Corporate Entrepreneurship ss 5-8 Mikkel Draebye.

Corporate Entrepreneurshipss 5-8

Mikkel Draebye

Agenda Session 5-8

• Where are we, What are we doing

• Flashback: What’s so interesting about Rob?

• Recall: Definitions of entrepreneurship

• Entrepreneurial Attitude : October Sky

• Relevance of e-ship

Where are we?

• Course is about understanding corporate entrepreneurship; How to foster, stimulate and nurture it

• The course is structured in 5 parts1. The nature of entrepreneurship from a behaviorial (R&R) and

attitudinal (October sky) point of view ( ch 1&2, session 1-6)

2. The relevance of entrepreneurship (ch 1&2, session 7-8)

3. The uniqueness (and non) of corporate entrepreneurship (ch. 1&2, session 9-10)

4. The definition, measurement and manifestations of corporate entrepreneurship (ch. 2&3, session 11-12)

5. How foster corporate entrepreneurship (ch 4-15, session 13-44)

R&R Case

• So, remind me what Rob did that was “entrepreneurial” ?

Some definitions of entrepreneurship

“The pursuit of opportunity beyond the resources you currently control”

Howard Stevenson (1988)

“The process of creating value by bringing together a unique combination of resources to exploit an opportunity”

Howard Stevenson (1986)

“Create and build a vision from practically nothing”

Jeffrey Timmons (2000)

Promoter vs. Trustee Orientation

Promoter vs. Trustee Orientation

Promoter vs. Trustee Orientation

Promoter vs. Trustee Orientation

Promoter vs. Trustee Orientation

Promoter vs. Trustee Orientation

Promoter vs. Trustee Orientation

It makes good sense to look as entrepreneurship as an attitude or orientation. As such it must be observed as it is

interpreted by the entrepreneur.

•What is that entrepreneurs do that makes them entrepreneurial?•What is that entrepreneurs do that make them succeed?•What is it that facilitates entrepreneurial success?

“The Entrepreneurial Mindset”

A collective investigation into the nature of entrepreneurship and some context conditions

Part 1: Intro and Context

Part 2: Idea & Vision

Part 3: Starting up

Part 4: Team and resources

Part 5: Resource acquisition

Part 6: Perserverance

Part 7: Happy ending

Conclusions from video clips

• It’s always possible• You are not born an entrepreneur, you become one• Have a clear vision and goal• Put a team together• Don’t be put off by resource and competence constraints: Beg, Borrow and Steal• Share vision and show leadership• Find sponsors and mentors• Tolerate failure• Tolerate risk• Try, try and try again• Learn from mistakes• Look for opportunities where other see landfills• Defy social pressure• Believe that you have the ability to change things• Don’t underestimate yourself• Be open to outside ideas• Share success

This corresponds very well to what we in academia normally highlight as themes of desirable and acquirable

attitudes and behaviors

• Commitment and determination• Leadership• Opportunity obsession• Tolerance of risk, ambuiguity and uncertainty• Creativity, self-reliance and adaptability• Motivation to excel

1. The Entrepreneurial Imperative

What arguments has been put forward to claim that this “entrepreneurship thing” is

actually useful ?

• The turbulent environment argument

• The organizational lifecycle argument

• The “Blue Ocean” argument (or the fallacy of Porter’s generic strategies)

• The national competitiveness argument

The

turb

ulen

t en

viro

nmen

t

New “skills”

•Adaptability•Flexibility•Speed•Aggressiveness•Innovativeness

Traits and characteristics that the entrepreneurial employee posses

A more dynamic industry environment necessitates more dynamic employees and

organizations

Turbulent env.

The organizational lifecycle argument:CE as a revitalization pill

1.Entrepreneurial

Stage

2.Collectivity

Stage

3.Formalization

Stage

4.Elaboration

Stage

Crisis:Need to dealwith too much

red tapeCrisis:Need for

delegationwith control

Crisis:Need for

leadership

Creativity

Provision of clear direction

Addition of internal systems

Development of teamwork

Crisis:Need for

revitalization

Decline

Continuedmaturity

Streamlining,small-company

thinking

SIZE

Large

Small

Sources: Adapted from Robert E. Quinn and Kim Cameron, “OrganizationalLife Cycles and Shifting Criteria of Effectiveness: Some Preliminary Evidence,” Management Science 29 (1983): 33-51; and Larry E. Greiner,“Evolution and Revolution as Organizations Grow,” Harvard BusinessReview 50 (July-August 1972): 37-46.

The “Blue Ocean” argument

• Based on 150 case studies

• Evidence found for the fact that sustained superior performance CANNOT be explained by generic strategy

• Authors argue that we are better off developing new value propositions and creating new market space than reacting to competition

Red vs. Blue Ocean Strategies

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market Create uncontested market space

Beat the competition Make the competition irrelevant

Exploit existing demand Create and capture new demand

Make the value-cost trade-off Break the value-cost trade off

Align the whole system of a strategic firm's activities with its choice of differentiation or low cost

Align the whole system of a firm's activities in pursuit of differentiation and low cost

VALUE INNOVATION

“Blue Ocean” is becoming an umbrella notion including also the “older” ideas of “New Game” and

“time-based” competition

SPEEDNewGame

LowCost Diff.

Focus

•Wal-Mart•Nokia•Dell•Zara

•Amazon•Ryanair•Swatch•Nike•Cirque du Soleil

•iPod•Ferrari•Harley Davidson•BIC•Husky

Empirical research supports the idea that “entrepreneurial”/”innovative”/”blue ocean” companies, outperform their “traditional”

strategy peers:• Covin & Slevin 1989, 1990 (New Market Development)• Davis, Morris & Allen 1991 (New Product Development)• Morris & Sexton 1996 (Entrepreneurial Intensity)• Shaker 1999 (NMD• Hornsby 2001 (EI)• Goosen 2002 (NMD, NPD)• Hindle 2004 (EI)• Yiu 2008 (NPD)• Jaakko Aspara, Joel Hietanen & Petri, 2008 (Blue Ocean)

WHY ?

National competitiveness argument -1 Entrepreneurship & Economic Thought

S

D

S

D

Joseph Schumpeter (1930s) Israel Kirzner (1970s)

““CREATIVE DESTRUCTION”CREATIVE DESTRUCTION”Entrepreneurship moves marketaway from equilibrium

““ENTREPRENEURIAL DISCOVERY”ENTREPRENEURIAL DISCOVERY”Entrepreneurship moves markettoward equilibrium.

New combinations: new goods,methods of production, new markets,sources of supply, organizations.

Entrepreneur alert to opportunitiesthat already exist and are waiting tobe noticed.

National competitiveness argument -2 (GEM)

Social, Cultural,PoliticalContext

General National Framework Conditions•Openness (External Trade)•Government (Extent,Role)•Financial Markets (Efficiency)•Technology, R&D (Level, Intensity)•Infrastructure (Physical)•Management (Skills)•Labor Markets (Flexible)•Institutions (Unbiased, Rule of Law)

EntrepreneurialFrameworkConditions•Financial•Government Policies•Government Programs•Education & Training•R&D Transfer•Commercial, Legal Infrastructure•Internal Market Openness•Access to Physical Infrastructure•Cultural, Social Norms

Entrepreneurial Opportunities

Entrepreneurial Capacity- Skills- Motivation

National Economic

Growth (GDP,Jobs)

BusinessChurning

Micro, Small, and Medium Firms

(Secondary Economy)

GEM CONCEPTUAL MODEL

Major Established Firms

(Primary Economy)

National Competitive Argument -2 (GEM)TEA Overall and National Economic Growth: 2 Yr Lag

R = 0.41 (0.01)

0.000

5.000

10.000

15.000

20.000

25.000

-2.00 -1.00 0.00 1.00 2.00 3.00 4.00 5.00 6.00 7.00

% Growth in GDP 2 yrs later

#/10

0 18

-64

Act

ive

in E

ntr

epre

neu

rsh

ip

Conclusion: Interesting, but not an absolute imperative

• “Entrepreneurial” organizations tends to be• More aggressive (higher sense of urgency)• Faster• More flexible• More adaptable• More innovative & creative

• But also• Less cost efficient

• In function of the key success factors of the industry, the potential of transforming the organization towards being more entrepreneurial varies