The Strategic Management Process
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Strategic Entrepreneurship
 Entrepreneurship is concerned with:
 The discovery of profitable opportunities
 The exploitation of profitable opportunities
 Entrepreneurship: the process by which individuals,
teams, or organizations identify and pursue
entrepreneurial opportunities without the immediate
constraint of the resources they currently control
 Purpose of entrepreneurship:
 To create wealth or value
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Strategic Entrepreneurship
 Entrepreneurs
 Individuals, acting independently or as part of an
organization, who perceive an entrepreneurial opportunity
and then take risks to develop an innovation to exploit it
 Entrepreneurial Mind-set
 Person who values uncertainty in the marketplace and seeks
to continuously identify opportunities with the potential to
lead to important innovations
 Firms that foster entrepreneurship are:
 Willing to take risks
 Committed to innovation
 Proactive in creating opportunities rather than waiting to
respond to opportunities created by others
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Strategic Entrepreneurship
 Strategic entrepreneurship: taking entrepreneurial
actions through a strategic perspective
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Entrepreneurship dimension: identifying opportunities in the
external environment to exploit through innovations
Strategic dimension: determining the best way to manage the
firm’s innovation efforts
 Corporate entrepreneurship: the use or application of
entrepreneurship within an established firm
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Critical to the survival and success of established organizations as
well as startup entrepreneurial ventures (or “startups”)
Three ways organizations can innovate
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Internally
By cooperating (e.g., strategic alliances)
Through acquisitions
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Strategic Entrepreneurship
 Firms engage in three types of innovative activities
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Invention
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Innovation
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The act of creating or developing a new product or process
Brings something new into being
Technical criteria determine the success of an invention
Process of creating a commercial product from an invention
Brings something new into use
Commercial criteria determine the success of an innovation
Imitation
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Adoption of an innovation by similar firms
Results of imitation
 Product or process standardization
 Products made with fewer features
 Products offered at lower prices
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Internal Innovation
 With internal innovation firms take deliberate efforts to
develop inventions and innovations within the
organization
 Often called internal corporate venturing or
intrapreneurship
 Firm internal innovation is reflected in efforts in
research and development (R&D) and patents
 Firms innovate internally in two ways
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Autonomous strategic behavior
Induced strategic behavior
 Firms produce two major types of internal innovations
 Incremental innovations
 Radical innovations
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Internal Innovation
 Autonomous strategic behavior
 A bottom up process in which product champions pursue
new ideas, often through a political process, by means of
which they develop and coordinate the commercialization of
a new good or service until it achieves success in the
marketplace
 Can facilitate incremental and radical innovations
 Primarily - Radical Innovation
 Induced strategic behavior
 A top down process whereby the firm’s current strategy and
structure foster innovations that are closely associated with
the current strategy and structure
 Can facilitate incremental and radical innovations
 Primarily - Incremental Innovation
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Internal Innovation
 Incremental Innovation
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Is evolutionary and linear in nature
Most innovations are incremental
Build on existing knowledge bases and provide small
improvements in current product lines/processes
Primarily - induced strategic behavior
 Radical Innovation
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Is revolutionary and nonlinear in nature
Is rare because of difficulty and risk involved
Provide significant technological breakthroughs and creates new
knowledge
Requires creativity
Use new technologies to serve newly created markets
Primarily - autonomous strategic behavior
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Innovation Through Cooperative
Strategies
 Most firms lack the breadth and depth of resources in
their R&D activities to continually develop innovations
and remain competitive
 To successfully develop and commercialize
inventions, firms may need to cooperate and integrate
knowledge and resources
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Entrepreneurial new venture firms may need investment
capital and distribution capabilities
More established companies may need new technological
knowledge possessed by newer entrepreneurial firms
 To innovate via cooperative relationships, firms must
share their knowledge and skills – strategic alliances
and joint ventures allow this to occur
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Innovation Through Acquisitions
 Firms can acquire companies to gain access to new
innovations and innovative capabilities
 This can rapidly extend the firm’s product line and
increase the firm’s revenues
 KEY RISK: a firm may substitute its ability to buy
innovations for its ability to produce innovations
internally and thus
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Lose its intensity in R&D efforts
Lose its ability to produce patents
 Research demonstrates that subsequent to
acquisitions, firms introduce fewer new products into
the market
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Process Management Tools
 The use of process management tools can improve an
organization’s strategy implementation efforts.
 Each tool has to do with making improvements to how
a firm performs a business process or series of
activities.
 Common process improvement tools include:
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Best Practices - a technique for performing an activity or
business process that has been shown to consistently deliver
superior results compared to other methods
Benchmarking - a tool for improving a company’s own internal
activities that is based on learning how other companies perform
them and borrowing their best practices
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Process Management Tools
 Common process improvement tools (cont.):
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Reengineering - involves radically redesigning and streamlining
how an activity is performed with the intent of achieving dramatic
improvements in performance
Total Quality Management - a philosophy of managing a set of
business practices that emphasizes continuously improving the
performance of every task and value chain activity
Six Sigma Quality Programs - utilize advance statistical methods
to improve quality by reducing defects and variability in the
performance of business processes
Lean Manufacturing - a production practice that considers the
expenditure of resources for any goal other than the creation of
value for the end customer to be wasteful, and thus a target for
elimination; centered on preserving value with less work
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