Transcript MBAX 6100 Entrepreneurship & Small Business Management Frank Moyes

MBAX 6100
Entrepreneurship &
Small Business Management
Frank Moyes
Leeds College of Business
University of Colorado
Boulder, Colorado
Corporate Entrepreneurship II
Today’s Agenda
Corporate Entrepreneurship II – Creativity &
Innovation
Feasibility: Is this a good industry?
Case: Emerging Business Opportunities at IBM
Read
Bringing Silicon Valley Inside
Feasibility: M-4 Is This a Good Industry?
Entrepreneurship Interview
Corporate Entrepreneurship II
Next Week’s Schedule
Corporate Entrepreneurship III – You as an
Intrapreneur
Case: Lucent Technologies
Feasibility: Sustainable competitive advantage
Speaker: Aaron Kennedy of Noodles
How has Noodles been innovative?
What problems does Noodles face to be innovative in the
future?
What are your recommendations for Kennedy?
Corporate Entrepreneurship II
Is this a Good Industry?
Five forces – Michael Porter
Ease of entry
Supplier power
Buyer power
Threat of substitutes
Competitive rivalry
Define your industry broadly
Good industries are competitively forgiving
Corporate Entrepreneurship II
Corporate Entrepreneurship
 Week 5 Obstacles to corporate entrepreneurship
 Week 6 Innovation in corporations
 Week 7 You as an Intrapreneur
Corporate Entrepreneurship II
Some Notes on Corporate
Entrepreneurship
 Opportunity driven
 Not a lack of ideas – execution is key
 Experimentation
Iterative innovation process
Learning from failure
 “A team with B plan”
 Sharing risks & rewards
Corporate Entrepreneurship II
Some Notes on Corporate
Entrepreneurship II
 Venture teams – self-directed, self-managing & high
performance
 Support from top management
 Forget, borrow, learn
 Resource attraction
 Do not use corporate services to save money; only
when it gives you a competitive advantage
Corporate Entrepreneurship II
What Are the Obstacles to Corporate
Entrepreneurship?
 Systems
 Organization Structure
 Strategic directions
 Policies & Procedures
 People
 Culture
Morris & Kuratko, Corporate Entrepreneurship
Corporate Entrepreneurship II
Systems Obstacles
 Reward & evaluation systems
 Oppressive Control systems
 Inflexible budgeting systems
 Arbitrary cost allocation systems
 Rigid planning system
Corporate Entrepreneurship II
Systems Decisions
 Reward systems
Division managers
Corporate entrepreneurship group
Intrapreneurs
 Planning systems
 Controls on capital
 How provide sustained funding? How get patient
capital?
 How avoid decisions that could sink the company?
Corporate Entrepreneurship II
Organizational Structure Obstacles
 Too many hierarchical levels
 Responsibility w/o authority
 Top down mgmt
 Restricted communication channels
 Lack of accountability
Corporate Entrepreneurship II
Organizational Structure Decisions
 Spin-off; separate from divisions; part of divisions
 Who responsible top management? How handle
change at top?
 Where locate?
 How measure performance?
Drive existing divisions out of business?
Corporate Entrepreneurship II
Strategic Direction Obstacles
 No innovation goals
 No strategy for Entrepreneurship
 No vision
 Lack of commitment from senior execs
 No Entrepreneur role models at top
Corporate Entrepreneurship II
Strategic Direction Decisions
 Time frame for success
 Focus is on short term results
Profit per share growth vs. higher P/E
 Criteria for success
 Innovation goal
 How choose the ventures?
IBM: cross-IBM resource needs, maturity of their strategies
and business plans, potential market size, valued to be
added by corporate insight
Outside validation?
Corporate Entrepreneurship II
Policies & Procedures Obstacles
 Long, complex approval cycles
 Extensive documentation requirements
 Unrealistic performance criteria
Corporate Entrepreneurship II
Policy & Procedures Decisions
 Restrictions on hiring – number & compensation
 Accounting systems
 Reports – environmental, equal opportunity
Corporate Entrepreneurship II
People Obstacles
 Fear of failure
 Resistance to change
 Turf protection
 Short-term orientation
 Inappropriate skills/talents
Corporate Entrepreneurship II
People Decisions
 Hire entrepreneurs from outside?
 How train intrapreneurs to provide skills?
 Assign experienced leaders or train young people?
 What skills are needed – traditional entrepreneurial or
ability to navigate the organization, secure cooperation
or support
 How handle turf protection?
 15% rule
Corporate Entrepreneurship II
Culture Obstacles
 Ill-defined values
 No consensus on priorities
 Values that conflict with Entrepreneur's approach
(innovation, calculated risk taking, pro-activeness)
 Definition of success: promotion every 3 years, corner
office, corporate kite
 Entrepreneurial ventures attract mavericks & risk takers
Corporate Entrepreneurship II
Culture Decisions
 How to not trigger the corporate immune system?
 How deal with failure?
Corporate Entrepreneurship II
Corporate Entrepreneurship II
Why Is It So Hard to Predict the Future?
"I think there is a world market for maybe five computers.
Thomas Watson, chairman of IBM, 1943
"This 'telephone' has too many shortcomings to be
seriously considered as a means of communication. The
device is inherently of no value to us." Western Union
internal memo, 1876.
Corporate Entrepreneurship II
Why Is It So Hard to Predict the Future?
"The concept is interesting and well-formed, but in order
to earn better than a 'C,' the idea must be feasible."
"Heavier-than-air flying machines are impossible."
Lord Kelvin, president, Royal Society, 1895.
Corporate Entrepreneurship II
Why Is It So Hard to Predict the Future?
"So we went to Atari and said, 'Hey, we've got this
amazing thing, even built with some of your parts,
and what do you think about funding us? Or, we'll
give it to you. We just want to do it. Pay our salary,
we'll come work for you.' And they said, 'No.' So,
then, we went to Hewlett-Packard, and they said,
'Hey, we don't need you. You haven't got through
college yet.”
Corporate Entrepreneurship II
Develop Corporate Innovation Strategy
 Morris & Kuratko: Obstacles
 “Building Breakthrough Businesses” – Forget, Borrow,
Learn
 “Bringing Silicon Valley Inside” – resource attraction
 IBM case – EBO’s
Corporate Entrepreneurship II