete! requires a complete solution i Speed of execution l t l ti Deadly MATURE STATE • Focus on large & dominant embrace with markets/customers Sustaining established • Meet growth goals in the MIGRATION short term customers & • Market behavior well PATH understood technologies g Sustaining Disruptive Products/Technology Adapted from: “The Innovators Dilemma”, Clayton M. Christensen, HBS Press.

Corporate Entrepreneurship VALUE CREATION MIGRATION Va Virtual alue Service Provider Solution Service Layer Standa Application / Services Layer Domain Information ardizing Web Portal – Information Utility Subscriber Equipment / Basic Services g Infrastructure Equipment 16

Corporate Entrepreneurship Corporate E t C t Entrepreneurship: hi Creating a Company within a Company Markets/ Customers New Markets NEW NEW BUSINESS VENTURES Market Extensions ESTABLISHED Existing CORPORATION CURRENT Market(s) BUSINESS Existing E i ti Product(s) P d t( ) New N Prod./ Prod / Product(s) Extensions Product(s) Tech’s

Corporate Entrepreneurship Corporate Entrepreneurship: NEW BUSINESSES New Business New Learnings New Risk Risk Opportunity of Failure Failure New Learnings

Corporate Entrepreneurship Corporate Entrepreneurship: Virtuos Cycle New Revenue Profits f Learning’s L i ’ Risk Learning’s Failure Success

Corporate Entrepreneurship Corporate Entrepreneurship: Promises p p p • Renew & Regenerate – New Technologies – New Markets – Process Re-engineering – New Value Creation/Extraction – New organizational models • Re-energize/Promote Corporative Culture Change – Dynamism & Speed – Promote taking measured risks – Personnel challenged by new opportunities/risk P l h ll db t iti / i k • Consistent Risk Management: – Increase success probability – Increased opportunities (breadth, scope, quality, (breadth scope quality quantity) – Able to stop earlier • Creation of Corporate Memory: p y – Keep track of the first or second try – Lessons learned

Corporate Entrepreneurship Established Firms a e u de Pressure… stab s ed s are under essu e Their old paradigm is breaking down… • Bigger creation of stockholder value, • Faster creation of stockholder value, • Faster ability to respond to market changes, • Faster ability to embrace new technologies and y g paradigm changes, • Increase their readiness to “tolerate risk” • Increase their readiness to “innovate” or innovate “integrate innovations” => network Innovation • Customer-centric innovation • Increase ability to “fail wisely fail wisely” • “…Stay hungry, stay foolish...” quote from Steve Jobs

Corporate Entrepreneurship Traditional Management vs. vs Entrepreneurial Management Encourages control Encourages Opportunity seeking Encourages discipline Encourages innovation Encourages conformity & efficiency Encourages vision & drive Encourages training Encourages learning Encourages uniformity Encourages questioning stat-quo Encourages effectiveness/contract E ff ti / t t Encourages building relationship E b ildi l ti hi relationships only within & outside the organization Encourages long-term planning with Encourages strategic thinking at functional knowledge all levels cooperation and rapid levels, knowledge transfer. Encourages to create certainty and Tolerates uncertainty and clarify ambiguity. Risk avoidance. ambiguity. Promotes risk taking Discourages failure. and embraces changes

Corporate Entrepreneurship Large Corporations Prospered… Prospered …in a Closed Innovation environment

Corporate Entrepreneurship Corporations are moving to… …an Open Innovation Model

Corporate Entrepreneurship Some ventures are better-off… better off… …outside the corporation The corporation becomes/creates an “Ecosystem”

Corporate Entrepreneurship Closed vs. Open Innovation Other fi Oth firm´s Market Our New License, Market M k t Spin-out, Divestiture Internal Technology Base Internal/External Our Current Venture Handling Market External Technology External Technology Base Insourcing Stolen with pride from Prof Henry Chesbrough UC Berkeley, Open Innovation: Renewing Growth from Industrial R&D, 10th Annual Innovation Convergence, Minneapolis Sept 27, 2004

Corporate Entrepreneurship THEME #3 Creating a C ti Process for P f CE

Corporate Entrepreneurship Corporate Entrepreneurship Speed -- Value Creation -- Renewal -- Transformation p • The creation of new business units by an established f firm, • The development and implementation of entrepreneurial strategic thrusts, p g , • Promotion/emergence of new ideas from anywhere:  up/down the hierarchy  all functions/sectors  up/down the supply chain

Corporate Entrepreneurship Corporate Entrepreneurship Governance -- P G Proactive -- I /E t ti In/External -- I /F l In/Formal l • Corporate Venturing: speed of execution for the formation of new ventures/strategic investments f ti f t / t t i i t t • Intrapreneurship: individual empowerment, take initiative, speeding tickets “are OK” and risk taking culture • Bring the Market Inside: connected to trends via multiple stakeholders: suppliers, customers, regulators, academics, investment bankers, other industries, etc…. , , , • Entrepreneurial Transformation: institutionalize permanent adaptability, renewal at increasing speed, risk/ rewards profile, tolerance to failure -- corporate DNA profile

Corporate Entrepreneurship Corporate Entrepreneurship Communicate -- Sell -- Review -- Fund • Elevator Pitches • Business Planning Process • Poster Sessions and One-Pagers • Business Pitches • Product/Service/Process Demos Establish Credibility -- Passion -- Clarity of Thoughts -- Mastery of Complexity THE RIGHT OPPORTUNITY BY THE RIGHT TEAM!

Corporate Entrepreneurship If you want t h t to have b buyers… You need to be selling…  Elevator Pitch & One-Pager  Project Plan  Business Pitch Presentations  Demonstrations/Proof-of-Concept C t Customer T ti Testimonials i l

Corporate Entrepreneurship Disciplined Incremental Phased Review New Venture Incubation/Acceleration Process Opportunity Business Opportunity Evaluation Exploration Qualification Plan “Deployment, Launch & Execution” Phase 0 Phase I Phase II Phase III • Hig Growth Markets eds M digenous Nee •Customer CHAMPIONING •Locations •Site Survey •Buildings •Demographic •Bus. Validation • Execution plicable •Managers •Gets/Gives •Contract Team gh • Rep • Ind White Project Business Paper Proposal Plan Shelve/ Learning Refinement & Framing

DIPR: FUNNELS DOWN THE Corporate Entrepreneurship BUSINESS OPPORTUNITIES Market/Technology Trends  Enables a disciplined process to screen business opportunities,  Establish a common framework to manage risks,  Maximize the efficiency (risk, cost and time) of the New Venture ) Exploration,  Capture the learning to avoid repeating the same mistake,  Defines a corporate culture f l Business Deployment, (i.e. “HP way”) or approach to Launch & Execution profitable growth.

Presentación Carlos Baradello

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