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Entrepreneurial Venturing Inside a Corporation

Entrepreneurial Venturing Inside a Corporation. Chapter 14. What is a Corporate Venture? . A project that is new to the company and carries a much higher risk of failure than other project. Due to the level of uncertainty, it is often managed separately

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Entrepreneurial Venturing Inside a Corporation

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  1. Entrepreneurial Venturing Inside a Corporation Chapter 14

  2. What is a Corporate Venture? • A project that is new to the company and carries a much higher risk of failure than other project. • Due to the level of uncertainty, it is often managed separately • Corporate ventures undertaken to move the company in new directions

  3. Benefits of Corporate Venturing • Effective way to create new revenue streams • Entrepreneurial activities stimulate product/process innovation • CV is a source of organizational growth • Entrepreneurial activities spur the company to take risks and pioneer, making it more competitive • Entrepreneurial activities help the company overcome resource limitations.

  4. The Reality of Corporate Venturing • Not easy to get senior management commitment • Venture champions endure significant risk • Less than 20% of new product introductions succeed • 70% of all new international ventures fail • Risk to the financial health of the parent company

  5. The Difference Between CVs and Entrepreneurial Ventures • The gestation period for a corporate venture is nearly twice as long as that for an independent start-up. • CVs are insulated from the external environment by the parent company • CVs, therefore, can tolerate a longer period of negative cash flow • The development project moves more slowly • CVs subject to success hurdles imposed by the parent • CVs often inherit the rigid hierarchies of the parent

  6. The New Role of the CEO in the World of Corporate Venturing • Champion • Personally drives the project • Patron • Financial support from top level executive • Provocateur • Leads the charge for innovation • Shaper of culture • Creates the environment

  7. What does it take to be a Venture Champion?

  8. Types of Champions • Project Champion • Interface with organization • Technical champion • Inventors and discoverers • Business Unit Champions • Manage the transition to operations

  9. Paths to Corporate Venturing • Skunk works – giving some independence to the project • Strategic Integration – balancing the core with various resources and opportunities • Entrepreneurial immersion – create an entrepreneurial culture

  10. Why You Need an Entrepreneurial Mindset

  11. New Resource Equation(Geoffrey Moore, Living on the Fault Line} Scarce Resources Plentiful Resources Time Talent Management attention Money Computing capability Service providers

  12. Entrepreneur V. Manager: Different Goals and Motivations

  13. Most Compelling Reason • Empirical Evidence that Corporate entrepreneurship improves company performance • Increases firm’s pro-activeness and willingness to take risks • Helps pioneer the development of new products, processes, and services

  14. Achieving Success As a Corporate Entrepreneur

  15. Success as a Corporate Entrepreneur • Disclose idea to a trusted colleague • Put the idea into a short memo with a compelling story • Ask for resources to achieve a specific goal • Seek a champion or leading blocker

  16. Learn to improvise Entrepreneurship/ Corporate Venturing Structure Discipline Chaos Freedom

  17. Develop a Semi-Coherent StrategyBased on Brown & Eisenhardt • Unpredictable • Uncontrolled • Inefficient • Proactive • Continuous • Diverse

  18. Example: NikeOn the Edge of Chaos • Core: cutting-edge design and technology • They innovate at the core • Air to Air Max to Air Zoom technology • Attack strong niche players like Speedo with novel products • Take advantage of unexpected opportunities (Tiger Woods) • Superior execution • Superior brand building

  19. Example: 3M - Improvising • Balancing freedom to explore with the discipline of the marketplace. • Policies & procedures promote personal freedom and trust. • Failure is not punished. • New products: • skunk works (Post-it Notes), • pacing programs (Scotch-Brite), • traditional development (derivatives)

  20. Entrepreneurial Guerrilla Tactics • Work under the radar; then ask forgiveness • Move people around and out of their comfort zone. • Establish employee-flight incentives • Define challenges in creative ways • Turn managers into sponsors

  21. Build to Last – Jim Collins • Religiously preserve your core values • Don’t play it safe – BHAGs • Create a cult-like environment - only those who fit • Make your best moves from experimentation, trial & error,& accident • Focus on beating yourself • Don’t make either/or choices. Go for it all.

  22. Summary Corporate Entrepreneurship • Who you are – • A believer in change • An accepter of intelligent failure • Customer driven • A believer in empowered teams

  23. Summary • What you do – • Focus on customer needs • Create a series of strategic alliances • Don’t limit the company to existing competencies or resources

  24. Summary • Why you do it – • Individual measurement and reward systems where associates and company share risk and rewards – Tom O’Malia, USC

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