1. Corporate Entrepreneurship MBAX 6100 Entrepreneurship & Small Business Management Frank Moyes Leeds College of Business University of Colorado Boulder, Colorado

2. Corporate Entrepreneurship Today’s Agenda  Corporate Entrepreneurship  Is this a good market?  Read  Building Breakthrough Businesses  Understanding Obstacles  M-3 Is This a Good Market?  Entrepreneurial market research – bring laptops. Joseph Yue

3. Corporate Entrepreneurship Next Week’s Schedule  Corporate Entrepreneurship – Creativity & Innovation  Case: Emerging Business Opportunities at IBM  Read  Bringing Silicon Valley Inside  Feasibility: M-4 Is This a Good Industry?  Read a magazine you would never, ever read & identify a business opportunity  Entrepreneurship Interview  Hand in paper  Be ready to discuss in class

4. Corporate Entrepreneurship  Week 5 Obstacles to corporate entrepreneurship  Week 6 Innovation in corporations  Week 7 You as an Intrapreneur

5. Corporate Entrepreneurship What is Corporate Entrepreneurship?  “Formal or informal activities aimed at creating new businesses in established companies through product and process innovations and market developments.” Zahra  “…centers on reenergizing and enhancing the firm’s ability to acquire innovative skills and capabilities.” Morris & Kuratko  “Cost-effective innovation or intrapreneurship” Pinchot

6. Corporate Entrepreneurship What Are Companies Good At?

7. Corporate Entrepreneurship Why Should Companies Be Great Places to Be Innovative?

8. Corporate Entrepreneurship Why Do Companies Need Rules?  Consistent actions  Guide behavior  Help make decisions  Treat employees fairly  Provide consistent quality & service

9. Corporate Entrepreneurship What Criteria Used to Make Investment Decisions  Tradition & set of shared assumptions  Typically based on technology, not opportunity, eg Corning & fiber optics in the 1960’s  Instinct is to protect existing business, e.g. must purchase from other parts of business

10. Corporate Entrepreneurship What is the Process for Making Decisions  Traditional evaluation techniques (ROI, market share, quick payback)?  Need for control - very structured approval process – Why?  Detailed business plan that must follow – don’t like surprises  Leads to paralysis by analysis

11. Corporate Entrepreneurship How Do Corporations Deal With Uncertainty?

12. Corporate Entrepreneurship Definitions of an Entrepreneur  “Entrepreneurs are societies rejects, instead of becoming hobos, criminals or professors, the start their own business.” Thereau  “Traits of entrepreneurs are closest to juvenile delinquents.”  “Progress depends upon unreasonable men.” GB Shaw  “If I’m in control, I’m probably going to slow.” Mario Andretti  “Road less traveled”, Robert Frost:  “If you ain’t makin’ waves, you ain’t kickin’ hard enough.”

13. Corporate Entrepreneurship What Have We Learned About Entrepreneurs?

14. Corporate Entrepreneurship What Are Entrepreneurial Ventures Good At?

15. How Start-up Actually Happens Inspiration Goals Plan Fooling Around Doing Plans Mistakes Failure Goals Some Other Action Plan Action Goals Inspiration Success Pinchot & Pellman, Intrapreneurship in Action

16. Corporate Entrepreneurship How Reconcile the Company’s Need for Rules & Creativity’s Need to Break the Rules?

17. Corporate Entrepreneurship What Are the Obstacles to Corporate Entrepreneurship?  Systems  Organization Structures  Strategic directions  Policies & Procedures  People  Culture Morris & Kuratko, Corporate Entrepreneurship

18. Corporate Entrepreneurship What Are the Personal Obstacles of the Corporate Entrepreneur?  Too busy with current job  Lack of managerial skills  Don’t understand financial dynamics  Selling skills  Old dog who can’t learn new tricks  Style of management  Lack political savvy  Lack a sense of urgency  Fear of failure Morris & Kuratko, Corporate Entrepreneurship

19. Corporate Entrepreneurship Focus on structure & processes Rule- following culture Processes & rigid structure Channeled communication + Process control + Efficiency - Loss of flexibility - Stunted innovation - Wrong products - Predictable strategy Source of Bureaucracy Warning Signals Plusses Minuses The Bureaucratic Trap Brown & Eisenhardt. Competing on the Edge: Strategy as Structured Chaos

20. Corporate Entrepreneurship Similarities Between Start-up & Corporate Entrepreneurs  Opportunity recognition with a defined window  Driven by passionate individual who uses a team to commercialize a concept  Encounter resistance & obstacles requiring persuasiveness  Must convince people to “invest”  Leverage resources  Ambiguity

21. Corporate Entrepreneurship Differences Between Start-up & Corporate Entrepreneurs  Entrepreneur takes the risk  Entrepreneur owns concept  Unlimited rewards  One error may mean failure  Independence of entrepreneur  Experimentation & flexibility  Quick decision making  Resource limitations  Corporation assumes risk  Corporation owns; no equity  Clear limits  More room for errors  Interdependence of entrepreneur  Rules, procedures, bureaucracy  Long approval cycles  Access to finances, R&D, sales force, distribution channels Start-up Corporate

22. Corporate Entrepreneurship What Issues Do Corporations Face When They Want to Be Intrapreneurial?  How establish effective reward systems  How treat failure  Types of people who work well in large organizations  Define success as running a larger organization, corner office & corporate kite  Traditional evaluation techniques don’t work (ROI, market share, quick payback)?  Instincts are to protect existing businesses  Is patient capital possible? Phil Knight “Took 18 years to be an overnight success.”