chapter 4 the forms of corporate entrepreneurship copyright (c) 2007 by donald f. kuratko all rights...
TRANSCRIPT
Chapter 4
The Forms of The Forms of Corporate Corporate EntrepreneurshipEntrepreneurship
Copyright (c) 2007 by Donald F. Kuratko All rights reserved.
EIntroduction
Entrepreneurship manifests in Entrepreneurship manifests in companies in two ways:companies in two ways:
Corporate VenturingCorporate Venturing – addition of – addition of new businesses to the corporationnew businesses to the corporation
Strategic EntrepreneurshipStrategic Entrepreneurship – – highly consequential innovations highly consequential innovations that are adopted in the firm’s that are adopted in the firm’s pursuit of competitive advantagepursuit of competitive advantage
EIntroduction
Delineating Different Forms that Corporate Entrepreneurship Can Take
Corporate Entrepreneurship
Corporate Venturing• Internal corporate
venturing• Cooperative corporate
venturing• External corporate
venturing• -corporate venture • capital
Strategic Entrepreneurship• Strategic renewal• Sustained regeneration• Domain redefinition• Organizational rejuvenation• Business model
reconstruction
EModes of Corporate VenturingModes of Corporate Venturing
Internal corporate venturingInternal corporate venturing – new – new businesses created and owned by the businesses created and owned by the corporationcorporation
Cooperative corporate venturingCooperative corporate venturing – new – new businesses are created and owned by businesses are created and owned by the corporation together with one or the corporation together with one or more external development partnersmore external development partners
External corporate venturingExternal corporate venturing – new – new businesses are created by parties businesses are created by parties outside the corporation and outside the corporation and subsequently invested in or acquired by subsequently invested in or acquired by the corporationthe corporation
ECorporate Venturing
What is a new business?What is a new business?
Market Developm
ent Strategy
Diversification
Strategy
MarketPenetratio
nStrategy
Product Developm
entStrategy
Corporate Growth Strategy MatrixCorporate Growth Strategy Matrix
New Markets
Current Markets
Product Focus
Market Focus
“When a company finds itself dealing with new categories of customers and selling them products or services that are new to the firm”
ECorporate Venturing
The Domain of a New BusinessThe Domain of a New Business
New Busine
ss
Existing
Business
Market Creation
*New Market
Market Extension
Existing Market
Existing Product in
Current Industry
New Industry Entry and/or
Creation
*New Product in
Current Industry
Product Extension in
Current Industry
Market Focus of the
Entrepreneurial Initiative
Product Focus of the Entrepreneurial Initiative
* The point of reference for new is new to the firm
ECorporate Venturing
Motives for Corporate VenturingMotives for Corporate Venturing
LeveragingLeveraging – to exploit existing – to exploit existing competencies in new product or competencies in new product or market arenasmarket arenas
LearningLearning – to acquire new – to acquire new knowledge and skills that may be knowledge and skills that may be useful in existing product or market useful in existing product or market arenasarenas
ECorporate Venturing
LeveragingLeveraging To exploit under-utilized To exploit under-utilized
resourceresource To extract further value from To extract further value from
existing resources existing resources To introduce competitive To introduce competitive
pressure onto internal suppliers pressure onto internal suppliers To spread the risk and cost of To spread the risk and cost of
product development product development To divest non-core activitiesTo divest non-core activities
ECorporate Venturing
LearningLearning
To learn about the process To learn about the process of venturing of venturing
To develop new To develop new competencies competencies
To develop managersTo develop managers
ECorporate Venturing
Corporate venturingCorporate venturing – directly investing – directly investing corporate funds into external business start-corporate funds into external business start-upsups
Chesbrough’s framework for linking corporate Chesbrough’s framework for linking corporate venture capital investments with a venture capital investments with a company’s larger strategic agenda can be company’s larger strategic agenda can be sorted into categories according to:sorted into categories according to:
1.) their objectives (strategic or financial)1.) their objectives (strategic or financial)2.) the degree to which the new business 2.) the degree to which the new business being invested in (typically as a start-up) being invested in (typically as a start-up) has operational capabilitieshas operational capabilities
ECorporate Venturing
Four pure types of corporate Four pure types of corporate venture capital investment:venture capital investment:
1.) Driving investments1.) Driving investments
2.) Enabling investments2.) Enabling investments
3.) Emergent investments3.) Emergent investments
4.) Passive investments4.) Passive investments
EStrategic Entrepreneurship: Innovating in Pursuit of Competitive Advantage
Form of Strategic Entrepreneur
Focus of the Entrepreneurial Initiative*
The Entrepreneurial Event
Typical Frequency of the Entrepreneurial Event
StrategicStrategicRenewalRenewal
Strategy of the firm Adoption of a new strategy Low
SustainedSustainedRegenerationRegeneration
Products offered by the firm or markets served by the firm
Introduction of a new product into a pre-existing product category or introduction of an existing product into a new (to the firm) but pre-existing market
High
DomainDomainRedefinitionRedefinition
New competitive space Creation of new or reconfiguration of existing product categories or market space
Low
OrganizationalOrganizationalRejuvenationRejuvenation
Organization structure, processes, and/or capabilities of the firm
Enactment of a major, internally-focused innovation aimed at improving strategy implementation
Low-to-moderate
Business ModelBusiness ModelReconstructionReconstruction
Business model of the firm Design of a new or redesign of an existing business model
Low*The focus of the entrepreneurial event can be the entire firm or, in the case of multi-business firms, one or more of its businesses
EThe Business Model as a Vehicle for Corporate Entrepreneurship
A Firm’s Business Model:A Firm’s Business Model:
““a concise representation of how an a concise representation of how an interrelated set of decision interrelated set of decision variables in the areas of venture variables in the areas of venture strategy, architecture, and strategy, architecture, and economics will be addressed to economics will be addressed to createcreate sustainable competitive sustainable competitive advantage in defined markets”advantage in defined markets”
EThe Business Model as a Vehicle for Corporate EntrepreneurshipA business model should address six basic A business model should address six basic
questions:questions:
1.) How does the firm create value1.) How does the firm create value2.) For whom does the firm create value2.) For whom does the firm create value3.) What is our source of internal advantage or 3.) What is our source of internal advantage or
core competencycore competency4.) How does the firm externally differentiate 4.) How does the firm externally differentiate
itself in the marketplaceitself in the marketplace5.) What is the firm’s model for making money5.) What is the firm’s model for making money6.) What is the management’s growth 6.) What is the management’s growth
ambition and over what time periodambition and over what time period
EThe Business Model as a Vehicle for Corporate Entrepreneurship
Decisions in these six areas can Decisions in these six areas can be made at three levels:be made at three levels:
1.) Foundation level1.) Foundation level
2.) Proprietary level2.) Proprietary level
3.) Rules level3.) Rules level
EThe Open Innovation Revolution
Open innovationOpen innovation – “a firm is not – “a firm is not solely reliant upon its own solely reliant upon its own innovative resources for new innovative resources for new technology, product, or business technology, product, or business development purposes. Rather, development purposes. Rather, the firm acquires critical inputs to the firm acquires critical inputs to innovation from outside sources.”innovation from outside sources.”
EThe Open Innovation Revolution
Four reasons companies are increasingly Four reasons companies are increasingly choosing to pursue open innovation choosing to pursue open innovation models:models:
1.) Importing new ideas is a good way to 1.) Importing new ideas is a good way to multiply the building blocks of innovationmultiply the building blocks of innovation
2.) Exporting ideas is a good way to raise 2.) Exporting ideas is a good way to raise cash and keep talentcash and keep talent
3.) Exporting ideas gives companies a way to 3.) Exporting ideas gives companies a way to measure an innovation’s real value and to measure an innovation’s real value and to ascertain whether further investment is ascertain whether further investment is warrantedwarranted
4.) Exporting and importing ideas helps 4.) Exporting and importing ideas helps companies clarify what they do bestcompanies clarify what they do best