Overcoming the Barriers to Corporate Entrepreneurship MBAX 6100

Overcoming the Barriers to Corporate Entrepreneurship MBAX 6100 February 26, 2007 Desiree Pacheco

Why Corporate Entrepreneurship? n n Competitive pressures Rapid technological change Loss of innovative talent Evolution of industries ¨ Evolutionary n versus revolutionary changes Evolution of technological cycles (e. g. , semiconductor industry)

CE Program: Factors for Success n Evaluate the market ¨ Don’t n stay too close to existing customers Hard drive market ¨ Accept unreliable estimates ¨ Outsource to smaller/expert organizations n Obtain information from nontraditional sources ¨ VCs, academics, etc. From: Bower and Christensen, 1995

CE Program: Factors for Success n n n Move beyond “performance trajectories” Be opened to cannibalization Align risks and rewards ¨ Equity n agreements Foster a creative environment ¨ Separate artists/innovators from the rest of the organization (e. g. , BMW: Chris Bangle, director of design) ¨ Promote autonomy & freedom n Individuals have ownership and control over their work and ideas

CE Program: Factors for Success n Foster a creative environment ¨ Provide adequate resources (intrinsic motivation) ¨ Manage pressure levels ¨ Beware of highly critical evaluations ¨ Manage the physical setting n Boundaries, interruptions From: Amabile et at. , 2004; Shalley et al. , 2004

CE Program: Factors for Success n Foster an entrepreneurial culture But what is it?

Organizational Culture n Definitions: “ a) a pattern of basic assumptions, b) invented, discovered, or developed by a given group, c) as it learns to cope with its problems of external adaptation and internal integration, d) that has worked well enough to be considered valid and, therefore e) is to be taught to new members as the f) correct way to perceive, think, and feel in relation to those problems” (Schein, 1990) “ An organization’s basic beliefs and assumptions about what the company is about, how its members should behave, and how it defines itself to its external environment” (Cornwall and Perlman, 1990)

Components of an Organizational Culture n n n Values Rules of conduct Vocabulary Methodology Rituals Myths and Stories From: Morris and Kuratko, 2002

An Entrepreneurial Culture… Command Decision Making Consensus Decision Making Empirical Decision Making Qualitative Decision Making Expediency Integrity Performance-based Rewards Power/tenure-based Rewards Career Jobs Disposable Labor Intimate Concerns Adapted From: Tropman and Morningstar, 1989

An Entrepreneurial Culture… n n A different view of failure Balance between individualism and collectivism From: Morris and Kuratko, 2002

Cultures in Older, Larger Firms… n Cultural inertia=high cholesterol ¨ Institutionalization of norms and values ¨ “cultural inertia, because it is so ephemeral, and difficult to attack directly, is a key reason managers often fail to successfully introduce revolutionary change—even when they know that it is needed” (Tushman and O’Reilly, 1996) Can you transform a nonentrepreneurial culture?

Transforming Cultures n Bad News ¨ Sears n Good News ¨ British Airways “…the heroes, the winners, will be the entire companies that have developed cultures that instead of fearing the pace of change, relish it” Jack Welch, General Electric From: Tushman and O’Reilly, 1996