Is Corporate Entrepreneurship an Oxymoron?

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According to authors Robert C. Wolcott and Michael J. Lippitz (Grow From Within: Mastering Corporate Entrepreneurship and Innovation), corporate entrepreneurship is “the process by which teams within an established company conceive, foster, launch, and manage a new business that is distinct from the parent company but leverages the parent’s assets, market position, capabilities or other resources.” To put it more succinctly: corporate entrepreneurship appropriates the processes and goals of startup entrepreneurship and sets them within a corporate setting.

But is the free-wheeling, risk-taking, rule-bending entrepreneurial approach truly possible within a rule-bound, process-driven, hierarchical corporate structure? Prominent skeptics say no. In a Harvard Business Review article, Scott Kirsner argues that corporate bureaucracy, institutional conservatism, and a too-strong focus on short-term returns all work against entrepreneurial enterprises. Sums up Kirsner: “There’s no such thing as a corporate entrepreneur.”

So, is the term corporate entrepreneurship an oxymoron? Or is it the key to longevity in a marketplace that advantages growth and change? This article explores these questions while also addressing:

• What is corporate entrepreneurship?
• What is an oxymoron?
• Is corporate entrepreneurship an oxymoron?
• Four forms of corporate entrepreneurship
• Examples of corporate entrepreneurship
• Developing corporate entrepreneurship skills

What is corporate entrepreneurship?

As John Zimmerman points out in Corporate Entrepreneurship at GE and Intel, all large companies originate in acts of entrepreneurship. However, successful companies eventually advance to a mature stage in which stability and predictable costs and revenue streams overwhelm the impulse to innovate. According to Zimmerman, “as new ventures progress from formation to become larger entities, they often implement policies, procedures, and rules that result in bureaucratic structures that, while needed to control and manage growth, often impede the innovation and creativity vital to maintain the competitive advantage initially created by entrepreneurial activity.”

However, as Zimmerman points out, companies “must engage in some form of entrepreneurial activity in order to continue to effectively compete in the marketplace.” Enter corporate entrepreneurship, through which an established business can engage in “organizational renewal involving innovation and venturing, resulting in new products, processes, and technologies.” Corporate entrepreneurship can address market stagnation, management conservatism, and the loss of talent to more forward-thinking competitors.

In a white paper entitled Corporate Entrepreneurship: Antidote or Oxymoron?, Neal Thornberry identifies four distinct forms of corporate entrepreneurship.

Four forms of corporate entrepreneurship

Thornberry describes corporate entrepreneurship as “startup entrepreneurship turned inward.” In identifying four types, he cautions that “there is a great deal of overlap in these typologies,” adding that they are still “helpful in understanding various approaches.”

Intrapreneurship

Intrapreneurship seeks to promote the mindset and behaviors typical of startup businesses within a corporate setting. In some instances, companies encourage all employees to think entrepreneurially; at others, this exercise is limited to a select group.

Thornberry recalls one intrapreneuring feat from SunLife (an insurance conglomerate) employee Ian Kennedy. After an edict from management to cut costs, Kennedy, the middle-manager at the Annuity Service Center, found a way to rearrange their entire department through innovative cross-training and self-directed teamwork.

The rearrangement looked to shorten timelines and increase efficiency—and it worked. With no financial investment, SunLife cut costs even more significantly than hoped thanks to a streamlined system thought up by one of its intrapreneurs.

Organizational transformation

Organizational transformation occurs when specific innovative changes result in new, profitable business prospects.

Let’s return to the SunLife example. Kennedy’s solution represents intrapreneurship for himself and organization transformation for the company. By changing a division’s structure, Sun Life was actually able to accept more business while simultaneously lowering per-policy costs for the customer—thus giving them a competitive advantage while improving their business model as a whole.

Corporate venturing

Corporate venturing occurs when a new business forms inside of an existing core business. This usually happens when one aspect of an organization is so successful that expanding that divisions’ resources and offering its services to other businesses becomes a profitable endeavor.

A new venture (e.g., a supermarket starting a delivery service) offers a unique revenue stream the organization is predisposed to work well with, offering a ‘startup feel’ with an accelerated track. Plus, new competencies never hurt come quarterly review time.

In another example of corporate venturing, 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.

Industry rule-bending

A type of transformation, industry rule-bending rewards the entrepreneur’s love of change—occurring when companies challenge long-established industry paradigms in favor of further innovation.

For example, bookselling remained relatively the same for 500 years. Then came Amazon. Disrupting the structure of the industry, Amazon forced major competitors, like Borders Books, out of business.

What is an oxymoron?

An oxymoron is a statement or phrase that contradicts itself. If you were to cut up your jumbo-shrimp with plastic-silverware, you’d be engaging in two oxymorons at once.

‘Oxymoron’ derives in two halves; from the ancient Greek word “oxus,” meaning sharp, and “mōros,” meaning dull. Sharp and dull. That’s right—’oxymoron’ itself is an oxymoron.

Is corporate entrepreneurship an oxymoron?

It depends on whom you ask. Kirsner clearly thinks it is; in his view, the all-or-nothing entrepreneurial culture is anathema to large corporations’ measured decision-making and bet-hedging. And yet many companies not only claim to engage in corporate entrepreneurship but also assert significant successes, as you’ll see from the examples cited below.

Without doubt, the corporate mindset can place formidable—insurmountable?—obstacles in the path of corporate entrepreneurship. The Harvard Business Review identifies three challenges that it collectively describes as the “two-cultures problem*. They are:

• New or emerging businesses typically have unreliable financial forecasts due to the lack of insights from similar companies in the marketplace; this unsettles corporations, which rely on predictable streams of income and reliable forecasting information
• The entrepreneurial spirit require fresh ideas and innovative thinking versus conventional thinking; a ‘don’t rock the boat’ mindset can, and too frequently does, predominate at established companies
• New businesses struggle to find the right fit between new and old system; established companies are comfortable with existing systems and averse to adapting to new ones

Examples of corporate entrepreneurship

3M and Arthur Fry

Arthur Fry, a chemical engineer at 3M, learned the company needed a super-adhesive for airplane construction. Fry set out to solve the problem and in the process invented a weak adhesive. Fry realized the adhesive would be a perfect addition to bookmarks, which have an annoying tendency to slip out of books. Several iterations later, Fry’s bookmark had morphed into the Post-it Note.

3M perfected a culture of progression and innovation both by hosting collaborative events and by offering funding for self-started projects. That approach has paid dividends that should stick with the company for a long time.

Google

Perhaps the most famous corporate entrepreneurship undertaking takes place at Google, where a 20 percent rule encourages employees to commit one-fifth of their working hours to exploring their own ideas and developing new skills. The policy, according to the Google IPO letter, “empowers [workers] to be more creative and innovative. Many of our significant advances have happened in this manner.” Among them: Google Maps, Gmail, and AdSense.

Developing corporate entrepreneurship skills

You won’t find entire university programs devoted to corporate entrepreneurship; in fact, relatively few programs offer extensive study in any form of entrepreneurship. Most programs offer one or two courses on the subject, and some MBA programs offer a concentration in the field, but those concentrations typically focus primarily, if not exclusively, on startup entrepreneurship.

That doesn’t mean you should abjure university study entirely. While it’s true you can theoretically rise through the ranks and earn a corporate entrepreneurial position without an advanced education, in reality candidates with impressive credentials—extensive past experience and/or academic training—have the upper hand. If you are serious about entering this field, consider at the very least pursuing individual courses or certificate programs.

MBA programs with entrepreneurship concentrations

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).

Of course, an MBA represents a major commitment of time—a full-time program typically runs two years, a part-time program three or more—and money (the most expensive MBA programs approach $140,000). You’ll learn a broad swath of business management fundamentals in the program through courses in finance, marketing, operations, supply chain management, leadership, and communications. Many apply to entrepreneurship. However, you will commit relatively little time to direct study of entrepreneurship and intrapreneurship.

Certificate programs

Certificate programs typically consist of a series of related courses that can be completed over a relatively short period of time (i.e., six to twelve months). Certificate programs are like miniature graduate degrees. Designed with working professionals in mind, many are delivered primarily or entirely online. Much of the material covered in these programs may pertain primarily or exclusively to startup entrepreneurs.

Single courses

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. Columbia University offers an online course entitled Corporate Entrepreneurship taught by internationally renowned expert Rita McGrath.

(Last Updated on February 26, 2024)

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