Corporate Startup Summit Workshop 20.10.16

1. © IST Institute
Corporate Startup Summit 20.10.2016 - Frankfurt
IMPLEMENTING CORPORATE
STARTUPS TEAMS SUCCESSFULLY

2. Christoph Selig, Ph.D. candidate IST Innovation institut – focussing on
strategic innovation with embedded entrepreneurial teams
Current
 Ph.D. candidate at institute for strategic innovation & technology management (IST)
 Leading research project – Corporate Entrepreneurship, embedded entrepreneurial teams
 Entrepreneurship program manager at HTWG Konstanz
 Coordinator of industry best-practice group in Baden-Württemberg
Academic background
 Master of Engineering industrial engineering HTWG Konstanz
 Bachelor of Engineering industrial engineering der HTWG Konstanz
 Exchange semester DTU Copenhagen focus on innovation and entrepreneurship
Profession background
 IST Institute since 2014
 Festo AG – Marketing concepts for global marketing campaigns
inno-ist.org
Page 1© IST Institut, M. Eng. Christoph Selig

3. IST focusses on technology-oriented companies and their challenge
in dynamic markets: Implementing strategic responsiveness
Firm 1: not successful
Firm 2: missing chances
Firm 3: sustained success with
strategic responsiveness
Market parameters
time
Market
Source: IST / CoPS, Walter Isaacson “Steve Jobs”
... creating an
“entrepreneurial
and
agile
organization” …
(Steve Jobs)
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4. © IST Institut, M. Eng. Christoph Selig Page 3
Firms need to combine centralized efficiency of their core business with
synergies from decentralized innovation: Ambidexterity
Source: IST / CoPS – Gard, Baltes, Katzy “Managing autonomy of teams in Corporate Entrepreneurship”, IAMOT 2013, Porto Alegre, Brazil
Entrepreneurial Teams Efficient hierarchy
• Advantages from agility
based on flexibility & passion
• Focus on investment in strategic
options, with risk & failure
tolerance
• Incentives for experimental
learning: „try early & fail cheap“
• Scaling based on intangible
assets, technology capabilities
and mobile market access
The “both-handed”
ambidextrous organization
Industrial Core
• Advantages from stability,
standardization, repetition
• Focus on planning, quality,
processes, specialization
• Incentives for risk averseness,
cost reduction, documentation
• Mass-produced physical-goods
scaling by smarter
automation & logistics
Strategic Innovation

5. Planning practices fail in disruptive context: Agile modes of
trial & error are vital for building capability-based advantages
Planning vs. Agility / Adaptability
 Omitting need for prediction by
establishing trial & error modes of
operation
 Enable small errors with bearable losses
but chance of over-proportional gain
(convexity)
 Optimize cost per unit of trial rather than a
risk of failing to identify patterns &
structures
 “I did not fail! I just found ten
thousand ways that didn’t work”*)
Source: Siemens AG / Pictures of the future 2013, * Edison, inventor of the light bulb, IST
Page 4© IST Institut, M. Eng. Christoph Selig

6. The suitable organizational design is depending on the corporates’
position in the market and the technological knowhow
Page 5
Source: Burgelmann, R.; (1984) Managing the internal corporate venturing process | Garrett, R. P.; Covin, J.G.; (2015) Internal Corporate Venture Operations Independence and Performance
Joint
Venture
Joint
Venture
Acquisition
Base Related Unrelated
BaseRelatedUnrelated
Joint
Venture
Joint
Venture
Internal
Development
Acquisition
Corporate
Venture
TECHNOLOGY / KNOWLEDGE
MARKET
Joint Acquisition – CVC
© IST Institut, M. Eng. Christoph Selig
Internal Corporate Venture
Joint Venture – BMW / Sixt

7. In such an environment Embedded Entrepreneurial Teams enable
industrial organizations to successfully step into digital options
 Formal decision making
 Risk averseness with
front-up analytics
 Problem solving with
consensus seeking
 Availability of resources
(capital, …) and access
 Elaborated processes
 Efficient administrative
backbone
Source: Aldrich, E.H.; Auster, E.R:, 1986. Even Dwarfs Started Small. Liabilities of age and size and their strategic | Ireland, R. D., Covin, J. G., & Kuratko, D. F. (2009). Conceptualizing corporate entrepreneurship strategy // Tirole, J. (1986). Hierarchies
and bureaucracies: On the role of collusion in organizations. | Chesbrough, H. (2000). Designing corporate ventures in the shadow of private venture capital | Baron, R. A. (2002). OB and entrepreneurship: The reciprocal benefits of closer conceptual links.
 Low/no hierarchy, informal
decision-making
 Intuitive risk taking, illusion
of self-control
 Problem solving by proto-
typing and experimenting
 Scare resources, boots-
trapping approach
 Rather routines than
processes evolving
Start-up
Organization
Corporate
Organization
Page 6
 Minimal organization with links
and pipelines to corporate
 Analytical risk taking
 Problem solving without
a formal consensus seeking
 Structurally separated with access
to (some) corporate resources
 Managing corporate Stakeholders
 …
Embedded Entrepreneurial Team EET
© IST Institut, M. Eng. Christoph Selig

8. The interface between the embedded entrepreneurial team and the
parent corporate has impact on the teams performance and success
© IST Institut, M. Eng. Christoph Selig Page 7
No blueprint for implementing corporate startups – highly individualized
Autonomy
high strategic &
structural auto-
nomy positive
performance
impact
Financing /
Sponsorship
bootstrapping,
stage-gate process,
budget
Incentive, reward
further career
options, financial
interest, failure
culture
Network access
linking pin, network
internal experts and
stakeholders, access
to external partners
Roles of the
advisory board
trade off between
demanding and
promoting
Shared Services
access to admin
and secretarial
services, basic
function in team
Source: IST Institute – Corporate Entrepreneurship study Germany | Selig, C., Stettina, C., Baltes G. (2016): The Corporate Entrepreneur

9. The corporate entrepreneur differs significantly from
entrepreneurs and corporate managers – but lends from both
 Risk-averse, seeking stability
 Team orientation
 Leadership role
 Need for power
 Stakeholder management &
communication focus
 Analytical decision making,
 Efficiency & execution driven
 …
 Risk-taking, tolerance for ambiguity
 Extrinsic motivation, egoistic
 Innovative, creative, visionary
 Need for achievement
 Full autonomy
 Intuitive decision making
 Effective & outcome driven
 …
Start-up
entrepreneur
Corporate
manager
Source: Brandstätter, Hermann (2011): Personality aspects of entrepreneurship. A look at five meta-analyses | Zhao, Hao; Seibert, Scott E. and Lumbkin, G. T.; (2010): The Relationship of Personality to Entrepreneurial Intentions | Ciavarella, M. A.; et al.
(2004): The Big Five and venture survival | Rauch, A., & Frese, M. (2007). Let's put the person back into entrepreneurship research | Busenitz, L. W., & Barney, J. B. (1997). Differences between entrepreneurs and managers in large organizations: Biases
and heuristics in strategic decision-making. | Dyer, J. H., Gregersen, H. B., and Christensen, C. (2008). Entrepreneur behaviors, opportunity recognition, and the origins of innovative ventures | Fagiano, D. (1997). Managers vs. leaders: A corporate fable.
 Analytical risk-taking,
reproducible problem solving
 Intrinsic motivation (achievement)
 Entrepreneurial leader
 Need for autonomy
 Stakeholder management
 Transparent decision making
 Innovative initiator
 …
Corporate entrepreneur
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10. First findings indicate corporate entrepreneur characteristics – with
consequences for management, incentives and hiring schemes
Page 9
Source: Selig, C., Stettina, C., Baltes G. (2016): The Corporate Entrepreneur: A driving force for strategic renewal and radical innovation in established companies.
Team
setting
Decisive project
leader role
Career
Track
Well educated,
professional
experience
Mgmt. style
Cautious risk
taking, problem
solving, illusion
of self-control
Financial
motivation
Within a corridor,
no upside needed
no downside acc.
Hygiene factors
Autonomy,
individual impact,
original creation
Corporate
relation
Conscious & stra-
tegic stakeholder
management
Motivation
Leave a mark –
this project is
“my baby”
Norms &
Values
High score on
(family) values,
trustable
Attractive career option for generation Y?
© IST Institut, M. Eng. Christoph Selig

11. Cannibalization of the core business to master digital transformation to
ensure sustainable competitiveness via implementing corporate startup
Page 10
Source: legic – homepage 2016 | CoPS - LEGIC Identsystems Ltd - From selling ID-cards to providing access to an ID network
© IST Institut, M. Eng. Christoph Selig
 Business: Product business –
selling locks and ID-cards as a key
 Threat: Replacement of ID cards
through mobile devices, endanger
existing business model
 Challenge: Company needs to cannibalize
their current core business (lock & key)
 Solution: Implementing internal startup
team – top down initiated to develop new
business using new digital technologies
 Learnings: external corporate entrepreneur
supports internal change; top down support
needed for overall corporate transformation

12. Contact information
M. Eng. Christoph Selig
Institut für
Strategische Innovation &
Technologiemanagement
Hochschule Konstanz
Brauneggerstraße 55
78462 Konstanz
cselig@htwg-konstanz.de
Mob +49 176 8373 0797
Tel +49 7531 206 310
© IST Institut, Prof. Dr. Guido Baltes, M. Eng. Christoph Selig Page 11