Intrapreneurship and Corporate Entrepreneurship Development


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Environmental turbulence creates a need for new management practices: customers, technology, competitors, legal-regulatory-ethical standards. Embattled by thiese circumstances, companies need new strategic initiatives to respond to that challenges to achieve sustainable competitive advantage. Today Entrepreneurship is the core source of sustainable advantage, in which can occur in any organizational context. In the context of corporation, it’s called Corporate Entrepreneurship.

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Intrapreneurship and Corporate Entrepreneurship Development

  1. 1. 11/28/2013 INTRAPRENEURSHIP DEVELOPMENT Contents  Entrepreneurship  Intrapreneurship  Corporate Entrepreneurship 1
  2. 2. 11/28/2013 Entrepreneurship The pursuit process of opportunities beyond the resources you currently control Stevenson, 1983, 1985; Stevenson and Jarillo, 1991  Entrepreneurship is a process  Entrepreneur is an individu doing entrepreneurship  Entrepreneurial is attitudes, skills, and behaviors of the entrepreneur World Economic Forum Executive Summary, 2009 Entrepreneurship is a process... Opportunity Recognition for Value Creation (Innovation) Willingness & initiative to seize opportunities Strategies to manage limited resources Willingness to take calculated risks New Venture Creation, Timmons, 2003, from research at Boston College 2
  3. 3. 11/28/2013 Entrepreneurial Process Model Exogenous forces Ambiguity Capital market context Uncertainty Timmons’ model of the Entrepreneurial Process, 2003 Why Entrepreneurship? Entrepreneur population 0.2% 7,2% 11,5% Indonesia Singapore USA Global Entrepreneurship Monitoring (GEM) Report, 2007 3
  4. 4. 11/28/2013 Who should be Entrepreneurial? As Individual: As Organization:  Business owner  Private Corporation  Private employee  State Corporation  State officer  Government  Educator  School/University INTRAPRENEUR CORPORATE ENTREPRENEURSHIP Intrapreneurship A process by which individuals inside organizations pursue opportunities independent of the resources they currently control Stevenson and Jarillo (1990: 23) 4
  5. 5. 11/28/2013 Intrapreneur - Corporate Relationship Model Resources: Financial, Market Penetration, Research facility Innitiative, Innovation Modified from Intrapreneuring, Pinchot, 1985 Example: The Intrapreneur who become Entrepreneur Steve Jobs & Steve Wozniac They joined and create Apple Computer after their PC concept rejected by HP and Atari 5
  6. 6. 11/28/2013 The Intrapreneur Intrapreneurs are … ‘dreamers who do’ Those who take hands-on responsibility for creating innovation of any kind within an organization They may be the creators or inventors but are always the dreamers who figure out how to turn an idea into a profitable reality Pinchot (1985, p. ix, in: Sharma & Chrisman, 1999) Intrapreneurial Grid High Artist Inventor Idea Generator INTRAPRENEUR Manager Supervisor Low Worker Valuable Worker Low High Intrapreneuring, Pinchot, 1985 6
  7. 7. 11/28/2013 Example: The Intrapreneur Example: The Intrapreneur Cheryl Pohlman Worldwide Product and Marketing Communications Director for inkjet systems, Inkjet printer division, KODAK 7
  8. 8. 11/28/2013 Example: The Intrapreneur Jeri Yoshizu Scion Sales and Promotion Manager Scion17 TOYOTA Example: The Intrapreneur Scott Gatz Former Senior Director of Advanced Products Sponsored search engine YAHOO 8
  9. 9. 11/28/2013 Example: The Intrapreneur Alicia Ledlie Senior Director for health business development In-store health clinics WALL MART Example: The Intrapreneur Andy Noya Wartawan, Presenter, Host ‘Kick Andy’ Waklil Pemimpin Umum Media Indonesia Pemimpin Redaksi Metro TV 9
  10. 10. 11/28/2013 Example: The Intrapreneur Prof. Yohanes Surya, PhD Wartawan, Presenter, Host ‘Kick Andy’ Waklil Pemimpin Umum Media Indonesia Pemimpin Redaksi Metro TV Example: The Intrapreneur Joko Widodo Walikota Solo 10
  11. 11. 11/28/2013 Example: The Intrapreneur Dahlan Iskan Former President Director of PT. Perusahaan Listrik Negara Minister of State-owned Corporations Intrapreneurial Process Model de Jong and Wennekers (2008), Mair (2002), Antoncic and Hisrich (2001) 11
  12. 12. 11/28/2013 Intrapreneurial is an attitudes, skills, behaviors  Taking Initiative: self starting, proactive, persistence  Innovative: implement vision to increase benefit/cost  Voicing  Championing  Taking Charge  Some Degree of Risk Taking Modified from Intrapreneurship, de Jong & Wennekers, 2008 Intrapreneurship is a process... Recombination of Resources Resource Acquisition Opportunity perception Idea generation Planning and Organizing Internal coalition Building Persuading the Management Modified from Intrapreneurship, de Jong & Wennekers, 2008 12
  13. 13. 11/28/2013 Corporate Entrepreneurship The process by which teams within a established firm conceive, foster, launch, and manage a new business that is distinct from but leverages the company’s current assests, markets, and capabilities Grow from Within, Wolcott & Lippitz, 2010 Innovation Radar A business system innovation Brand Networking Platform Solutions Supply chain Organization Customer experience Value capture Grow from Within, Wolcott & Lippitz, 2010 13
  14. 14. 11/28/2013 The 4 Model of Corporate Entrepreneurship Enabler Producer Company provide funding & attention to prospective projects (ex: Google) Company supports a fullservice group with special mandate (ex: IBM, Cargill) Opportunist Advocat Internal & external networks drive concept selection & resource allocation (ex: Zimmer) Company evangelizes for corporate entrepreneurship, funded by business unit (ex: DuPont) Dedicated Ad Hoc Diffused Focused Grow from Within, Wolcott & Lippitz, 2010 Incentive Design for Corporate Entrepreneurship 1. Prime Factor  Human Element; Critical Success Factor; Autonomy, Structure, Processes 2. Incentive System Parameters  Short-Term vs Long-Term; Performance Relatedness; Attracting and retaining 3. Incentive System Components  Financial, Non-Financial, Risk The 4E Model, Viswanathan, Nagarajan, 2004 ESADE MBA Business Review 14
  15. 15. 11/28/2013 1. Prime Factor: Critical Success Factors Success Factor Incentive Features   Financial and symbolic significance Rapidity of Feedback Individualization Team-wide Incentives  Fairness of Distribution  Recognizing and Adapting to Reality   Organizational Support Competitiveness  Effective Teamwork Direct relationship between incentives and performance   Enthusiasm and Continuing Commitment Significant Earning Potencial Team Recognition  Perception of Fairness  Balance between potential risks and rewards  Payment for results, not for strict adherence to plan  Significant personal financial risk for venture managers 3. Incentive System Components: Financial Success Factor Incentive Features  Shares/ Options in parent firm/ venture  Phantom shares: If venture doesn’t exist as a separate entity  Encourages collaborative behavior  Purchased equity in new venture links risk to potencial reward  Relatively long term incentive  Three popular types Fixed amounts known in advance: Variable, per formance linked, Discretionary bonus after major contribution  Can be both long term as well as short term Salary increases  Salary increase is related to Changing role in the venture Fringe benefits  Holiday trips, Scholarships to Children Sabbaticals ,etc Equity and EquityRelated Bonuses 15
  16. 16. 11/28/2013 3. Incentive System Components: Non-Financial Success Factor Incentive Features Recognition Authority Responsibility Power Presence of a management champion for th  Increased resources: money or personnel  Basic motivation of intrapreneur is to realize his vision in his own way: Autonomy  Intrapreneur does not have to take management permission for every move: Freedom & Independence in operation Recognition is not just a gesture, it is an empowerment tool  Manifested through recognition ceremonies, awards and corporate publications  Autonomy Freedom Independece   Top management support for venture Subtle incentives  Only explicit way of awarding these incentives is through promotions  Promotion to broadened responsibilities is the fundamental corporate reward 3. Incentive System Components: Risk Success Factor Incentive Features  Career Risks Job Security and benefits related risk Effort & Stress  Possibility of missing out on incentives due to the inherent risk of the new venture  Working for the new venture may become a Stumbling block in the employee’s career. He may miss out on promotions, etc  Financial Risk Opportunity cost of leaving some other division and working for new venture Firms sometimes don’t guarantee jobs in case of venture failure. This creates job security risk.  While joining new venture employees often have to give up standard benefits package  A new venture, by its inherent nature, is often more stressful and difficult than an established venture 16
  17. 17. 11/28/2013 Lifecycle Incentive Approach Success Factor Pre-Launch Product Development Stage Incentive Features  Small discretionary bonus could be provided on completions of feasibility and concept study  Medium to significant bonus on ontime, within estimated budget, product development  Needs built in quality protection provisions Startup  Bonus could be calculated as a % of the difference between planned and actual startup expenses Ongoing Sales and Production  Percentage of dollar amount improvement over planned profit or loss to be shared by venture team Post Venture Maturity stages  Payout mechanism for venture personnel who voluntarily leave or are transferred or discharged Intrapreneuring Phase No Phase Description 1 Solo phase self vision, no-ego barrier, write down your idea & concept 2 Network phase share your idea, getting feedback to elaborate strength & weakness and suggestion 3 Bootleg/ Informal phase Start getting supporter without company back-up, fine tuning style of early team 4 Formal phase Getting management support, Recruiting formal team, legitimacy & leadership, maintain expectation 5 Execution Resource recombining & acquisition, Implementation Modified from Intrapreneuring, Pinchot, 1985 17
  18. 18. 11/28/2013 Entrepreneurship vs Intrapreneurship Intrapreneurship is part of entrepreneurship, but differ in term of:  Resource: existing network, corporate reputation, market penetration, technology base, competence human resource, financial  Risk  Autonomy  Share Intrapreneurship Development Desentralized Organization Learning Orientation Learning Culture Transformational Leadership Organizational Learning INTRAPRENEURSHIP Organizational Performance Learning Environment Framework for Successful Corporate Entrepreneur, Rupcic, Zekic, Kutnjak, 2010 18
  19. 19. 11/28/2013 The Intrapreneur’s 10 Commandments 1. It’s easier to ask for forgiveness than for permission 2. Do any job needed to make your project work, regardless of your job description 3. Ask for advice before resources 4. Recruit strong team 5. Honor your sponsors 6. Underpromise and overdeliver 7. Be true to your goals, but realistic about ways to achieve them 8. Forget pride authorship, spread credit widely 9. When you bend the rules, keep the best interests of the company and its customer in mind 10. Prepare to be fired 19