Levels of
Entrepreneurship in
Organizations:
Entrepreneurial Intensity
Question 1: What are the three (3)
dimensions of entrepreneurship?
Three dimensions characterize an
entrepreneurial organization
 Innovativeness
 Risk-Taking
 Proactiveness
Two additional (Lumpkin & Dess, 1996)
 Autonomy
 Competitive Aggressiveness
Question 2: What are the three (3)
frontiers of innovation? What is an
example of each?
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
Question
3: What causes
established businesses to
innovate?
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?
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
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
Approaches
Marketing or Sales
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
Procurement Techniques
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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.
While typically associated with genius or brilliance, innovation is more
often a function of persistence.
Being first to market is not consistently associated with success, while
being second or third is not consistently associated with failure.
 Question
4: How does prior knowledge of a
product market/technology market help a firm
innovate successfully? How should firms
approach innovations in markets that are
unknown to them? (Hint: how do firms manage
downside risks?)
Question
5: According to
research conducted by Synectics,
what are the three (3) categories
of innovative firms? Describe
them briefly.
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!
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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
Question
6: How is a firm’s
innovation success affected by
the relatedness of their new
innovation to existing products?
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
Question
7: What are the two subdimensions of risk-taking? How
do they combine to help
entrepreneurs assess risk levels?
Isoquant Risk Map
High
Risk
Probability
of Loss
Low
Low
Magnitude
of Loss
High
Question
8: How can firms
mitigate the risks of shifting
market/technology shifts when
innovating? (Hint: see Figure 3-2)
Exploring the Dimensions of
Entrepreneurship
High Little to no
Innovative Activity
Home-run
Strategy
Risk
Lots of trials and experiments/
balanced portfolio of projects
Low
Low
Innovativeness
High
Question
9: What are the four (4)
types of innovation?
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)
Relating Types of Innovation to Risk
Magnitude of
Potential
Reward
High
RISK
Low
Imitation Continuous
Dynamically
Continuous
TYPE OF INNOVATION
Discontinuous
Question
10: What characterizes
risk of “sinking the boat” versus
“missing the boat”?
“Missing-the-Boat” and “Sinking-the-Boat” Risk
Total Risk
TR=f (SBR, MBR)
Missing the boat
risk curve
Sinking the boat
risk curve
Planning Time
Source: Dickson and Giglierano (1986). Reprinted with permission
Proactiveness
 “Entrepreneurial firms acting on, rather than
reacting to their environments”
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
Question
11: What are three (3)
ways that firms approach
proactiveness?
Proactivness occurs in three (3) ways:
1.
2.
3.
Seeking new opportunities that may or
may not be related to the present line of
operations;
Introducing new products and brands
ahead of the competition; &
Strategically eliminating operations that
are in the mature or declining stages of
the life cycle.
Exploring the Dimensions of
Entrepreneurship
High
Dreamer
Entrepreneur
Stuck in
the Mud
Wild-eyed
Gambler
Innovativeness
Low
Low
High
Risk-taking
 Different
combinations of the three
dimensions of ENT are possible
 They do not always vary in unison
• More restrictive definition – entrepreneurial
organizations are concurrently high on all
dimensions
• Less restrictive definition – entrepreneurial
organizations are assessed via the sum of ENT
properties
Combining Degree and Frequency……
The Entrepreneurial Grid
Question
12: Draw and describe
the entrepreneurial grid. What
are the dimensions? How does
entrepreneurial intensity
integrate into the grid?
Frequency of
Entrepreneurship
High
Continuous/
Incremental
Revolutionary
Dynamic
Periodic/
Incremental
Low
Low
Periodic/
Discontinuous
Degree of
Entrepreneurship
(innovativeness, risk-taking, proactiveness)
High
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.
High
Procter &
Gamble
Level 3 Communications
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Frequency of
Entrepreneurship
3M
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Nucor Steel
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Wendy’s
Low
Low
Degree of
Entrepreneurship
High
Question
13: Select a firm and
discuss where it is positioned on
the entrepreneurial grid. Why?
The entrepreneurial grid can serve as a
useful means for diagnosing
entrepreneurial management profiles

High

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Ted Turner (CNN)
Rich DeVos
(Amyway
Household
Products)

Frequency of
Entrepreneurship
Richard Branson
(Virgin)

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Akio Morito (Sony)

Ray Kroc
(McDonald’s)

Bill Gates (Microsoft)
Sachiro Honda
(Honda Motors)
Herb Kellehner
(Southwest Airways)


Howard Head
(Head Skis, Prince Tennis Racquets)
Steven Jobs
(Apple, NeXT and Pixar)
Low
Low
Degree of
Entrepreneurship
High