3. Business Life Cycle and Entrepreneurship
New Entrepreneurial
stage needed ?
Sales
Entrepreneurial Consolidation Maturity
Approach ?
Entrepreneurial ? Growth
Survival
Inception
Time
3
4. Businesses are faced with...
Changing dynamic markets
Globalisation
Shorter product life cycles
High rates of technological change
Pressures to reduce costs
Changes in business organisation (int. &
ext.)
4
5. A Possible Response
Some large firms responded to the changing
environment by addressing their necessary
response to working with a dynamic environment
involving attitudes to:
risk
innovation
flexible, rapid response
changes in management and
organisation
5
7. Role of Innovation
“An enterprise that does not daily innovate inevitably ages and
declines … even in a successful business the disease of
bureaucracy and complacency is ever present. (Drucker).
“Firms create competitive advantage by perceiving or
discovering new and better ways to compete in an industry and
bringing them to market, which is ultimately an act of
innovation” Michael Porter. The Competitive Advantage of
Nations.
7
8. Schumpeterian Innovation
Schumpeter (1934). … By recombining the
factors of production to create something new
the entrepreneur creates a demand…
Innovation could take different forms:
Creation of a new or alternative product
A new method of production
Opening a new market
Capture of a new source of supply
A new organisation
8
9. Dimensions
Birkinshaw (2003) identifies four common
themes in corporate entrepreneurship.
Corporate Venturing
Intrapreneuring
Bringing the Market Inside
Entrepreneurial Transformation
9
10. Hierarchy of terminology in Corporate
Entrepreneurship
Entrepreneurship
Independent Corporate
Entrepreneurship Entrepreneurship
After: Sharma and Chrisman (1999)
10
11. Hierarchy of terminology in Corporate
Entrepreneurship
Entrepreneurship
Independent Corporate
Entrepreneurship Entrepreneurship
Corp. Venturing Innovation Strategic
Renewal
Int.. Corp. Venturing Ext.. Corp. Venturing
After: Sharma and Chrisman (1999)
11
13. Reasons for venturing
Reasons for venturing US Co. Japanese Co.
Maturity of the base business 70 57
To meet strategic goals 76 73
To provide challenges to managers 46 15
To develop future managers 30 17
To survive 35 28
To provide employment 3 24
Source: Zenas Block & Ian MacMillan ‘Corporate Venturing’, Harvard Business Press 1993
13
16. Intrapreneur
Used by Norman Macrae in an article in the
Economist. (Christmas Ed. 1976). Applied term
to managers, professionals and artisans who set
up small businesses within old and existing
organisations.
Some texts suggest that Pinchot was the person
who first used the term
16
17. Intrapreneur
Developed by Pinchot (1986)
“ An intrapreneur is an entrepreneur within an
already established organisation”. Used to
describe entrepreneurism within a large
organisation, rather than establishment of
small businesses within a large organisation.
17
18. Intrapreneur
Gibb (1988) An Intrapreneur is an employee of a
large organisation who has the entrepreneurial
qualities of drive, creativity, vision and ambition.
Gibb goes on to state that these people differ
from entrepreneurs as they wish to retain the
security of the large organisation.
A number of authors define Intrapreneur and
related terms. See Sharma and Chrisman
(1999).
18
19. Intrapreneurs
May have these
characteristics in common
with independent
entrepreneurs
Ability to work amidst confusion
Ability to anticipate change
Ability to make intuitive leaps
High energy levels
Creativity in problem solving
Action orientation
19
20. ….. But want ...
BUT may differ ….
Want less restrictive but supportive environment
Want recognition
Want their ideas to be a vehicle for advancement
Want the security (pay cheque, pension etc)
20
22. Intrapreneurs need in addition
An ability in a Multi-disciplinary role
To understand the environment
To encourage open discussion
Be able to create management
options
To build a coalition of supporters.
Source: Pinchot 1986.
Intrapreneuring. Harper &
Row.
22
23. Corporate Entrepreneurs as ‘Change Masters’
‘Change Master’ A term used by Rosabeth Moss
Kanter
Three Stages of the journey:
Formulate and Sell,
Power to advance,
Maintain Momentum.
23
24. Intrapreneurs as Change Masters
A term used by Rosabeth Moss Kanter
Three Stages of the journey: Formulate and Sell,
Power to advance, maintain Momentum.
Skills: Personal and Interpersonal
Step outside of conventional thinking
Often ‘generalists’ with ‘kaleidoscopic thinking,
vision communicators, persistent individuals,
coalition & team builders, willing to share credit
24
25. Rosebeth Moss Kanter’s View
Corporate entrepreneurs are people who
envision something new and make it work.
Being a corporate entrepreneur, what I call
a ‘change master’ is much more
challenging and fun than being a non-
entrepreneur. It requires more of a person,
but it gives back more self-satisfaction.
Rosabeth Moss Kanter (1988). Handbook for Creative and Innovative
Managers. McGraw Hill.
25
26. Intrapreneurial Behaviour
May be seen as good news
High achievement motivation
High task commitment
26
27. Intrapreneurial Behaviour
May be seen as mild irritants
High levels of informal networking
Informal recruitment (This could be a major
problem)
27
28. Intrapreneurial Behaviour
May be seen as serious problems
Independence
Non-acceptance of rules and boundaries
Non-compliance with planning and control
systems
Conflict with authority
28
30. Barriers to an Intrapreneurial Culture
Barriers Include:
Senior management feel alienated
hierarchical nature of the organisation
Corporate culture
Short term performance requirements
Planning procedures
Source Gibb 1990
30
31. Barriers to an Intrapreneurial Culture
Barriers (continued) Include:
Lack of ownership of the problem
Mobility of managers
lack of flexibility in the organisation
methods of compensation
Source Gibb 1990
31
32. An ‘Intrapreneurial’ culture needs:
Sponsors
Continuous involvement
Autonomy of the intrepreneurial team
Ability to cross boundaries
See Pinchot (1986)
32
33. An ‘Intrapreneurial’ culture needs:
(needs continued)
A tolerance of risk and failures
Long term objectives
Making resources available
Introducing suitable compensation schemes.
See Pinchot (1986)
33
34. Drucker’s Entrepreneurial Practices
Druker suggests some key management
practices are vital in the development of
‘entrepreneurship’ in an existing business.
Management focuses on opportunity
Generation and maintenance of entrepreneurial spirit
Top-down and cross functional interaction
Source Drucker, P. Innovation & Entrepreneurship. Pan 1986
34
35. The final word …..
“Intrapreneurs cannot exist if their passionate
commitment is ignored and their visions given to
people who don’t understand them. Without
intrapreneurs, innovation flounders
Source Pinchot (1986)
35
Notes de l'éditeur
Introduction to Policy Ideas.- Link with Luke’s initial statements re. innovative ideas. Pont out that there are only a limited number of possibilities. Note move of AOL and Warners etc. Link with many of the innovative moves in management & processes Note that some methods are difficult to get to work. E.g. mergers & acquisitions - culture often key. Cultural Web. Internal venturing. Bootleg/skunk-work projects. (Note 3M) - more later Change of organisation structures in recent years. Moves to ‘e’ commerce and working. More home working. (e.g. FI, Utilities) and change of attitudes. Introduce risk.
Either / And Develop Intrapreneurs. Use Gibb’s definition. Draw out some of the traits that may give problems. Introduce Rosebeth Moss Kanters ‘Change Master’ concept. Difficult to manage. Impact on the rest of the system. Resource availability (official / unofficial) Entrepreneurial culture necessary. From the TOP. Cross-discipline Job rotation. Shallow organisational structure Matrix structures Empowerment Risk