Level of entrepreneurial intensity in corporate entrepreneurship

1. Levels of
Entrepreneurship in
Organizations:
Entrepreneurial Intensity

2. The three (3) dimensions of
entrepreneurship

3. Three dimensions characterize an
entrepreneurial organization
 Innovativeness
 Risk-Taking
 Proactiveness
Two additional (Lumpkin & Dess, 1996)
 Autonomy
 Competitive Aggressiveness

4. Three Frontiers of Innovation
 Services – new or improved services
• Ex. - Netflix, Google, Facebook
 Products – unique or improved
• Ex. - iPhone, Bluetooth, flat screen TVs
 Processes – new or better ways to
accomplish a task or function
• Ex. – UHT pasteurization, improved metal
recycling

5. What causes established
businesses to innovate?

6. Innovativeness – to what extent is the company
doing things that are novel, unique, or different
 Does the concept address a need that has not
previously been addressed?
 Does it change the way one goes about
addressing a need?
 Is it a dramatic improvement over conventional
solutions?
 Does it represent a minor modification or
improvement to an existing product?
 Is it just the geographic transfer of a proven
product?

7. Innovativeness as it Applies to
Products and Services
New to the World Products/Services

New to the Market Products/Services

New Product/Service Lines in a Company

Additions to Product/Service Lines

Product Improvements/Revisions

New Applications for Existing Products/Services

Re-positioning of Existing Products/Services

Cost Reductions for Existing Products/Services

8. Degree of Innovation Type of Process__
Major New Process Administrative Systems
Service Delivery Systems
Minor New Process Production Methods
Financing Methods
Significant Revision of Existing Process Marketing or Sales
Approaches
Procurement Techniques
Modest Improvement to Existing Process Compensation Methods
Supply Chain MGMT
Techniques
Distribution Methods
Employee Training
Programs
Pricing Approaches
Information MGMT
Systems
Customer Support
Programs
Logistical Approaches
Hiring Methods

9.  Innovation is about the unknown.
Management is about control.
How do you control the unknown?
 Innovation is often about breaking
the rules. People who break rules
don’t last long in organizations.
 Successful innovation tends to
occur when there are constraints,
routines and deadlines. There is a
need for both freedom and
discipline, and the issue is one of
balance.
 An innovation succeeds because it
addresses customer needs. Yet,
when you ask customers about
their needs, many do not know or
cannot describe them to you
except in very general terms.
 A company that innovates is frequently
making its own products obsolete
when there was still profit potential in
those products.
 People who design innovations
typically seek to perfect their new
product or service, making it the best
possible. But the marketplace often
wants it to be “good enough,” not
perfect. The additional time and
money necessary to make the
innovation “best possible” drive up
prices beyond what the customer will
pay, and result in missed opportunity.
 Being first to market is not consistently
associated with success, while being
second or third is not consistently
associated with failure.

10. Radical
Innovation
Incremental
Innovation
Laparoscopic
“keyhole”
surgery
Speech
recognition
software
Polyester
Enterprise
resource
planning
(ERP)
Frozen
yogurt
Fiber-optic
cable
Internet
browser
Online
auction
exchanges
Bubble
wrap
Continuum of Radical and Incremental Innovations

11. https://www.youtube.com/watch?v=yUAtIQDllo8

13. Synectics, a leading international firm specializing in innovation and
consulting characterized the “best practices” of companies that
seem to be especially good at innovation yielded three categories
of firms:
• Stars – high performing companies that had successfully
integrated innovation and creativity into their daily business
practices
• Seekers – display a number of appropriate innovation practices,
but came up short in terms of innovation performance and
company-wide commitment to innovation
• Spectators – acknowledge the importance of innovation but
provide little support for it
Be HOT for innovation!

14.  Having CEO’s that were heavily involved in fostering innovation
 Defining innovation as critical to long-term company success
 Attaching great importance to the concept of managing change
 Having the words innovation and creativity in their mission
statements
 Demonstrating an openness to outside ideas
 Having formal programs for idea generation and problem-solving
 Placing strong emphasis on cross-function communications
 Implementing programs to encourage employees to talk to
customers
 Increasing levels of investment in R&D and a strong focus on
product development
 Creating budgets allocated exclusively to innovation
 Providing rewards for individual creativity and innovation
 Spending time in meetings that were highly productive

15. How is a firm’s innovation success
affected by the relatedness of their
new innovation to existing
products?

16. Risk-taking involves a willingness to pursue
opportunities that have a reasonable likelihood
of producing losses or significant performance
discrepancies
• Includes both the probability of loss and the magnitude of
loss
• Involves a reasonable awareness of the risks involved –
financial, technical, market, personal, etc. – and an
attempt to capture and manage those risks
• Reflected in the resource allocation decisions made by an
individual or an organization

17. Innovativeness
Little to no
Innovative Activity
Home-run
Strategy
Lots of trials and experiments/
balanced portfolio of projects
Risk
High
Low
High
Low
Exploring the Dimensions of
Entrepreneurship

18. Question 9:What are the four (4)
types of innovation?

19. Four Types of Innovation:
 Discontinuous innovation – a breakthrough
innovation (e.g., cellphones)
 Dynamically continuous innovation – a
dramatic improvement (e.g., smart phones)
 Continuous innovation – incremental
innovation (e.g., touch screens, gyroscopes)
 Imitation – copying, adapting, or mimicking
innovations (e.g., Samsung/Windows phone v.
Apple iPhone)

20. TYPE OF INNOVATION
RISK
High
Low
Dynamically
Continuous
• Electric
toothbrush
• Laptop
computers
Imitation
• Laptop by
Lexmark and
HP
Continuous
• Extra 100 watt
light bulb,
• New flavored soft
drink
Discontinuous
• Integrated circuits
• Microwave
• Robotic surgery
Relating Types of Innovation to Risk
Magnitude of
Potential
Reward

21. TR=f (SBR, MBR)
Missing the boat
risk curve
Total Risk
Planning Time
Source: Dickson and Giglierano (1986). Reprinted with permission
“Missing-the-Boat” and “Sinking-the-Boat” Risk
Sinking the boat
risk curve

22. Proactiveness
 “Entrepreneurial firms acting on, rather than
reacting to their environments”
 To define Action orientation
 3 items to measure proactiveness
• Following versus leading competitors in
innovation
• Favoring the tried and true versus emphasizing
growth, innovation, and development
• Trying to cooperate with competitors versus
trying to undo them

23. What are three (3) ways that firms
approach proactiveness?

24. Proactivness occurs in three (3) ways:
1. Seeking new opportunities that may or
may not be related to the present line of
operations;
2. Introducing new products and brands
ahead of the competition; &
3. Strategically eliminating operations that
are in the mature or declining stages of
the life cycle.

25. Combining Degree and Frequency……
The Entrepreneurial Grid

26. Frequency
of
Entrepreneurship
Degree of
Entrepreneurship
(innovativeness, risk-taking, proactiveness)
High
Low
Low High
Continuous/
Incremental
Periodic/
Incremental
Dynamic
Revolutionary
Periodic/
Discontinuous

27. The entrepreneurial grid is a useful too for
managers attempting to define the role of
entrepreneurship within their
organizations.
A company’s entrepreneurial strategy is
effectively defined according to where it
falls on the grid.

28.  Wendy’s: :
Creative changes
to fast-food
industry
Procter &
Gamble

 Nucor Steel: Radical new
technical process- ¾ man-hrs.
vs conventional 3- man-hrs.
 Level 3
Communications
3M

Low
Low High
High
Frequency of
Entrepreneurship
Degree of
Entrepreneurship

29. The entrepreneurial grid can serve as a
useful means for diagnosing
entrepreneurial management profiles

30.  Richard Branson
(Virgin)
Low
Low High
High
Frequency of
Entrepreneurship
Degree of
Entrepreneurship
 Rich DeVos
(Amyway
Household
Products)
 Ted Turner (CNN)
 Akio Morito (Sony)
 Bill Gates (Microsoft)
 Ray Kroc
(McDonald’s)  Sachiro Honda
(Honda Motors)
 Herb Kellehner
(Southwest Airways)
 Howard Head
(Head Skis, Prince Tennis Racquets)
 Steven Jobs
(Apple, NeXT and Pixar)