Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin...

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Managing Innovation and Fostering Corporate Entrepreneur ship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

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Page 1: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Managing Innovation and

Fostering Corporate

Entrepreneurship

Chapter Twelve

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Page 2: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Learning Objectives

After reading this chapter, you should have a good understanding of:

LO12.1 The importance of implementing strategies and practices that foster innovation.

LO12.2 The challenges and pitfalls of managing corporate innovation processes.

LO12.3 How corporations use new venture teams, business incubators, and product champions to create an internal environment and culture that promote entrepreneurial development.

12-2

Page 3: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Learning Objectives (cont.)

LO12.4 How corporate entrepreneurship achieves both financial goals and strategic goals.

LO12.5 The benefits and potential drawbacks of real options analysis in making resource deployment decisions in corporate entrepreneurship contexts.

LO12.6 How an entrepreneurial orientation can enhance a firm’s efforts to develop promising corporate venture initiatives.

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Page 4: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Managing Innovation

Innovation using new knowledge to transform

organizational processes or create commercially viable products and services

Latest technology, results of experiments, creative insights, competitive information

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Page 5: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Types of Innovation

Sustaining innovations extend sales in an

existing market, usually by enabling new products or services to be sold at higher margins.

Disruptive innovations overturn markets

by providing an altogether new approach to meeting customer needs.

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Challenges of Innovation

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Managing the Pace of Innovation

Incremental innovation May be six months

to two years May use a

milestone approach driven by goals and deadlines

Radical innovation Typically long term

– 10 years or more Often involves

open-ended experimentation and time-consuming mistakes

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Page 8: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Rules for Fostering Innovation

12-8

Exhibit 12.3

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Focused Approaches to Corporate Entrepreneurship

New venture group a group of individuals, or a division within a

corporation, that identifies, evaluates, and cultivates venture opportunities.

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Focused Approaches to Corporate Entrepreneurship

Business incubator supports and nurtures

fledgling entrepreneurial ventures until they can thrive on their own as stand-alone businesses.

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Page 11: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Entrepreneurial Culture

Culture of entrepreneurship Search for venture opportunities permeates

every part of the organization Strategic leaders and the culture generate a

strong impetus to innovate, take risks and seek out new venture opportunities

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Product Champions

Product (or project) champions Bring entrepreneurial ideas forward Identify what kind of market exists for the

product or service Find resources to support the venture Promote the venture concept to upper

management

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Page 13: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Measuring the Success of Corporate Entrepreneurship Activities

Exit champions individual working within a corporation who is

willing to question the viability of a venture project by demanding hard evidence of venture success and challenging the belief system that carries a venture forward.

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Page 14: Managing Innovation and Fostering Corporate Entrepreneurship Chapter Twelve McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights.

Real Options Analysis

Real options analysis for each investment step the investor has the

option of (a) investing additional funds to grow or accelerate, (b) delaying, (c) shrinking the scale of, or (d) abandoning the activity.

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Dimensions of EntrepreneurialOrientation

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Exhibit 12.4


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