Corporate Entrepreneurship

Corporate Entrepreneurship has provided opportunities for those individuals with entrepreneurial mindset but low risk taking ability. The corporates resources are made available to these individuals. This is the basic idea of having the cake and eating it too.

A startup makes use of innovation as a disruption when they enter the market. However, this entity’s growth hinders innovation.

Survival in the competitive world requires corporates to promote a culture of innovation. In reality, as the organization grows bureaucracy, tolerance level for failures and functional silos hinder innovation.

Corporate entrepreneurship is often defined as a process that goes on inside an existing firm and that may lead to new business ventures, the development of new products, services or processes and the renewal of strategies and competitive postures.

Corporate Entrepreneurship- Shedding the Skin

Setting a culture to promote entrepreneurship

A startup creates disruption in the market. This is referred to as innovation which is the DNA of any startup. Over a period of time, when the company grows the human capital also grows. The entrepreneur focusses on stability, growth and raising funds. He delegates most of the functions.  However, the startup culture rarely remains. Safety first, risk aversion, lack of incentives for employees for out of box thinking etc. affect the company’s growth.

Corporate Entrepreneurship- Hurdles

The entrepreneur always searches for changes, responds to it and exploits the opportunity to create a successful product or service. The effort involves mobilizing resources and executing the plan. The entrepreneur is willing to take the risk and the risk appetite is purely the decision of the entrepreneur or the board.

How do you build the traits of a startup entrepreneur in a well-established corporate? The older the organization the grater the bureaucracy and hence actions are governed by rules and procedures. Failure is not accepted. Rewards and recognition are related to achieving or exceeding 

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The Human Resources

The human resources in well-established corporates can be classified into broadly three categories. (Based on personal corporate experiences)

1.   Stickler to rules and procedures- Meeting the targets set for them (70-85%)

2.   Struggles to meet targets and sometimes a non-team player (10%)

3.   Restless and wants to unshackle the restrictions. Innovates and makes significant contributions. Entrepreneurial in thinking. (5%) 

Corporate Entrepreneurship- A strategic Initiative

The importance of embracing entrepreneurial thinking inside the workplace

1.   Market Forces

 For a company to remain competitive, it has to bring out innovative products/services as growth strategy. The product life cycle, technological changes, emergence of new competitors etc. create pressure on organizations to be innovative. 

2.   Top Talent Retention 

The leadership role is in nurturing and supporting the 5% of talent which is willing to take risks and has an entrepreneurial mindset. They are likely the future CEO material of corporates. Engaging this group is important.

Corporate entrepreneurship addresses both the above requirements. Ideas and concepts will have no impact unless followed by strong execution facilitated by top management.


Organisational Climate

The top management has to assess what is the current climate in their organizations and ask the following questions.

         Does the current system encourage risk taking and tolerate mistakes?

         Are people in the corporate concerned only with defending their turf? or are they open to new ideas 

Process for Promoting Corporate Entrepreneurship

The following steps will help in facilitating the innovative people with an entrepreneurial mindset:

1.   Top Managements’ unstinted support by appointing a senior person as a mentor

2.   Set explicit goals

3.   Support the team leader with resources

4.   Create a system of feedback and positive reinforcement

5.   Give rewards based on results

6.   Do not punish failures but Celebrate failures

7.   Encouraging—not mandating—innovative activity

8.   Bet on people, not on analysis.

Rewarding Risk takers

        Allow inventor to take charge of the new venture

        Grant discretionary time to work on future projects

        Make sure required resources including capital is available for research ideas 

Corporate Entrepreneurship- Stick Note Story

The following story of 3M illustrates how a breakthrough invention saw the light of day by accident.

In 1970, a chemist named Spencer Silver was working in the 3M research laboratories trying to develop strong glue. His work resulted instead in an adhesive that wasn’t very sticky. When pulling apart two pieces of paper stuck together with that adhesive, Spencer discovered that the glue stuck either to one paper or the other. That seemed like a pretty useless invention.

Four years later a colleague Art Fry who was singing in the church choir was however hit by a brilliant idea. He used markers to keep his place in the hymn book, but they kept falling out. So he coated them with Spencer’s glue. As if by magic, they stayed in place yet lifted off without damaging the pages. The Post-it note was born. Today, it is one of the most popular office products available.

There was no formal process for recognizing and taking the idea to market in 3M when the above development happened. This confirms that a formal process for promoting innovation both within the organization as well in the market is important.

Current Process in 3M - Innovation Rules

         Don’t kill a project

         Tolerate failure

         Keep divisions small

         Motivate the champions

         Stay close to the customer

         Reward Innovators

         Share the wealth

Corporate Entrepreneurship- Conclusion

Corporate Entrepreneurship provides competitive advantage to organizations by setting up a process for innovation. It is also a powerful tool to reward, recognize and retain top talent. The individuals with entrepreneurial qualities thrive in that atmosphere and the rewards act as golden lock.