Large companies enjoy many significant advantages over smaller competitors. A huge manufacturing company, for example, benefits from various economies of scale: it buys raw materials more cheaply, and its bigger manufacturing runs typically reduce per-unit production and shipping costs. The end result is a less expensive product, which can—and typically does—confer a decisive upper hand in the marketplace. Across business sectors and functions, size frequently delivers similar advantages.
When it comes to entrepreneurial ventures, however, big businesses can operate at a disadvantage. Large concerns tend to be bureaucratic, process-driven, and risk-averse. If they are publicly held, they face steady pressure to increase short-term returns, disincentivizing the riskier long-term plays that entrepreneurship represents. For these reasons, large corporations tend to favor stability and predictability.
Those tendencies, ironically, can lead a company into decline and failure. Especially in today’s rapidly changing markets, standing pat often means standing still as competitors race past. That’s why more and more established companies today seek opportunities to cultivate and encourage entrepreneurship within their ranks. Despite assertions that corporate entrepreneurship is an oxymoron, large businesses must innovate to stay relevant. Corporate entrepreneurship offers a way to address that challenge.
Corporate entrepreneurship describes any enterprise that creates, promotes, and continues new value for an established business. According to Neal Thornberry’s Corporate Entrepreneurship: Antidote or Oxymoron? (European Management Journal), the distinctive characteristics of corporate entrepreneurship undertakings are that they:
Corporate entrepreneurs share many characteristics with startup entrepreneurs (sometimes referred to as “green field startups”), but they also differ significantly. Established corporations need to focus on their current commitments and their prospective business simultaneously; they can’t simply go all in on their novel venture. They must find ways for these contrasting objectives to integrate, or at least peacefully coexist, within the corporate structure. And they must be ever-mindful of the eventual goal of folding the startup into the traditional corporate structure.
Thornberry identifies four manifestations of corporate entrepreneurship: corporate venturing, intrapreneuring, organizational transformation, and industry rule-bending.
Corporate venturing describes the process by which a new business is launched within an existing business. In corporate ventures, the new business arises from an existing process, product, or competency, but they soon carve their own paths. Corporate ventures typically result in new products or new markets, distinguishing them from line extensions.
For example, in 2007 the automobile company Daimler launched car2go, an initiative allowing drivers to rent vehicles by the hour. The venture placed rental cars around the city and arranged dedicated parking spaces in which users could leave the cars when they were done with the vehicle. Today, car2go serves over 3 million customers in 24 major metropolitan areas across Europe, China, and North America.
Intrapreneurship identifies a group of managers within a corporate structure and encourages them to develop the mindset of green field entrepreneurs. These managers are typically directed to pursue promising spin-up business development opportunities or simply to offer “outside the box” perspectives on ongoing ventures. The goal is to create opportunities for risk-taking and nimble strategies.
In a prime example of intrapreneurship, Google famously urges employees to pursue independent projects, reserving 20 percent of work time for just such undertakings. Paul Buchheit, a Google engineer, used his time to develop Gmail. Google Maps arose from the same process.
Some forms of organizational transformation represent conventional business strategies that can’t be classified as corporate entrepreneurship. Downsizing and new technology adaptations are transformations, but not ones that result in new markets and/or new businesses. They do not count as corporate entrepreneurial ventures.
Sometimes, however, a reorganization results in an entirely new way of doing business. Thornberry cites a reorg at Sun Financial that started with a directive to cut staff and save money. In response, the manager in charge developed more efficient organization and services that drastically sped up insurance application processes. This new and valuable capability resulted in a dramatic increase in business; a policy that initially sought to reduce staff not only revolutionized the business but probably ended up protecting many jobs in the insurance division in the process.
Industry rule-bending occupies a gray area on the corporate entrepreneurship spectrum. John Stopford and Charles Baden-Fuller describe it as “frame-breaking change“—a disruption so dramatic that it alters the way an entire industry operates. The example they cite: Toyota, which broke into the US market by producing high-quality vehicles at an affordable price. The company’s success by necessity changed the way its competitors produced and sold automobiles.
Most industry rule-bending emanates from startup entrepreneurs like Amazon, eBay, and AirBnB. They can originate from within established companies, however; when they do, they can constitute a form of corporate entrepreneurship.
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Success in corporate entrepreneurship requires a battery of hard and soft skills. They include:
Various programs take different approaches to training these skills. In its online course Corporate Entrepreneurship, Columbia University establishes the following learning objectives:
Corporate entrepreneurship is a relatively recent arrival among academic specializations. Most degree, certificate, and single-course offerings in entrepreneurship focus most or all of their attention on startup (aka green field) entrepreneurs. However, as more businesses devote resources and org-chart space to these endeavors, expect to see more research and teaching in the field.
Several business schools offer a Master of Business Administration (MBA) with a specialization in entrepreneurship. Others cast their net a bit more broadly, defining their degree as an MBA in corporate innovation and entrepreneurship. This latter group typically focuses more course content on corporate entrepreneurship (as opposed to startup entrepreneurship).
An MBA is not the appropriate solution for everyone, of course. Some professionals interested in corporate entrepreneurship may already have an MBA; they only need to supplement their management knowledge and skills, not develop them from scratch. Others may not have the option of committing one to two years (full-time) or more (part-time) to a comprehensive graduate degree. They want specialized knowledge focused narrowly on their area of interest.
Certificate programs typically consist of a series of related courses that can be completed in a year or less. Certificate programs are like miniature graduate degrees. Many are designed with working professionals in mind, which is why they are delivered online. Online study offers numerous conveniences in comparison to on-campus courses. Online offerings eliminate geographic barriers; anyone anywhere can participate in an online course. They also obviate the need to travel to campus, explaining why even local students choose online study when it’s an option.
For speed and convenience, it’s hard to beat single courses. Some can be completed in just a few weeks, and at a fraction of the cost of a certificate program. Their short duration produces yet another benefit: more, and more frequent, start times, meaning you won’t have to wait a semester or a year for the next enrollment period. You may be able to start work within days of deciding to enroll.
Corporate entrepreneurs face uncertain, high-risk business challenges presenting many unique obstacles both from the marketplace at large and within their organizations. Success in such ventures can be career-defining, but so too can failure, and not in the same way. If you’re ready to pursue these exciting business opportunities, seek professional development that enables you to develop an entrepreneurial mindset. You may find that a single course in corporate entrepreneurship is all you need to successfully launch new ventures within your corporation.