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Chapter 13 –Strategic Entrepreneurship

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Agenda1. Introduction to Corporate Entrepreneurship

2. Innovation

3. Organizing for Corporate Entrepreneurship

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SOURCE: “How failure breeds success”, Business Week, July 10, 2006: 44-45.

Corporate Entrepreneurship

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Corporate EntrepreneurshipEntrepreneurs

Individuals acting independently or as part of an organization who create a new venture or develop an innovation and take risks entering innovations into the marketplace

Can be any manager or employee in an organization

Corporate entrepreneurship

Process whereby an individual or a group in an existing organization creates a new venture or develops an innovation

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Entrepreneurial CapabilitiesFirms that encourage entrepreneurship are:

Risk takers

Committed to innovation

Proactive in creating opportunities rather than waiting to respond to opportunities created by others

Entrepreneurial capabilities include:

Intellectual & human capital

Entrepreneurial mind-set

Transfer of entrepreneurial competence to others in the organization

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Agenda1. Introduction to Corporate Entrepreneurship

2. Innovation

3. Organizing for Corporate Entrepreneurship

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Innovation Process (Schumpeter)

The act of creating or developing a new product or process

Brings something new into being

Technical criteria are used to determine the success of an invention

InventionInvention

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Innovation Process – cont’dThe process of creating a commercial product from an invention

Brings something new into use

Commercial criteria are used to determine the success of an innovation

InventionInvention

InnovationInnovation

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Innovation Process – cont’dThe adoption of an innovation by similar firms

Usually leads to product or process standardization

Products based on imitation often are offered at lower prices but with fewer features

InventionInvention

InnovationInnovation

ImitationImitation

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Incremental & Radical Innovation Incremental InnovationIncremental Innovation

Most innovations are incremental

Provides small increments in current product lines

Improves existing knowledge and processes

Can create value

Radical InnovationRadical Innovation

Are rare because of difficulty and risk

Provides significant technological breakthroughs

Creates new knowledge and processes

Can create value

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Innovation Pyramid

Source: Kanter, E. R., cited in: Business Week, March, 2007: 3.

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Agenda1. Introduction to Corporate Entrepreneurship

2. Innovation

3. Organizing for Corporate Entrepreneurship

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Strategic Venturing BehaviorsInduced Strategic Behavior

A top-down process whereby the firm’s current strategy and structure foster product innovations

The strategy in place is filtered through a matching structural hierarchy

Innovations are associated closely with that strategy and structure

Autonomous Strategic Behavior

Bottom-up process based on a firm’s wellsprings of knowledge and resources

A firm’s technological capabilities and competencies are its basis for new products and processes

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Product ChampionOrganizational member with an entrepreneurial vision of a new product or service and who seeks to create support for its commercialization

Play critical role in moving innovations forward

“Sell” new business ideas to the organization

Particularly important for autonomous strategic behavior

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Facilitate integration of activities associated with different organizational functions (design, manufacturing, marketing, etc.)

New product development processes can be completed more quickly

Products can be more easily commercialized when cross-functional teams work effectively

Cross-functionalCross-functionalProduct DevelopmentProduct Development

Team Team

Cross–Functional Product Development Teams

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Cooperative Strategies & M&AUnlikely that firms possess all the knowledge and resources required for it to be entrepreneurial and innovative in a dynamic, competitive market

To gain access to other organization’s knowledge and resources and to commercialize innovations, firms

Enter into strategic alliances and/or networks of alliances

Engage in acquisitions of other organizations