Corporate Entrepreneurship Part Two

So, the first model that we're going to talk about is this one up

here if we move up the column from the opportunist to the enabler.

So the difference here is that now,

as these ideas bubble up,

there's an opportunity to access a dedicated corporate pool of resources,

and to access and gain senior executive attention.

So the way that this approach works is that the firm goes ahead and says,

we are going to support employees across

the organization to enable them to develop new concepts.

We're going to typically have an executive council

that where entrepreneurial individuals within the business units

will apply for support for their ideas so get senior executive attention and funding,

and the way that the process is managed is that,

typically, once the idea is selected,

there'll be milestones set and funding established so that the idea can

move from an idea to a proven concept.

This isn't an approach where the endpoint,

the outcome is a new business in itself.

It's much more the idea that we're going to help individuals with

raw ideas move those to the proven concept phase and then,

we're going to go ahead and take them

from there within a more normal corporate structure.

Firms as diverse as Google, Boeing,

and Whirlpool have use different variations of this theme and have had success with it.

And we'll come back to where this approach is particularly

suitable once we cover the others and we have a sense of what they are.

The second approach that they identify beyond the opportunist model,

let's come down kitty corner to the advocate, right?

Now, the difference in the advocate approach is that,

there's an established corporate unit whose job,

whose focus, is to support entrepreneurs within the business unit.

So you can think of the corporate group as consultants.

That's going to be a little bit more than that but that's a good starting place,

as consultants who will come in when there is an idea that shows

some promise in a business unit and they will help the individuals with expertise,

their networks, and the legitimacy that connection with an established group brings.

So that there's a greater chance that good ideas will gain

the support from the business unit that they would need.

Okay, so the difference here is,

instead of an entrepreneur or maybe an engineer who has an idea, right?

Being on his or her own to go ahead and promote that idea,

that engineer would have access to and support from this corporate group.

And this is where it's more than just coaching, right?

It's more than just consulting.

What firms that do this find is that,

the corporate unit is evangelizing within the business,

within the business unit executives to help them see the potential of this new business.

So that this is a bit of a surprise.

People who are in these units say,

well I expect that I would just be a consultant but I'm doing more,

I'm using my network much more.

And so that's the nature of this advocate approach, right?

The idea is to make sure that the good ideas actually get a strong hearing.

So one example here is DuPont.

DuPont has been using an approach like this where they have

five full time people in a corporate group who work

this kind of a process and they report building

a half billion dollars and new business over several years through this approach.

So that's the event the advocate approach where the name is important there.

It's not just coaching,

it's advocating for these late entrepreneurs.

So finally if you move to the top right,

now we've got what they call the producer model.

And this model is one where you have a corporate unit that is responsible for

the corporate entrepreneurship process and that

has resources from corporate to develop new businesses.

So it's a full service group rather than a council of executives as

we saw with the enabler or

a group that comes in and helps people within the business units.

This is a full service,

freestanding group that is charged with taking ideas

all the way from conception to development of the business itself,

the outcome here is new businesses.

So the process will involve identifying

ideas that are coming up within the business units where maybe

the business units see potential but they don't fit that

business units capabilities, markets, products.

It just doesn't fit within the strategic frame of that business unit.

So that idea and perhaps some of the key people will be brought

into the producer organization and it will take charge of developing this business.

An example here is Cargill where they've formed

something called the emerging business accelerator group.

And they did this because they realized they didn't have a process

where good ideas that utilized their technologies,

their resources, would come

up if they didn't fit within the purview of the business units they would languish.

And so now they have a place for those ideas to go, and for example,

one that's mentioned in Woolcott and [inaudible] research is a noble approach to deicing.

Now, Cargill was in the deicing business that's where this idea came from,

but the market that this particular approach was appropriate for,

was a high end market rather than a commodity market that they were in.

So they sent it to the emerging business accelerator

and that group built a business around it.

So this is a much larger commitment, right?

This is a commitment where you're taking ideas out of the business units

and providing resources and responsibility at the corporate level.

It still remains a way of encouraging late entrepreneurs.

But we see that there are three different approaches that build on this idea of

the opportunistic approach having shortcomings and

being not reliable enough for us to

count on it in developing these entrepreneurial ideas.

So, having covered what these models are.

Now, it's important to talk about the purposes that they serve,

the strategic goals and opportunities that they can help firms realize.

And in doing this,

I'm actually going to start with the advocate model.

When you think about the advocate model, remember,

this is one where the corporate unit is simply

helping entrepreneurial individuals within the business unit.

Helping executives within that business unit figure out how to gain funding,

how to access networks across the corporation and so on.

So in that way, it's the most focused and incremental change from

opportunist to a more systematic and deliberate model

of the corporate entrepreneurial process.

And because of that,

it can best serve ideas that are not that far from the core of the business unit itself.

After all the business unit is going to be providing

the funding support for this for these ideas in large part.

So the key to remember is that we're trying

to offset the tendency of business units to focus on the near term,

to focus on the established businesses,

and to do that we want to provide ideas that are broadly speaking within their purview.

Okay. So that's the kind of opportunity

the advocate provides and so you can think of it as a way of reinvigorating,

transforming, making more dynamic the business units in a firm.

A really really powerful strategic goal to establish.

Now if we go up to the enabler, right?

Remember the enabler is the one that is perhaps

most distant from actually producing a new business.

The enabler is really about giving people a chance to prove their concepts.

When that's something that within the business units, again,

the pressures of delivering on current targets make that hard to do at times and to bring

ideas to a place where senior executives can consider them in a broader perspective.

The kinds of ideas that are going to work well here are ones that are

broadly within the strategic frame of the corporation,

ones where the senior executives if not the business executives,

see them as potentially important.

And then, the enabler approach is meant to bring those ideas to

the point where they can be brought into the corporation's more regular processes.

The producer model is the one that requires the greatest commitment.

We've talked about this as a full service type of organization.

And so, you want to think carefully what kind of ideas are going to fit here?

Well, they're going to be ideas that don't fit well within the business units, right?

You don't want to be taking away ideas from

the business units that would work for them, right?

That the Advocate approach works well with those.

The producer approach is particularly effective for

ideas that might be a little bit threatening to a business unit.

We've seen for example in discussions of disruptive technologies,

that this threat of cannibalization is one that you have to take very seriously.

Cannibalization of your own business.

And so, this producer model is one where ideas with potential to do that can find a home.

Now, soon as you say that, you think we'll wait.

So, why is the business unit going to support that producer organization?

That isn't that producer organization going to become

a pariah that gets undercut at every chance?

Well this is the challenge, right?

I mean, in practice,

most of the ideas are ones that are outside

of the business units experience rather than disruptive ones.

This issue emphasizes the need for individuals,

the leaders and the producer organizations to be

particularly adept and politically well-connected and credible so that,

they can go ahead and manage these tensions.

This is always the case with any corporate unit, right?

That is going to work with business units.

But it's particularly the case in the producer model.

So, you see each of these models is nicely

suited to specific kinds of ideas and to complement that point,

you want to think about the fact that these are not mutually exclusive choices.

Firms could conceivably do all three and in fact, IBM for instance,

has been mentioned as a firm that does some form of all of

these practices to support corporate entrepreneurship in a comprehensive way,

and cover the waterfront as far as the kinds of

ideas that can be enabled and facilitated within the firm.

Okay. Now we want to go ahead and bring this lesson to a close,

and think about what are the core points you want to take away from it?

And the first is just the motivation, right?

That the idea that corporate entrepreneurship as

a process is essentially we're trying to go ahead,

and to encourage individuals who are entrepreneurial,

and who have ideas to bring them to fruition within the firm,

leverage the resources of the firms so they're more likely to be successful.

That's the motivation and the key recognition is that

the serendipitous kind of connections that

the opportunist approach offers and is driven by,

are really not strong enough for a really important process like this.

That there are more systematic processes we can

apply to this process of corporate entrepreneurship. So that's it.

The motivation is to say,

"Let's go ahead and think about this as a process we can systematize."

And doing so, we end up with a framework that complements other work that we've seen,

on how firms can manage innovations.

Now the second big point is that when you think about this,

think about it in terms of a framework.

Where you think about,

where is the responsibility for corporate entrepreneurship?

Are you going to leave it in an ad hoc kind of way and

try to pluck ideas up to senior executives?

Or are you going to go ahead and have units that are focused on enabling this process?

And second, think about the resource authority.

Where are the resources going to come from?

So you've got two dimensions along which you want to think,

and then there are the three new approaches,

the enabler or the advocate,

and the producer that fall out of that

thinking that each have particular strategic goals they can serve,

and that each focus on specific challenges and brings specific challenges.

The final point would be to say all these ideas require significant commitments,

they require sustained effort,

and they require an ability among the people leading them

to navigate the political and cultural landscape of the firm because what we're

seeing here are crosscutting kind of efforts that exist outside the normal hierarchy

so that there's a great deal on

the informal dimension that's going to be required to make them work.

Okay. Now going through that part of the process

is beyond the scope of our lesson right here,

but the purpose here is to emphasize that firms have been able to do this successfully.

And there are many examples of firms that have

used different ways to build their capability for corporate entrepreneurship.

And in so doing,

we want to motivate consideration of these ideas at your firm.

Strategic Innovation: Managing Innovation Initiatives

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