Chapter Twelve. Effective Strategic Management: Fostering Corporate Entrepreneurship and New Venture Creation. Learning Objectives. TRANSPARENCY-99. After studying this chapter, you should have a good understanding of:.
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Effective Strategic Management:Fostering Corporate Entrepreneurship and New Venture Creation
TRANSPARENCY-99After studying this chapter, you should have a good understanding of:
Techniques to Stimulate Creativity
Sources: Gundry, L.K., Kickul, J.R., & Prather, C.W. 1994. Building the creative organization. Organization Dynamics: 22-37; Mackie, K. 1998. Ford RAPIDS helping UT departments streamline work processes. On Campus, April 14. Yaqub, R.M. 2000. The play’s the thing. Worth, November: 116-123.
Retail Trade (20%)1,094,000
Wholesale Trade (7.4%)410,000
Transportation, Communications, and Public Utilities (4%)217,000
Mining (0.4%) 20,000
Finance, Insurance, and Real Estate (8%) 457,000
Manufacturing (6.%) 329,000
TRANSPARENCY-101All Small Companies*, By Industry
Source: SBA’s Office of Advocacy, based on Data Provided by the U.S. Census Bureau, statistics of U.S. Businesses. (Percentages don’t add to 100% because of rounding.)
* Businesses with 500 or fewer employees in 1997 (rounded)
Allows a start-up to hold on to its cash and minimize commitments to equipment or real estate that might need updating as the company grows (or shrinks). Leasing costs are deductible as a business expense.
A traditional non-cash means of exchanging products or services. Bartering has enjoyed a resurgence in popularity because exchange services that are now available on the Internet are facilitating more barter transactions.
One of the fastest-growing techniques for financing start-ups; number one among women entrepreneurs. It’s like a bank loan without the lengthy approval process. But the high interest rates that some cards charge could make it risky.
Suppliers that let you pay for goods or services in 60 or 90 days rather than after only 10 to 30 days are, in effect, financing your purchase. Some suppliers will agree to this because they need your business as badly as you need their credit.
Factoring is a method of raising cash by selling accounts receivables to a third party or financing against the value of receivables. It’s generally only used for short term cash needs and often comes with a hefty interest charge.
TRANSPARENCY-102Alternatives to Traditional Financing
Source: Fraser, J. A. 1998. A hitchhiker’s guide to capital resources. Inc. Magazine, February: 74-82; Owens, T. 1990. Getting financing in 1990. Small Business Reports, June:
Don’t kill a project
Managers exhibit patience in nurturing projects. Ideas can be kept alive by individual staffers who believe in a project, even if it can’t find a home in one of 3M’s divisions.
If at first you don’t succeed, 3M believes that you should be able to try and try again. Thus, it encourages experimentation and risk taking on projects, even when the outcome is unclear. This strategy has helped 3M achieve one of its key objectives: obtain 25-30 percent of sales from products introduced in the past 5 years.
Keep divisions small
Divisions are split up if they get too big, say, over $250 million in sales. 3M believes its divisions should be granted autonomy and that division managers should know staffers by their first names.
Motivate the champions
Product champions are challenged to be innovative. When successful, they are rewarded with salaries and promotions. If a product takes off, a champion forms an action team and may get to run his or her own product group.
Stay close to customers
Product development is not conducted in isolation. Customers are often invited to join 3M researchers and marketers to brainstorm about uses for a technology and new product concepts.
Share the wealth
Divisions and product groups do not have an exclusive claim on the technologies they develop. An atmosphere of open communication helps everyone benefit from the technological insights and breakthroughs that others at 3M discover.
TRANSPARENCY-1033M’s Rules for Successful Innovation
Sources: Collins, J. C., & Porras, J. I. 1997. Built to Last. NewYork: HarperBusiness; Graham, A. B. 1996. The Learning Organization: Managing Knowledge for Business Success; Mitchell, R. 1989. Masters of innovation. Business Week, April 10: 58-63; Osborn, T. 1988. The new product champions: How 3M manages for innovation. Marketing communications, 13(11): 17-22.
Independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion.
A willingness to introduce novelty through experimentation and creative processes aimed at developing new products and services as well as new processes.
A forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities in anticipation of future demand.
An intense effort to outperform industry rivals. It is characterized by a combative posture or an aggressive response aimed at improving position or overcoming a threat in a competitive marketplace.
Making decisions and taking action without certain knowledge of probable outcomes; some undertakings may also involve making substantial resource commitments in the process of venturing forward.
TRANSPARENCY-104Dimensions of Entrepreneurial Orientation
Source: Covin, J. G., & Slevin, D. P. 1991. A conceptual model of entrepreneurship as firm behavior. Entrepreneurship Theory & Practice, Fall: 7-25; Lumpkin, G. G., & Dess, G. G. 1996. Clarifying the entrepreneurial orientation construct and linking it to performance. Academy of Management Review, 21(1): 135-172; Miller, D. 1983. The correlates of entrepreneurship in three types of firms. Management Science, 29: 770-791.