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On Venturing. MGT 709 New Venture Creation. Determining how entrepreneurial projects will be pursued. Corporate Entrepreneurship. Corporate culture Leadership Structural features that guide and constrain action Organizational systems that foster learning and manage rewards.

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on venturing

On Venturing

MGT 709 New Venture Creation

corporate entrepreneurship

Determining

how

entrepreneurial projects will be pursued

Corporate Entrepreneurship

  • Corporate culture
  • Leadership
  • Structural features that guide and constrain action
  • Organizational systems that foster learning and manage rewards
  • Use of teams in strategic decision making
  • Whether the company is product or service oriented
  • Whether the firm’s innovation efforts are aimed at product or process improvements
  • The extent to which it is high-tech or low-tech
slide3

Focused Approaches to Corporate Entrepreneurship

Autonomous corporate venturing work group

  • Autonomous corporate venturing (work) group
    • Frees entrepreneurial team members from constraints imposed by existing norms and routines
    • Facilitates open-minded creativity
    • But, does isolate the group from the corporate mainstream
      • New venture groups (NVGs)
      • Business incubators
new venture groups nvgs

Focused approach

New Venture

Group

New Venture Groups(NVGs)

  • Goal is to identify, evaluate, and cultivate venture opportunities
  • Typically function as semi-autonomous units with little formal structure
  • Involvement includes
    • Innovation and experimentation
    • Coordinating with other corporate divisions
    • Identifying potential venture partners
    • Gathering resources
    • Launching the venture
business incubators

Focused approach

Business Incubators

Business Incubators

  • Business incubators are designed to “hatch” new businesses
  • Incubators provide some or all of the following functions
    • Funding
    • Physical space
    • Business services
    • Monitoring
    • Networking
dispersed approaches to corporate entrepreneurship

Dedication to principles and practices of entrepreneurship is spread throughout the firm

    • Ability to change is a core capability
    • Stakeholders can bring new ideas or venture opportunities to anyone in the organization
  • Two related aspects of dispersed entrepreneurship
    • Entrepreneurial culture
    • Product champions

Dispersed Approaches to Corporate Entrepreneurship

entrepreneurial culture

Dispersed approach Entrepreneurial Culture

Entrepreneurial Culture

  • Culture of entrepreneurship
    • Search for venture opportunities permeates every part of the organization
    • Effect is strongest when it animates all parts of the organization
    • Strategic leaders and the culture generate a strong impetus
      • To innovate
      • Take risks
      • Seek out new venture opportunities
product champions

Dispersed approach Product

Champions

Product Champions

  • Product (or project) champions
    • Bring entrepreneurial ideas forward
    • Identify what kind of market exists for the product or service
    • Find resources to support the venture
    • Promote the venture concept to upper management
  • New project must pass two critical stages
    • Project definition
    • Project impetus
measuring the success of corporate entrepreneurship activities

Measuring the Success of Corporate Entrepreneurship Activities

  • Techniques used to limit the expense of venturing or to cut losses when entrepreneurial initiatives appear doomed
    • Comparing strategic and financial goals
      • Are the products or services offered by the venture accepted in the marketplace?
      • Are the contributions of the venture to the corporation’s internal competencies and experience valuable?
      • Is the venture able to sustain its basis of competitive advantage?
measuring the success of corporate entrepreneurship activities1

Techniques used to limit the expense of venturing or to cut losses when entrepreneurial initiatives appear doomed

    • Exit champions
      • Willing to question the viability of a venture project
      • Demand hard evidence and challenge the belief system that is carrying an idea forward
      • Hold the line on ventures that appear shaky
    • Real options
      • Managing the uncertainty associated with launching new ventures

Measuring the Success of Corporate Entrepreneurship Activities

adams on corporate venturing
Adams On Corporate Venturing
  • How can mature companies act like a startup?
    • Make sure everybody is creating value
      • Reward great people, give them a voice
    • Get back to market validation
      • Every presentation around customer pain
    • Communicate a common vision
      • Don’t waste resources on internal competition
    • Align new products with the sales model
    • Harness entrepreneurial energy
      • Reward great ideas, give people autonomy, establish safe havens
adams ctd
Adams ctd.
  • How can mature companies act like a startup?
    • Make decisions and act fast – speed wins
      • Cut the bureaucracy, take risks
      • 50% of time in meetings
      • Listen to customers or lead people
    • Stick to your core competency
      • work with people who will get the job done
    • Create smaller, dynamic units
      • 16 person teams in military, minimal org overhead
    • Keep R&D alive
future of corporate venturing
Future of Corporate Venturing
  • Ecosystem venturing
    • Supports and encourages a network of customers and suppliers
    • Value of benefits for existing businesses divided by invested capital – don’t lose focus
  • Innovation venturing
    • Spend a proportion of an existing functional budget in a ‘venturing’ way (e.g. R&D)
      • Focus on commercializing new technologies for existing business
      • Make sure it stays under a functional head rather than become a general ‘innovation fund’
future of corporate venturing1
Future of Corporate Venturing
  • Harvest Venturing
    • Convert existing corporate resources into commercial ventures and then into cash
      • Must not be needed by current or future org
    • Danger of becoming a ‘new growth’ unit rather than focusing on existing resources
  • Private Equity Venturing
    • Setting up a VC operation
      • Need privileged access to deals in early stage of lifecycle and some value-added for new firms
      • Danger of being bringing nothing special to the table but thinking you do (hubris)
why new legs venturing fails
Why ‘new legs’ venturing fails
  • Focus on low probability projects
  • Little attention or commitment from core
  • Not given enough time or funds (due to competition with core business)
  • It’s a tough business
    • Even VC firms earn below cost of capital on average
diagnosis discovery
DIAGNOSIS & DISCOVERY

CONSULTING SKILLS

block on diagnosis
Block on Diagnosis
  • The business of discovery is:
    • Doing layers of analysis
    • Understanding the political climate
    • Resurfacing resistance to sharing information
    • Seeing the interview as an intervention
specific skills
Specific skills
  • Distinguish between the presenting problem and the underlying problem
  • Understand the technical problem and how it is being managed (or not)
  • Ask questions about what others are doing to cause or maintain the problem
    • Ask questions about the client’s own role
  • Plan the data collection jointly
    • Involve the client in interpreting the data
    • Condense to a limited number of issues
    • Use simple language
    • Develop a clear and simple picture of what is going on
  • There may be a similarity between how the client manages you and the organization
  • THE PURPOSE OF DISCOVER IS TO GET ACTION, NOT DO RESEARCH
further steps
Further Steps
  • Concentrate on four things beyond the technical considerations:
    • Keep simplifying your inquiry so that is ends up focusing more and more on the next steps the client can take
    • Use everyday language
    • Give a great deal of attention to your relationship with the client
      • Include the client at every opportunity in deciding how to proceed. Deal with resistance as it arises.
    • Treat technical data as valid and relevant. Also assess how the problem is being managed.

The presenting problem is never the real problem!

weiss on successful interventions
Weiss on Successful Interventions
  • Ten steps to launch:
    • Reaffirm the proposal content with the buyer
    • Begin doing something
    • Find and meet the key players
    • Begin co-opting resistance
    • By-pass islands
    • Periodically meet with the buyer
    • Make your successes visible to the organization
    • Share credit, or even bestow all of it
    • Illustrate closure
    • Visibly make mid-course corrections
other gems for discovery
Other Gems for Discovery
  • Challenge basic premises
    • If the internal people had it all figured out, they wouldn’t need you
    • Seek documented (objective) validation for bald-faced assertions
  • Ensure you have alternative sources of information.
    • Don’t talk. Listen.
      • Cafeteria, the implementers, customers, suppliers, office staff
      • Ask anyone who volunteers information for examples, frequency, and who else was there
      • Trust your instincts and history.
      • Search for incongruities.
other gems for discovery1
Other Gems for Discovery
  • Avoid being intimidated
    • Establish a comfortable first name relationship
    • Never pose as an expert
    • Don’t defend yourself with credentials or background
    • Try to meet on neutral turf
    • Push back firmly whenever the situation calls for it
    • Never accept a political role or take sides
    • Be proactive
    • Do your homework
    • Face setbacks honestly
    • Understand that tomorrow’s another day
    • THE MORE YOU GIVE IN, THE MORE THEY’LL EXPECT YOU TO GIVE; THE MORE YOU STAND FIRM, THE MORE THEY’LL RESPECT YOU
and finally
And finally…
  • Avoid intimidating others
    • Don’t start by talking
    • Don’t start with your process/methodology
    • Stop dropping the buyer’s name
    • Join them in the cafeteria
    • Contribute to company causes
    • Observe social mores
    • Dress like everyone else
    • Maintain confidences
    • Don’t take sides
    • Show humility
    • NEVER GIVE AN ORDER TO ANY CLIENT PERSONNEL
diagnosing organizations
DIAGNOSING ORGANIZATIONS

CONSULTING TOOLS