Corporate entrepreneurship and innovation - errors made

Corporate entrepreneurship and innovation is extremely difficult as we have previously established. During the Internet bubble, many businesses claimed to have insufficient skills and consequently launched separate businesses to create a "clicks" presence in addition to a "bricks" presence.

This was a major error on the part of management. In splitting the business they created a new entity with a new culture. While it may have been more innovative, it quite likely also lost many of the strengths of the original business and management team.

The point being made is that innovation is served as an integral part of the organisation, and not as an aside or a bolt-on.

Corporate entrepreneurship and innovation - there is a lot of hope

Entrepreneurship and innovation continue to elude the bulk of large businesses. However, this by no means indicates that it is totally dead in the corporate environment. I have been reading broadly lately on this topic, and I am please to say that I am finding more and more examples of corporate entrepreneurship and innovation.

Over the next few blogs I will be looking at some of the examples I have found, and hopefully this will inspire you to find new ways to make your business entrepreneurial and innovative.

Corporate entrepreneurship and innovation - can you be a corporate activist

Corporate entrepreneurship and innovation is not and never will be easy. While last week I suggested that the marketing director could perhaps attempt to drive innovation, there is nothing to stop anyone in the organisation from attempting to do so.

I have personally experienced the incredible innovation that can rise from the bottom of the organisation. Staff just see things from a completely different perspective, and therefore they can make meaningful contributions.

So staff too can be the drivers of innovation. The question is whether you believe in yourself and your innovations. Too often people have "bright ideas" which are not thought through, and then when exposed to the light of day, they collapse, thereby destroying this useful source of innovation. Learn to include others and create a groundswell. Build you crowd around the concept and how it will benefit the business. Get support from colleagues and managers. But build up slowly and test the model carefully before going too big. Choose your partners carefully for how they can add value to the proposition. Finally, when presenting to management, try to pitch it to them in a way they understand and a way they will be able to see the benefits as they perceive them. In other words pitch at the right level.

So there is nothing to stop YOU being innovative.

Corporate entrepreneurship and innovation - changing the culture

Over the past while, organisations have swung away from employing marketing people as CEO, and moved towards the employment of financial people as CEO instead. While this trend is another debate in itself, the truth is that the corporate culture under these two very different CEOs will vary just as much as they do in their personalities. The reason quite simply being that the CEO invariably drives the corporate culture.

So how do you encourage an open innovative culture if the CEO is driving a different and less open culture?

The senior marketing person in the organisation will need to drive innovation and attempt to develop an entrepreneurial culture in the marketing department, as a sub-culture within the firm. This is not easy nor a simple process. However, the marketing department is the logical driving force for this sub-culture.

However, to do this, the senior marketing person will need to be a fairly strong personality with a fair degree of charismatic leadership style, in order to have the strength of character to develop this sub-culture. This would need to be done so as not to compromise the main corporate culture, but rather to blend with it.

Corporate entrepreneurship and innovation - is benchmarking an answer

Corporates normally have the capacity to benchmark themselves against industry standards. The first question is whether they belong to groups that encourage benchmarking.

Firms often become introspective and do not participate in industry groups. Certain firms are also unable to overcome their fear of industrial espionage and therefore do not join these groups.

However, whether it an industry specific group, eg. automotive industry, or a broader group such as manufacturing, membership is almost essential. It is sometimes only once a firm can identify that is DOES have weaknesses, that innovation will be seen as the beneficial tool it is.

However, a further opportunity for firms is to execute cross-industry benchmarking. Therefore a view of say the logistics industry benchmarks will provide an insight into the logistics department within your own firm.

Look at benchmarks for the retail industry to gain an insight into customer care within your own organisation.

Simply put, do not be shy, join as many groups as is practicable and likely to add value to your firm.

Corporate entrepreneurship and innovation - facing up to the corporate culture

Corporate culture can be a major disincentive for entrepreneurship and innovation in large organisations.

Large businesses by default tend towards a culture of conformity, and entrepreneurship and innovation are often perceived as being counter-intuitive to this culture.

The 3M example of internal efforts at entrepreneurship and innovation are unfortunately only too rare. They obviously exist but are seldom written about.

Another example I read about involved mixing the open plan office. They put the staff from debtors, creditors, stock and sales who serviced the same clients together in mini clusters. This allowed for a greater interaction and flow of ideas and had many positive benefits in all functional areas.

There is no doubt that entrepreneurs and innovators are seen as disruptive forces, as this is exactly what they are. The secret lies in the ability to harness these disruptive forces in a positive manner, and therein lies the challenge.

Corporate entrepreneurship and innovation - examples

Corporate entrepreneurship and innovation are often a function of different departments or business units, or even enterprises, set up specifically to address the need for corporate entrepreneurship and innovation.

Some fail and some succeed, with the best example of success possibly being 3M. They drive this need for corporate entrepreneurship and innovation, by setting turnover goals linked to new product development. However, there are few known examples of this strategy working well.

Another strategy, used by Cisco, is designed to take advantage of the fact that entrepreneurs are often drivers of innovation. Cisco has a strategy that specifically avoids large scale Research and Development (R&D) and drives innovation through the acquisition of entrepreneurially driven SMEs. What is not clear is whether Cisco attempt to keep these entrepreneurs in house, or whether they allow them, consciously or unconsciously, to depart Cisco, hopefully to drive the innovation process once again in a new field.

These are two very different approaches. The first is much more difficult to achieve in a large business, and requires s special kind of management team and a deep culture of entrepreneurship. The second is a lot easier, and poses the dilemna of what to do with the entrepreneurs once you have them, particularly when you have limited R&D efforts on an ongoing basis.

Would you be able to choose the best strategy for your enterprise?

Corporate entrepreneurship and innovation - Was the owner a real entrepreneur?

This week we look at the owner who started the business. While the owner may meet the definition of an entrepreneur, there is clear evidence that the degree of entrepreneurship is not absolute, but rather scalar, and therefore it is important to understand where the entrepreneur stands on the scale.

Burch defined what he considered the  range of entrepreneurial spirit/endeavour to be. However, I have attempted to revise the Burch Entrepreneurship Continuum, in order to make it more representative of current business practice, such as franchising.

Therefore when making an acquisition or merger, particularly if the other party is an SME, it is important to ensure that you rate the existing owner on the Entrepreneurship Continuum. This will provide an insight into whether or not the existing owner is likely to cave in and toe the corporate line, or whether they will leave soon after because of their high level of entrepreneurial drive. This will also impact on the level of entrepreneurial drive in the business and the level of innovation.

This can also impact on innovation, and can influence corporate strategy. We will consider this in the next blog on this topic.

Corporate entrepreneurship and innovation - the lifecycle

Certain lifecycle models show that as the business progresses from medium to large size, there is an increase in red tape, systems and controls. This is a necessity in order to gain and keep control, after the heady growth engendered by the entrepreneur. It is also this point at which entrepreneurs either lose the entrepreneurial drive, or leave to start again somewhere else.

Therefore it would appear that large business by default will lose the entrepreneurial spark, in order to increase its efficiency and control. Therefore how does the large business act in an innovative / entrepreneurial way? It is with a large degree of difficulty.

The whole organisation is focused on structured growth through systems and control, and yet the explosive growth generated by the entrepreneur is still needed but not catered for. So are the entrepreneurs still needed? How do you stimulate entrepreneurship and innovation within the constraints of systems and controls?

We will consider these issues in the next edition.

Corporate entrepreneurship and innovation

Unfortunately the global trend by the less informed has been to use entrepreneur and SME interchangeably. While entrepreneurs often do start SMEs, it is not the case that all SMEs are entrepreneurs, nor that entrepreneurs own SMEs. This has lead to the word entrepreneur losing its real meaning and value.

For a while, an attempt was made to differentiate, in the large business context, with the use of the word intrapreneur. However, this appears to have lost favour and momentum, assuming it ever was favoured to start with.

The need for entrepreneurship and innnovation in large businesses has not diminished in the least, and the current global recession should in fact be highlighting the need more than ever. This recession demands quick responses and innovative processes in order to survive. Market development requires a more entrepreneurial and innovative approach.

This blog will attempt to look at these issues going forward.

Dr Rob Smorfitt