New Ventures (part D)
by
Charles Lamson
Intrapreneurship
Today's large corporations are more than passive bystanders in the entrepreneurial explosion. Even established companies try to find and pursue new and profitable ideas---and they need intrapreneurs to do so. If you work in a company, and are considering preparing a new business venture, table one can help you decide whether the new idea is worth pursuing.
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TABLE 1 Checklist for Choosing Ideas
Building Support for Your Idea
A manager who has a new idea to capitalize on a market opportunity will need to get others in the organization to buy in or sign on. In other words, you need to build a network of allies who support and will help implement the idea.
If you need to build support for a project idea, the first step involves clearing the investment with your immediate boss or boss's. At this stage, you explain the idea and seek approval to look for wider support.
Higher executives often want evidence that the project is backed by your peers before committing to it. This involves making cheerleaders---people who will support the manager before formal approval from higher levels. Some managers refer to this strategy as "loading the gun"---lining up ammunition in support of your idea.
Next, horse trading begins. You can offer Promises of payoffs from the project in return for support, time, money, and other resources that peers and others contribute.
Finally, you should get the blessing of relevant higher-level officials. This usually involves a formal presentation. You will need to guarantee the project's technical and political feasibility. Higher management endorsement of the project and promises of resources help convert potential supporters into an enthusiastic team. At this point, you can go back to your boss and make specific plans for going ahead with the project.
Along the way, expect resistance and frustration and use passion and persistence, as well as business logic, to persuade others to get on board.
Building Intrapreneurship
Two common approaches used to stimulate intrapreneurial activity are skunkworks and bootlegging. Skunkworks are project teams designed to produce a new product. A team is formed with a specific goal within a specified time frame. A respected person is chosen to be manager of the Skunkworks. In this approach to corporate innovation, risk takers are not punished for taking risks and failing---their former jobs are held for them. The risk takers also have the opportunity to earn large rewards.
Bootlegging refers to informal efforts by managers and employees to create new products and new processes. "Informal" can mean "secretive," such as when a bootlegger believes the company will frown on those activities. But the intrapreneurial organization should tolerate and even encourage bootlegging.
Organizing New Corporate Ventures
For large-scale innovation, strategic alliances---cooperation among different organizations---can be a useful route.
Hazards in Intrapreneurship
Organizations that encourage intrapreneurship face an obvious risk: the effort can fail. One author noted, “There is considerable history of internal venture development by large firms, and it does not encourage optimism. However, this risk can be managed. In fact, failing to foster intrapreneurship may represent a subtler but greater risk then encouraging it. The organization that resists intrapreneurial initiative may lose its ability to adapt when conditions dictate change.
The most dangerous risk in intrapreneurship is the risk of over-reliance on a single project. Many companies fail while awaiting the completion of one large, innovative project. The successful intrapreneurial organization avoids over-commitment to a single product and relies on its entrepreneurial spirit to produce at least one winner from among several projects.
Organizations also court failure when they spread their intrapreneurial efforts over too many projects. If there are many intrapersonal projects, each effort may be too small in scale. Managers will consider the project unattractive because of their small size. Or, those recruited to manage the projects may have difficulty building power and status within the organization.
The hazards in intrapreneurship, then, are related to scale. One large project is a threat, as are too many underfunded projects. But a carefully managed approach to this strategically important process will upgrade an organizations chances for long-term survival and success.
Entrepreneurial Orientation
In an earlier post, the characteristics of individual entrepreneurs were described. Now we do the same for companies we describe how companies: We describe how companies that are highly entrepreneurial differ from those that are not.
Entrepreneurial Orientation is the tendency of an organization to engage in activities designed to identify and capitalize successfully on opportunities to launch new ventures by entering new or established markets with new or existing goods or services. Entrepreneurial orientation is determined by five tendencies: to allow independent action, innovative, take risks, be proactive, and be completely aggressive.
To allow independent action is to grant to individuals and teams the freedom to exercise their creativity, champion promising ideas, and carry them through to completion. Innovativeness requires the firm to support new ideas, experimentation, and the creative processes that can lead to new products or processes; it requires a willingness to depart from existing practices and venture beyond the status quo. Risk-taking comes from a willingness to commit significant resources, and perhaps borrow heavily, to venture into the unknown. The tendency to take risks can be assessed by considering whether people are bold or cautious, whether they require high levels of certainty before taking or allowing action, and whether they tend to follow tried and true. paths.
To be proactive is to act in anticipation of future problems and opportunities. A proactive firm shapes the environment and changes the competitive landscape; other firms merely react. Proactive firms are forward-thinking and fast to act, and are leaders rather than followers. Similarly, some individuals are more likely to be proactive, to shape and create their own environments, than others who more passively cope with the situations in which they find themselves. Proactive firms encourage and allow individuals and teams to be proactive.
Finally, competitive aggressiveness is the tendency of the firm to challenge competitors directly and intensely in order to achieve entry or improve its position. In other words, it is a competitive tendency to outperform ones rivals in the marketplace. This might take the form of striking fast to beat competitors to the punch, to tackle them head-to-head, and to analyze and target competitors weaknesses.
What makes a firm "entrepreneurial" is its engagement in an effective combination of independent action, innovativeness, risk-taking, proactiveness, and competitive aggressiveness. The relationship between these factors and the performance of the firm is a complicated one that depends on many things. Nevertheless you can imagine how the opposite profile---too many constraints on action, business as usual, extreme caution, passivity, and a lack of competitive fire will undermine entrepreneurial activities. And without entrepreneurship, how would firms survive and thrive in a constantly changing competitive environment?
*SOURCE: MANAGEMENT: THE NEW COMPETITIVE LANDSCAPE, 6TH ED., 2004, THOMAS S. BATEMAN, SCOTT A. SNELL, PGS. 228-231*
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