Corporate Strategy and
Entrepreneurship
The contemporary business
environment can be characterized in
terms of:
•
•
•
•
•
increasing risk
decreased ability to forecast
fluid firm and industry boundaries
new rules of the game
new structural forms that not only allow for
change but also help create it.
Strategic Inflection Points
• An inflection point occurs when the old strategic
picture dissolves and gives way to the new,
allowing the adaptive and proactive business to
ascend to new heights
• How can organizations know when the time is
right to make changes?
Strategic Management
• In essence, strategic management is the
formulation of long-range plans for the effective
management of external opportunities and threats
in light of a company’s internal strengths and
weaknesses
• Involves a continuous search for competitive
advantages
 Mintzberg (1987) 5 Ps of Strategy
• Strategy as a Plan—a consciously intended
•
•
•
•
course of action
Strategy as a Ploy—a specific maneuver to outwit
competitors or opponents
Strategy as a Pattern—a consistent patterned
stream of actions
Strategy as a Position—a means of locating the
organization within a competitive environment
Strategy as a Perspective—a cognitive state-ofmind held by organizational decision-makers


Dominant Logic refers to the way in
which managers conceptualize the
business and make critical
resource allocation decisions
The dominant logic that is optimal
for the firm in today’s environment
may well be inappropriate for the
environment that will exist five
years hence
 One
means of creating a dynamic
dominant logic is to make
entrepreneurship the basis upon which
the organization is conceptualized and
resources are allocated
 As dominant logic, entrepreneurship
promotes strategic agility, flexibility,
creativity, and continuous innovation
throughout the firm
The integration of entrepreneurship
with strategy has two aspects:
• Entrepreneurial Strategy
 Application of creativity and
entrepreneurial thinking to the
development of a core strategy for the
firm
• Strategy for Entrepreneurship
 The need to develop a strategy for the
entrepreneurial activities of the firm
Ireland, Covin, and Kuratko (2009) define
an entrepreneurial strategy as
“a vision-directed, organization-wide reliance on
entrepreneurial behavior that purposefully and
continuously rejuvenates the organization and
shapes the scope of its operations through the
recognition and exploitation of entrepreneurial
opportunity.”
Observed Configurations of the Corporate VenturingBusiness Strategy Relationship
Model 1
CV
Model 4
BS
CV
BS
Model 2
CV
BS
Model 5
CV
Model 3
CV
BS
BS
CV = Corporate Venturing
BS = Business Strategy
1.
Where does the firm want to be in the
entrepreneurial grid?
2.
To what extent is the entrepreneurial
emphasis in the company that of growing
new business and starting new ventures
outside the mainstream of the firm vs.
transforming the existing enterprise and
its internal operations into a more
entrepreneurial environment?
3.
In what areas does the firm want to be
an innovation leader vs. an innovation
follower vis-a-vis the industry?
4.
In what areas of the firm is
management looking for higher vs.
lower levels of entrepreneurial
activity?
5.
What is the relative importance over
the next three years of product vs.
service vs. process innovation?
6.
To what extent is innovation expected
to come from senior management,
middle management, or first-level
management?
Management attempts to draw a balance
across five metrics:
1.
2.
3.
4.
5.
High risk, high-return projects against lowerrisk, lower return projects
Discontinuous or dynamically continuous
innovations against continuous innovations and
imitations
Projects with shorter development cycles and
payoffs against ones with longer-term outcomes
Products/services intended for markets the firm
currently serves against ones for markets that
are new to the firm
Projects utilizing new and emerging
technologies against those relying on
technologies with which the firm is familiar
High
Firm’s Knowledge
Pertaining to the New
Products’/Service’s
Targeted Market
Medium
Low
Moderate
Innovation
Success
Probability
High Innovation
Success
Probability
Highest
Innovation
Success
Probability
Low Innovation
Success
Probability
Moderate
Innovation
Success
Probability
High Innovation
Success
Probability
Lowest
Innovation
Success
Probability
Low Innovation
Success
Probability
Moderate
Innovation
Success
Probability
Low
Medium
High
Firm’s Knowledge Pertaining to the New
Products’/Service’s Core Technology
Technology represents both an opportunity
and threat for entrepreneurial activity
Technology has shortened product life
cycles, leading to smaller windows of
opportunity in which innovation can
occur. This has forced entrepreneurs to
have an exit strategy even as the
innovation is in the development stages.
Technology allows firms to achieve
sustainable competitive advantages if
management determine:
1.
How the firm will use technology to
position its products/services in the
marketplace
2.
How the firm will use technology to
enhance its internal processes
Sustaining Technologies – maintains a rate
of improvement, giving customers more or
better in the attributes, cannot get much
better
•
Speed, quality, size
Disruptive Technologies – introduces a
different sets of attributes than ones
customers historically value
•
•
Introduction of microwave oven
Creates new markets or new applications
Technology-push – employees within the
firm (usually technically qualified
engineers or scientists) see a technical
possibility and strive to capitalize on it.
These individuals see a new way in
which a technology might be applied.
Market-pull – innovations start with the
customer and are typically driven by
marketing people. Customers are often
the source of the new idea.
Strategic Positioning
• …is concerned with how the firm wants to be
perceived in the marketplace
• Entrepreneurial strategy is all about positioning.
It is a process of perceiving new positions that
attract customers from established ones or draw
new customers into the market
• Effective strategic positioning is critical for
competitive advantage
Strategic Flexibility and Adaptation
• Strategic flexibility involves a willingness to
rethink continuously and make adjustments to the
firm’s strategies, action plans, and resource
allocations and to the company structure, culture,
and managerial systems
The following 5 factors contribute to
building strategic leadership:
• A unique set of dynamic core competencies
• Creative approaches to human capital
• Effective incorporation of new and emerging
technologies
• Strategic alliances and a global market
presence
• Company structures that are flattened and
cultures that stress learning and
accountability for innovation
Build Dynamic Core Competencies
Focus and Develop Human Capital
• Contingency workers and outsourcing
• Developing employee skills
Exercise
Strategic
Leadership
Strategic
Flexibility
Effectively use New Technologies
• Manufacturing technologies
• Information technologies
Competitive
Advantage
Engage in Valuable Strategies
• Exploit global markets
• Use cooperative strategies
Develop New Organization Structures
and Culture
• Horizontal organization
• Learning and innovative culture
• Manage as a bundle of assets
Strategic Leverage
• Leveraging refers to doing more with less
• Corporate entrepreneurs and entrepreneurial
companies are brilliant “leveragers” of
resources
• “Getting to the future first is more a function of
resourcefulness than resources”
Resource leveraging has a number of
dimensions:
• Stretching resources much further than others have
done in the past
• Getting uses out of resources that others are unable
to realize
• Using other people’s/firm’s resources to accomplish
the entrepreneur’s own purpose
• Complementing one resource
with another to create higher
combined value
• Using certain resources to
obtain other resources
Flaw 1: Misunderstanding industry
attractiveness
Flaw 2: No real competitive advantage
Flaw 3: Pursuing an unsustainable
competitive position
Flaw 4: Compromising strategy for growth
Flaw 5: Failure to explicitly communicate
strategy internally
 Developing
an entrepreneurial vision
 Increasing the perception of opportunity
 Institutionalizing change
 Instilling the desire to be innovative
 Investing in people’s ideas
 Sharing risks and rewards with employees
 Recognizing the critical importance of
failure