Lecture 12

Corporate Venturing
Sustaining Entrepreneurial
Performance in the 21st
Century Organisation

Copyright (c) 2007 by Donald F. Kuratko All rights reserved.

 Introduction
The true value of entrepreneurship as a
managerial concept lies in the extent to
which it helps organizations create
sustainable competitive advantage.
While some companies struggle to muster
even a minimal amount of
entrepreneurial activity, all companies
battle mightily to sustain
entrepreneurship over time.
Developing a Personal Approach to the
Entrepreneurial Process
There are certain principles to which the
individual entrepreneur or champion may
always want to adhere:
 Solidify a relationship with a sponsor
 Build a flexible team structure

 Insulate the project and keep it quiet as

long as possible
 Become a guerrilla
Developing a Personal Approach to the
Entrepreneurial Process

Promise less but deliver more

Experiment and produce early

wins
Manage project momentum

Attempt to set the parameters

 The Decision-making Styles of Corporate
Entrepreneurs (Biases)
Overconfidence
 The tendency for a decision-maker to be
overly optimistic in their initial assessment
of a situation
Representativeness
 A willingness to generalise about a person or
phenomenon based on only a few attributes
of that person or only a few observations of a
specified phenomenon
Developing a Personal Approach to the
Entrepreneurial Process

Another aspect of the entrepreneur’s

model or approach to projects concerns
the management of expectations.
The rule here is simple: under-promise
and over-deliver.
The earlier the champion can show
progress, the better.
Developing a Personal Approach to the
Entrepreneurial Process
The champion should have in mind an
overall time horizon over which a project
will unfold. Expectations are managed
across this time horizon and are steadily
raised. Similarly, small wins evolve into
more significant accomplishments.
Developing a Personal Approach to the
Entrepreneurial Process
Finally, the entrepreneur must have an
approach for influencing the rules of the
game.
Champions should look for ways to set or
negotiate the parameters under which
the venture team operates
The Ten Commandments of a Corporate
Entrepreneur
 The 10 Commandments
1. Come to work each day willing to
be fired.
2. Circumvent any orders aimed at stopping
your dream.
3. Do any job needed to make your project
work, regardless of your job description.
4. Build a network of good people to assist
you.
5. Develop a spirited team; choose and work
with only the best.
 The 10 Commandments
6. Work underground as longs as you can –
publicity triggers the corporate immune
mechanism.
7. Be loyal and truthful to your sponsor.
8. Remember that it is easier to ask for forgiveness
than for permission.
9. Be true to your goals, but be realistic about the
ways to achieve them.
10. Be thoroughly engaged, take ownership, and
persevere.
 The Importance of Sponsors
Below are some questions to ask when
attempting to identify a sponsor:
 Has this person been challenged and yet
proceeded anyway? Is the person willing to
handle controversy?
 Does the person have a deep personal
commitment to innovation and innovate
people?
 Can you gain the respect of this person?
 The Importance of Sponsors
 How important is another step up the corporate
ladder to this person?
 Does this person know when to fight, when to
give up gracefully, and when it really does not
matter?
 Does the person understand clearly the
corporate decision-making structure?
 Does this person have the respect of other key
corporate decision makers and have access to
them?
 The Dark Side of Entrepreneurship
A potentially destructive element resides
within the energetic drive of successful
entrepreneurs
1. The Confrontation with Risk
–Financial risk
–Career risk
–Family and social risk
–Psychic risk
The Dark Side of Entrepreneurship – Cont.

2. Entrepreneurial stress
–Role overload
The Dark Side of Entrepreneurship – Cont.

3. The entrepreneurial ego

–An overbearing need for control
–A sense of distrust
–An overriding desire for success
–Unrealistic Optimism
Managing the Triggering Events
 The trigger provides the impetus to behave
entrepreneurially when other conditions
are conducive to such behavior.
 For example, it appears that the positive
relationship between the entrepreneurial
orientation of a company its bottom-line
performance is especially strong when it
must come with a dynamic, threatening, and
complex external environment.
 Managing the Triggering Events

5 key ways for grouping triggers

 Internal/external source
 Opportunity-driven/threat-driven
 Technology push/market-pull
 Top-down/bottom-up
 Systematic or deliberate
search/chance or opportunism
Examples of “Triggering” Events for CE

 Competitor threat or action

 Declining market share
 Senior management initiative
 Personal initiative on the part of one or
more employees
 Vertical integration
 Rising costs
 Supplier requests
Managing the Triggering Events
One exploratory survey directed at a
sample of 20 large companies, Morris et
al. (2000) attempted to discern the
relative reliance on the triggers
identified in Senior executives were
asked to identify up to 5 entrepreneurial
initiatives that has been pursued within
their companies in the past 3 years.
 Managing the Triggering Events
A total of 82 entrepreneurial initiatives
were identified.
Internal factors were surprisingly
prevalent among the most frequently
mentioned triggers:
 Employee initiative
 A strategic program

 A new growth target

 A new marketing initiative

 Public relations/image
Managing the Triggering Events

The principal external triggers

were:
specific customer request
competitor threat

change in people’s lifestyles or

expectations
Managing the Triggering Events
By studying the triggering process in
their organisations, managers can gain
insights regarding the triggers to be
emphasized under a given set of
circumstances, how resources and
incentives should be allocated to
facilitate certain triggers, and ways in
which the organization should be
structured so as to take maximum
advantage of particular types of triggers.
 Creating a Sense of Urgency
The problem is sustainable innovation –
making innovation happen on an
ongoing basis and throughout the
company.
The reality is that employees are always
capable of entrepreneurial behavior, but
most of the time they and their bosses do
not perceive the need for innovation and
change.
 Creating a Sense of Urgency
Further, innovation is disruptive, and
managers have a natural tendency to
exalt in past accomplishments and
reputation of the firm.
The great challenge for any company
wishing to achieve sustainable
entrepreneurship is creating an ongoing
sense of urgency throughout the
organization.
 Creating a Sense of Urgency
Management must create an environment
where urgency is felt all the time. Urgency
in this context refers to a compelling
sense that organisational survival depends
on change.
Entrepreneurial companies instill in their
employees a burning desire to make
things better. People demonstrate a
combination of paranoia, competitiveness,
pride, and obsession.
Does the Company Have a Sense of
Urgency? (Table 15.4)
 How big is the comfort zone surrounding
managers at each level in the organization?
 Does the company measure itself against the
best, but even more so against itself?
 If a customer complains or is not satisfied,
does the company measure how quickly the
situation is rectified, and has that time been
reduced by at least 10% in the past year?
Does the Company Have a Sense of
Urgency?

Do managers in the company want to

change the world?
How much of a sense of regret do
mangers feel for missed opportunities
and missed targets?
 The Adaptive Organization
Underlying the learning process is the
organization’s ability to find or generate
information, organise or code it, process
it, store it, generate reports from it,
interpret it, share it, and act on it.
Concern lies with the company’s ability to
learn in ways that facilitate
entrepreneurship, and this is a notable
area of weakness in companies.
 The Adaptive Organization
Most companies do not have systematic
methods to ensure learning because:

 Key people involved with the project may

have left the firm
 The champion responsible for the project
may have been reassigned to a distant
location
 The Adaptive Organization
Most companies do not have systematic
methods to ensure learning because:

 A number of individuals may have

participated, with each having been
involved with a different aspect of the
experience at a different time
 The Adaptive Organisation
Most companies do not have systematic
methods to ensure learning because:
Few records may have been kept
Accounting figures are not always

consolidated and readily accessible

 The Adaptive Organisation
10 Critical Areas that should be the focus of
learning efforts within a given company:

1. Champion styles that work and do not

work
2. Venture team structures that are most
effective for certain types of innovation
projects
 The Adaptive Organisation
10 Critical Areas that should be the focus of
learning efforts within a given company:

3. Models of successful projects in terms of

key steps or stages and the identification
of the models that best fit different types
of projects
4. Approaches to goal setting and
monitoring that keep projects on track
 The Adaptive Organisation
10 Critical Areas that should be the focus of
learning efforts within a given company:

5. Methods of opportunity identification

that are especially productive given the
nature of the company, industry, and
market
6. Ways of achieving the appropriate
balance between autonomy and control
on innovation projects
 The Adaptive Organisation
10 Critical Areas that should be the focus of
learning efforts within a given company:
7. Venture funding approaches that
encourage successful projects
8. Human resource management
policies that encourage individual
initiative and group collaboration
around innovation projects
 The Adaptive Organisation
10 Critical Areas that should be the focus of
learning efforts within a given company:
9. Techniques for optimally managing the
timing and allocation of resources
(funds, functional specialists, staff
people, facilities, and equipment) across
the stages of a project
10. Effective means of getting mainstream
units in the company to adopt or assume
ownership of projects developed by
venture teams
 The Adaptive Organisation
Entrepreneurial managers can enhance a venture’s
chance of remaining adaptive and innovative by:
 Share the entrepreneurial vision

 Increase the perception of opportunity

 Institutionalize change as the goal

 Instill the desire to be innovative

– Reward system
– An environment that allows for failure
– Flexible operations
– Development of V-Teams
 The New Strategic Imperatives:
Embracing Paradoxes
The entrepreneurial organization of tomorrow will
be one filled with paradoxes and will require
managers who are adept at managing them:

 The paradox of size and scope

 The paradox of risk and return

 The paradox of the individual and

the team
 The New Strategic Imperatives:
Embracing Paradoxes
The entrepreneurial organization of tomorrow will
be one filled with paradoxes and will require
managers who are adept at managing them:

 The paradox of flexibility and control

 The paradox of constructive and
destructive behavior
 The paradox of success and failure
The New Strategic Imperatives
1. Increase strategic clock speed
2. Focus portfolios with various
business models
3. Abbreviated strategic life cycles
4. Create “go-to-market” flexibility
5. Enhance competitive innovation
6. Manage intra-enterprise
cannibalism
The Entrepreneurial Mindset
Framework Future Goals
Change/Innovation Status Quo

Satisfied
Possible Entrepreneur
manager
Perceived
Capability to
Achieve Frustrated Classic
Blocked
manager bureaucrat
 Entrepreneurial & Strategic Actions
To create wealth, firms will need to establish
linkages between entrepreneurial actions and
strategic actions within 6 dominant domains:
 Innovation

 Networks

 Internationalisation

 Organisational learning

 Top management team

 Growth opportunities
Entrepreneurial & Strategic Actions

•Innovation
•Networks
•Globalisation Strategic
•Learning Actions
•Top mgt. Teams
& governance
•Growth

Wealth Creation
 The Entrepreneurial Firm:
A Dynamic Incubator
 Consider the findings of a recent study.
Researchers examined 1,435 companies that had
been listed among the 500 largest any time since
1965. They sought to identify companies that
were able to make a shift from good to great
performance (defined as having generated
cumulative shareholder returns greater than 3x
the market average over 15 years). Only 11 of the
companies showed a sustained and verifiable
shift from good to great.
 The Entrepreneurial Firm:
A Dynamic Incubator
Portfolio thinking is about a strategic balance in
which the firm balances a mix of objectives such
as risk vs. return, income vs. growth, and short
vs. long term performance.
 4 major portfolios
 The portfolio of competencies

 The portfolio of resources

 The portfolio of innovations

 The portfolio of ventures and small businesses

 Conclusions
Corporate entrepreneurship is not a fad,
and it does not produce instant success.
It requires considerable time and
investment, and there must be continual
reinforcement.
A sustainable entrepreneurial orientation
will drive organisations to new heights in
the 21st century.
 Final Thoughts
To Achieve Entrepreneurial Excellence:
Expect more than others think is
practical
Dare more than others think is wise

Risk more than others think is safe

Dream more than others think is possible

 Final Thoughts

The future belongs to those who

dream, believe in, and pursue
entrepreneurial excellence!