Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

PART 4

CREATIVITY AND

INNOVATION

CHAPTER 13

Encouraging

Entrepreneurial Innovation

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Schumpter’s Innovations

• Introduction of a new or improved good

• Introduction of a new process

• Opening of a new market

• Identification of a new source of supply of

raw materials

• Creation of new types of industrial

organisation

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Product/Service and Process

Development

Product/Service Development

New to the world

New to the market

New lines within company

Additions to lines

Improvements and revisions

New applications

Repositioning

Cost reduction

Process Development

Major new process

Minor new process

Significant revisions

Modest improvements

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Innovation and Competitive Advantage

Increasing

competitive

advantage

Frequency of

Innovation

Degree of Innovation

HighLow

High

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Barriers to Innovation

• Regard new ideas with suspicion

• Enforce cumbersome approval mechanisms

• Pit departments & individuals against each other

• Express criticism without praise

• Treat problem identification as a sign of failure

• Control everything carefully

• Plan reorganisation in secret

• Keep tight control over information

• Delegate unpleasant duties to inferiors

• Assume you know everything about the business

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Adaptor v Innovator

• Is sensitive to group cohesion and cooperation

• No need for consensus; often is insensitive to others

Adaptor

• Employs a disciplined, precise, methodical approach

• Is concerned with solving, rather than finding, problems

• Attempts to refine current practises

• Tends to be means orientated

• Is capable of extended detail work

Innovator

• Approaches task from unusual angles

• Discovers problems and avenues of solutions

• Questions basic assumptions related to current practices

• Has little regard for means; is more interested in ends

• Has little tolerance for routine work

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Ability to be

CREATIVE

Ability to spot

OPPORTUNITIES

INVENTION

INNOVATION

SUCCESS

ENTREPRENEURIAL ENVIRONMENT

Creativity, Invention, Opportunity and

Entrepreneurship

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Invention and Entrepreneurship

STRUGGLER

COPIER

INNOVATOR

STAGNATOR

Creativity /

Invention

Opportunity perception / Entrepreneurship

High

Low High

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Growth and Risk

Increasing

risk

New

ness o

f m

ark

et

Same

Totally new

Newness of product

Same Extended

range

Better

coverage

Related

Incremental

changesTotally

new

Increasing

risk

Twilight Zone

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Risk and the Process of Innovation

Imitation DiscreteDramatically

continuous

Continuous

Process of Innovation

High

Low

Risk

Twilight Zone

No innovation

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Risk and Innovation Process Time

Time to market

High

Low

Risk

Best time to

launch

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Innovation and size

• SMEs produce their fair share of innovations

and do it more efficiently than large firms

• Both small and large firms have advantages

in producing different types of innovation –

this has implications for structure

• SMEs tend to innovate in sectors where

resources (ie. capital) are less important

• Innovation is not entirely related to firm size -

it also relates to business activity, industry,

nature of innovation and type of company

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Discontinuous Innovation

• Unpredicted new markets

• New business models

• New technologies

• New political rules

• Market exhaustion

• Sea-change in market sentiment or behaviour

• Deregulation or shifts in regulatory regimes

• Fracture along ‘fault lines’ causing ‘flips’

• Unthinkable events

• Shifts in ‘techno-economic’ paradigm

• Architectural innovations rewriting the ‘rules of the game’

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Innovation Networks

Similar Organisations

Radical

innovation

Incremental

innovation

Different Organisations

Zone 2

• Strategic alliances

• Sector consortia

• New technology

development consortia

Zone 1

• Sector for a

• Supply chain learning

programmes

Zone 4

• Multi-company

innovation networks in

complex product

systems

• New product/process

Zone 3

• Regional clusters

• Best practice clubs

• Topic networks

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

From Information to Knowledge

Information Learning Knowledge

Decisions

Actions

Behaviours

Feedback loops

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Commitment to Innovation

From top management that innovation:

• Is at the core of what the business does

• Is everyone’s responsibility, not just the R&D

Department

• Happens in everything from product

development to marketing

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Balancing the Portfolio

• High-risk, high return and low-risk, low

return innovations

• Discrete, dynamic and continuous

innovations

• Product/service and market innovations

• Short and long-to-market innovations

• Innovations that employ new technologies

and those that employ existing technologies

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

A Specimen Risk PortfolioN

ew

ness o

f m

ark

et

Same

Totally new

Newness of product

Same Extended

range

Better

coverage

Related

Incremental

changesTotally

new

Twilight Zone

Increasing risk

Inc

rea

sin

gris

k

A

DEFG

H

C

B

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Innovation and Marketing Strategy

Degree of differentiationLow High

Competitive

emphasis

placed on..

Innovation

stimulated

by..

Predominant

type of

innovation

Product

line

Production

process

Cost

reduction

Pressure to

reduce costs,

improve quality

Incremental

product & process

innovation

Undifferentiated

standard products

Efficient, often

capital intensive

& rigid

Product/service

variation

Functional

product

performance

Opportunities

created by external

technical capability

Information on

user needs

Major process

innovations required

by rising volume

Frequent major

changes in

product/service

Diverse often

including custom

designs

Includes at least

one stable or

dominant design

Flexible & inefficient

Experiment &

change frequently

Becoming more

rigid & defined

Corporate Entrepreneurship: Building the Entrepreneurial Organization by Paul Burns

Keys to Successful Innovation

• Atmosphere and vision…..the right culture

• Market responsiveness….opportunity driven

• Small, flat organisations

• Skunkworks

• Multiple approaches

• Interactive learningQuinn (1985)