Corporate Entrepreneurship: How?
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This document discusses two types of corporate entrepreneurship: focused entrepreneurship which promotes entrepreneurship through mandates but has limitations, and organization-wide entrepreneurship which creates an environment for opportunities to be pursued across the organization. It provides examples of how Wipro successfully transitioned from focused to organization-wide entrepreneurship through establishing the right culture and processes that allowed for structured innovation and risk-taking.
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Corporate Entrepreneurship: How?
- 1. Corporate Entrepreneurship : How?
- 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
- 6. Focused Entrepreneurship – How to Develop? Company External Entrepreneurs Internal Appointments
- 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)
- 13. Vegetable oil (1945-1970’s) (IT) services Azim Hasham Premji (late 70’s) 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
- 22. From “Focused” to “Org. Wide” Entrepreneurship… The Way
- 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