MBAX 6100 Entrepreneurship & Small Business Management

Corporate Entrepreneurship II

MBAX 6100MBAX 6100

Entrepreneurship & Entrepreneurship &

Small Business ManagementSmall Business Management

MBAX 6100MBAX 6100

Entrepreneurship & Entrepreneurship &

Small Business ManagementSmall Business Management

Frank MoyesFrank MoyesLeeds College of Business Leeds College of Business University of ColoradoUniversity of ColoradoBoulder, ColoradoBoulder, Colorado


Today’s AgendaToday’s Agenda

Corporate Entrepreneurship II – Creativity & Corporate Entrepreneurship II – Creativity & InnovationInnovation

Feasibility: Is this a good industry?Feasibility: Is this a good industry?Case: Emerging Business Opportunities at IBMCase: Emerging Business Opportunities at IBMReadRead

Bringing Silicon Valley InsideBringing Silicon Valley Inside Feasibility: M-4 Is This a Good Industry?Feasibility: M-4 Is This a Good Industry?

Entrepreneurship InterviewEntrepreneurship Interview


Next Week’s ScheduleNext Week’s ScheduleCorporate Entrepreneurship III – You as an IntrapreneurCorporate Entrepreneurship III – You as an IntrapreneurCase: Lucent TechnologiesCase: Lucent TechnologiesFeasibility: Sustainable competitive advantageFeasibility: Sustainable competitive advantageSpeaker: Aaron Kennedy of NoodlesSpeaker: Aaron Kennedy of Noodles

How has Noodles been innovative?How has Noodles been innovative? What problems does Noodles face to be innovative in the What problems does Noodles face to be innovative in the

future?future? What are your recommendations for Kennedy?What are your recommendations for Kennedy?


Is this a Good Industry?Is this a Good Industry?

Five forces – Michael PorterFive forces – Michael Porter Ease of entryEase of entry Supplier powerSupplier power Buyer powerBuyer power Threat of substitutesThreat of substitutes Competitive rivalryCompetitive rivalry

Define your industry broadlyDefine your industry broadlyGood industries are competitively forgivingGood industries are competitively forgiving


Corporate EntrepreneurshipCorporate Entrepreneurship

Week 5 Obstacles to corporate entrepreneurshipWeek 5 Obstacles to corporate entrepreneurship Week 6 Innovation in corporationsWeek 6 Innovation in corporations Week 7 You as an IntrapreneurWeek 7 You as an Intrapreneur


Some Notes on Corporate Some Notes on Corporate EntrepreneurshipEntrepreneurship

Opportunity drivenOpportunity driven Not a lack of ideas – execution is keyNot a lack of ideas – execution is key ExperimentationExperimentation

Iterative innovation processIterative innovation process Learning from failureLearning from failure

““A team with B plan”A team with B plan” Sharing risks & rewardsSharing risks & rewards


Some Notes on Corporate Some Notes on Corporate Entrepreneurship IIEntrepreneurship II

Venture teams – self-directed, self-managing & high Venture teams – self-directed, self-managing & high performanceperformance

Support from top managementSupport from top management Forget, borrow, learnForget, borrow, learn Resource attractionResource attraction Do not use corporate services to save money; only Do not use corporate services to save money; only

when it gives you a competitive advantagewhen it gives you a competitive advantage


What Are the Obstacles to Corporate What Are the Obstacles to Corporate Entrepreneurship?Entrepreneurship?

SystemsSystems Organization StructureOrganization Structure Strategic directionsStrategic directions Policies & ProceduresPolicies & Procedures PeoplePeople CultureCulture

Morris & Kuratko, Corporate Entrepreneurship


Systems ObstaclesSystems Obstacles

Reward & evaluation systemsReward & evaluation systems Oppressive Control systemsOppressive Control systems Inflexible budgeting systemsInflexible budgeting systems Arbitrary cost allocation systemsArbitrary cost allocation systems Rigid planning systemRigid planning system


Systems DecisionsSystems Decisions

Reward systemsReward systems Division managersDivision managers Corporate entrepreneurship groupCorporate entrepreneurship group IntrapreneursIntrapreneurs

Planning systemsPlanning systems Controls on capitalControls on capital How provide sustained funding? How get patient How provide sustained funding? How get patient

capital?capital? How avoid decisions that could sink the company?How avoid decisions that could sink the company?


Organizational Structure ObstaclesOrganizational Structure Obstacles

Too many hierarchical levelsToo many hierarchical levels Responsibility w/o authorityResponsibility w/o authority Top down mgmtTop down mgmt Restricted communication channelsRestricted communication channels Lack of accountabilityLack of accountability


Organizational Structure DecisionsOrganizational Structure Decisions

Spin-off; separate from divisions; part of divisionsSpin-off; separate from divisions; part of divisions Who responsible top management? How handle change Who responsible top management? How handle change

at top?at top? Where locate?Where locate? How measure performance?How measure performance?

Drive existing divisions out of business?Drive existing divisions out of business?


Strategic Direction ObstaclesStrategic Direction Obstacles

No innovation goalsNo innovation goals No strategy for EntrepreneurshipNo strategy for Entrepreneurship No visionNo vision Lack of commitment from senior execsLack of commitment from senior execs No Entrepreneur role models at topNo Entrepreneur role models at top


Strategic Direction Decisions Strategic Direction Decisions

Time frame for successTime frame for success Focus is on short term resultsFocus is on short term results

Profit per share growth vs. higher P/EProfit per share growth vs. higher P/E Criteria for successCriteria for success Innovation goalInnovation goal How choose the ventures?How choose the ventures?

IBM: cross-IBM resource needs, maturity of their strategies and IBM: cross-IBM resource needs, maturity of their strategies and business plans, potential market size, valued to be added by business plans, potential market size, valued to be added by corporate insightcorporate insight

Outside validation?Outside validation?


Policies & Procedures Policies & Procedures ObstaclesObstacles

Long, complex approval cyclesLong, complex approval cycles Extensive documentation requirementsExtensive documentation requirements Unrealistic performance criteriaUnrealistic performance criteria


Policy & Procedures DecisionsPolicy & Procedures Decisions

Restrictions on hiring – number & compensationRestrictions on hiring – number & compensation Accounting systems Accounting systems Reports – environmental, equal opportunityReports – environmental, equal opportunity


People ObstaclesPeople Obstacles

Fear of failureFear of failure Resistance to changeResistance to change Turf protectionTurf protection Short-term orientationShort-term orientation Inappropriate skills/talentsInappropriate skills/talents


People DecisionsPeople Decisions

Hire entrepreneurs from outside?Hire entrepreneurs from outside? How train intrapreneurs to provide skills?How train intrapreneurs to provide skills? Assign experienced leaders or train young people?Assign experienced leaders or train young people? What skills are needed – traditional entrepreneurial or What skills are needed – traditional entrepreneurial or

ability to navigate the organization, secure cooperation ability to navigate the organization, secure cooperation or supportor support

How handle turf protection?How handle turf protection? 15% rule15% rule


Culture Culture ObstaclesObstacles

Ill-defined valuesIll-defined values No consensus on prioritiesNo consensus on priorities Values that conflict with Entrepreneur's approach Values that conflict with Entrepreneur's approach

(innovation, calculated risk taking, pro-activeness)(innovation, calculated risk taking, pro-activeness) Definition of success: promotion every 3 years, corner Definition of success: promotion every 3 years, corner

office, corporate kiteoffice, corporate kite Entrepreneurial ventures attract mavericks & risk takersEntrepreneurial ventures attract mavericks & risk takers


Culture DecisionsCulture Decisions

How to not trigger the corporate immune system?How to not trigger the corporate immune system? How deal with failure?How deal with failure?



Why Is It So Hard to Predict the Future?Why Is It So Hard to Predict the Future?

"I think there is a world market for maybe five computers. "I think there is a world market for maybe five computers. Thomas Watson, chairman of IBM, 1943Thomas Watson, chairman of IBM, 1943

"This 'telephone' has too many shortcomings to be "This 'telephone' has too many shortcomings to be seriously considered as a means of communication. The seriously considered as a means of communication. The device is inherently of no value to us." Western Union device is inherently of no value to us." Western Union internal memo, 1876.internal memo, 1876.



"The concept is interesting and well-formed, but in order "The concept is interesting and well-formed, but in order

to earn better than a 'C,' the idea must be feasible."to earn better than a 'C,' the idea must be feasible."

"Heavier-than-air flying machines are impossible.""Heavier-than-air flying machines are impossible." Lord Kelvin, president, Royal Society, 1895.Lord Kelvin, president, Royal Society, 1895.



"So we went to Atari and said, 'Hey, we've got this "So we went to Atari and said, 'Hey, we've got this amazing thing, even built with some of your parts, amazing thing, even built with some of your parts, and what do you think about funding us? Or, we'll and what do you think about funding us? Or, we'll give it to you. We just want to do it. Pay our salary, give it to you. We just want to do it. Pay our salary, we'll come work for you.' And they said, 'No.' So, we'll come work for you.' And they said, 'No.' So, then, we went to Hewlett-Packard, and they said, then, we went to Hewlett-Packard, and they said, 'Hey, we don't need you. You haven't got through 'Hey, we don't need you. You haven't got through college yet.”college yet.”


Develop Corporate Innovation StrategyDevelop Corporate Innovation Strategy

Morris & Kuratko: ObstaclesMorris & Kuratko: Obstacles ““Building Breakthrough Businesses” – Forget, Borrow, Building Breakthrough Businesses” – Forget, Borrow,

LearnLearn ““Bringing Silicon Valley Inside” – resource attractionBringing Silicon Valley Inside” – resource attraction IBM case – EBO’sIBM case – EBO’s

Documents

MBAX 6100 Entrepreneurship & Small Business Management