Corporate Entrepreneurship
ss 5-8
Mikkel Draebye
Agenda Session 5-8
• Where are we, What are we doing
• Flashback: What’s so interesting about
Rob?
• Recall: Definitions of entrepreneurship
• Entrepreneurial Attitude : October Sky
• Relevance of e-ship
Where are we?
• Course is about understanding corporate
entrepreneurship; How to foster, stimulate and nurture it
• The course is structured in 5 parts
1. The nature of entrepreneurship from a behaviorial (R&R) and
attitudinal (October sky) point of view ( ch 1&2, session 1-6)
2. The relevance of entrepreneurship (ch 1&2, session 7-8)
3. The uniqueness (and non) of corporate entrepreneurship (ch.
1&2, session 9-10)
4. The definition, measurement and manifestations of corporate
entrepreneurship (ch. 2&3, session 11-12)
5. How foster corporate entrepreneurship (ch 4-15, session 1344)
R&R Case
• So, remind me what Rob did that was
“entrepreneurial” ?
Some definitions of entrepreneurship
“The pursuit of opportunity beyond the resources you
currently control”
Howard Stevenson (1988)
“The process of creating value by bringing together a
unique combination of resources to exploit an
opportunity”
Howard Stevenson (1986)
“Create and build a vision from practically nothing”
Jeffrey Timmons (2000)
Promoter vs. Trustee Orientation
Promoter vs. Trustee Orientation
Promoter vs. Trustee Orientation
Promoter vs. Trustee Orientation
Promoter vs. Trustee Orientation
Promoter vs. Trustee Orientation
Promoter vs. Trustee Orientation
It makes good sense to look as entrepreneurship as an
attitude or orientation. As such it must be observed as it is
interpreted by the entrepreneur.
“The Entrepreneurial Mindset”
A collective investigation into the nature of
entrepreneurship and some context
conditions
•What is that entrepreneurs do that makes them
entrepreneurial?
•What is that entrepreneurs do that make them succeed?
•What is it that facilitates entrepreneurial success?
Part 1: Intro and Context
Part 2: Idea & Vision
Part 3: Starting up
Part 4: Team and resources
Part 5: Resource acquisition
Part 6: Perserverance
Part 7: Happy ending
Conclusions from video clips
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It’s always possible
You are not born an entrepreneur, you become one
Have a clear vision and goal
Put a team together
Don’t be put off by resource and competence constraints: Beg, Borrow and Steal
Share vision and show leadership
Find sponsors and mentors
Tolerate failure
Tolerate risk
Try, try and try again
Learn from mistakes
Look for opportunities where other see landfills
Defy social pressure
Believe that you have the ability to change things
Don’t underestimate yourself
Be open to outside ideas
Share success
This corresponds very well to what we in academia
normally highlight as themes of desirable and acquirable
attitudes and behaviors
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Commitment and determination
Leadership
Opportunity obsession
Tolerance of risk, ambuiguity and uncertainty
Creativity, self-reliance and adaptability
Motivation to excel
1. The Entrepreneurial
Imperative
What arguments has been put forward to
claim that this “entrepreneurship thing” is
actually useful ?
• The turbulent environment argument
• The organizational lifecycle argument
• The “Blue Ocean” argument (or the fallacy of Porter’s generic
strategies)
• The national competitiveness argument
The turbulent
environment
A more dynamic industry environment
necessitates more dynamic employees and
organizations
Turbulent env.
New “skills”
•Adaptability
•Flexibility
•Speed
•Aggressiveness
•Innovativeness
Traits and characteristics that the
entrepreneurial employee posses
The organizational lifecycle argument:
CE as a revitalization pill
Streamlining,
small-company
thinking
Large
Development of teamwork
Addition of internal systems
S
I
Z
E
Crisis:
Need for
revitalization
Provision of clear direction
Creativity
Crisis:
Need for
leadership
1.
Small Entrepreneurial
Stage
2.
Collectivity
Stage
Sources: Adapted from Robert E. Quinn and Kim Cameron, “Organizational
Life Cycles and Shifting Criteria of Effectiveness: Some Preliminary
Evidence,” Management Science 29 (1983): 33-51; and Larry E. Greiner,
“Evolution and Revolution as Organizations Grow,” Harvard Business
Review 50 (July-August 1972): 37-46.
Crisis:
Need for
delegation
with control
Crisis:
Need to deal
with too much
red tape
3.
Formalization
Stage
4.
Elaboration
Stage
Continued
maturity
Decline
The “Blue Ocean” argument
• Based on 150 case studies
• Evidence found for the fact that
sustained superior performance
CANNOT be explained by generic
strategy
• Authors argue that we are better
off developing new value
propositions and creating new
market space than reacting to
competition
Red vs. Blue Ocean Strategies
Red Ocean Strategy
Blue Ocean Strategy
Compete in existing market
Create uncontested market
space
Beat the competition
Make the competition
irrelevant
Exploit existing demand
Create and capture new
demand
Make the value-cost trade-off
Break the value-cost trade off
Align the whole system of a
strategic firm's activities with its
choice of differentiation or low
cost
Align the whole system of a
firm's activities in pursuit of
differentiation and low cost
VALUE INNOVATION
“Blue Ocean” is becoming an umbrella notion
including also the “older” ideas of “New Game” and
“time-based” competition
•Wal-Mart
•Nokia
•Dell
•Zara
SPEED
New
Game
•Amazon
•Ryanair
•Swatch
•Nike
•Cirque
du Soleil
Low
Cost
•iPod
•Ferrari
•Harley Davidson
•BIC
•Husky
Focus
Diff.
Empirical research supports the idea that
“entrepreneurial”/”innovative”/”blue ocean”
companies, outperform their “traditional”
strategy peers:
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Covin & Slevin 1989, 1990 (New Market Development)
Davis, Morris & Allen 1991 (New Product Development)
Morris & Sexton 1996 (Entrepreneurial Intensity)
Shaker 1999 (NMD
Hornsby 2001 (EI)
Goosen 2002 (NMD, NPD)
Hindle 2004 (EI)
Yiu 2008 (NPD)
Jaakko Aspara, Joel Hietanen & Petri, 2008 (Blue Ocean)
WHY ?
National competitiveness argument -1
Entrepreneurship & Economic Thought
Joseph Schumpeter (1930s)
S
D
“CREATIVE DESTRUCTION”
Entrepreneurship moves market
away from equilibrium
New combinations: new goods,
methods of production, new markets,
sources of supply, organizations.
Israel Kirzner (1970s)
S
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“ENTREPRENEURIAL DISCOVERY”
Entrepreneurship moves market
toward equilibrium.
Entrepreneur alert to opportunities
that already exist and are waiting to
be noticed.
National competitiveness
argument -2 (GEM)
General National
Framework
Conditions
•Openness (External Trade)
•Government (Extent,Role)
•Financial Markets (Efficiency)
•Technology, R&D (Level, Intensity)
•Infrastructure (Physical)
•Management (Skills)
•Labor Markets (Flexible)
•Institutions (Unbiased, Rule of Law)
Major
Established Firms
(Primary Economy)
GEM CONCEPTUAL MODEL
Micro, Small, and
Medium Firms
(Secondary Economy)
National
Economic
Growth
(GDP,Jobs)
Social,
Cultural,
Political
Context
Entrepreneurial
Framework
Conditions
•Financial
•Government Policies
•Government Programs
•Education & Training
•R&D Transfer
•Commercial, Legal Infrastructure
•Internal Market Openness
•Access to Physical Infrastructure
•Cultural, Social Norms
Entrepreneurial
Opportunities
Entrepreneurial
Capacity
- Skills
- Motivation
Business
Churning
National Competitive Argument -2 (GEM)
TEA Overall and National Economic Growth: 2 Yr Lag
25.000
#/100 18-64 Active in Entrepreneurship
20.000
R = 0.41 (0.01)
15.000
10.000
5.000
-2.00
-1.00
0.000
0.00
1.00
2.00
3.00
% Growth in GDP 2 yrs later
4.00
5.00
6.00
7.00
Conclusion: Interesting, but not an
absolute imperative
• “Entrepreneurial” organizations tends to be
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More aggressive (higher sense of urgency)
Faster
More flexible
More adaptable
More innovative & creative
• But also
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Less cost efficient
• In function of the key success factors of the industry, the
potential of transforming the organization towards being
more entrepreneurial varies