Corporate entrepreneurship refers to companies engaging in internal diversification through developing new business ventures. This allows companies to gain stability from existing business lines while pursuing innovation through new ventures. However, balancing the needs of established and new business units within a company is challenging. Corporations often fail because responsibilities are too diffuse or the new ventures become too separated from the parent company. To succeed, companies must develop strategic exploration of opportunities, rely on customer feedback, use prototypes, set non-financial milestones, and integrate new ventures with autonomy at the right time. IBM's model of using "mature turks" to lead new ventures and separate but aligned review processes is provided as a successful example.

1. Meeting the challenges of
Corporate
Entrepreneurship
Mohammad ABBASI

2. Introduction
Corporate Entrepreneurship:
 Refers to process in which companies engage in
diversification through internal development.
Why is it needed?
 Existing business give stability but innovation
gives differentiation. Corporations needs both.

3. Challenges associated with
Corporate Entrepreneurship
Old company organization
Looks to exploit the existing market.
New company organization:
Looks to explore
Challenge is to balance these two in the
same corporation.

4. Why corporates fails to make a
balance?
Corporations generally respond with two approaches:
 Diffused responsibility: Disperse the task of new business
creation to existing divisions which leads to:
 Resistance to change.
 Misalignment of incentives.
 Cowboy culture. E.g. Enron
Centralization: Completely separate new ventures from
existing divisions which leads to:
 Culture clash during integration phase.
 Power Struggle

5. How to handle the new business?
Develop strategy to explore new opportunity
 Search for opportunities in areas of promise.
 Rely on customer feedback rather than market research.
 Use prototypes to test assumptions
 Set non financial milestones.
 Pre-decide when to pull the plug.

6. Operate with mix of old and new
o Use “mature-turks” to run the new venture.
o Align the incentives.
o Have different review process
o Select resource with specific skills. E.g. Entrepreneurial
skills.
o Ask company veterans to run the new businesses oversight
bodies.

7. Integrate with autonomy
o Timing very critical when to integrate.
o Identity and integration should be balanced.
o Assign both corporate executives and managers from
division to look after new ventures.
o Stipulate criteria for handling new business over to
existing business.

8. An Example of IBM- EBOs
Strategy for new venture
 Emphasis on “Strategic clarity”
 Teams encouraged to engage with market place.
 Proposed product to be tested as a pilot, design-in.
 Review process based on plan targets rather than
financial targets.
 EBO evaluation based on project based milestones,
financials and business maturity

9. Operating the new venture
 Appointment of “mature turks”- John Thompson as the head of EBO.
 Created new development, oversight and review process.
 Handpicked EBO leaders based on different selection criteria.
Integrating the new business
 At the time when business had clear leadership and strategy.
 Corporate Strategy executives monitor progress of EBOs
 Reviews to check if traditional business is choking new business.

10. THANKS!!