Examples of Corporate Entrepreneurship
March 12, 2022
What is corporate entrepreneurship? This article looks at a few examples that illustrate its different manifestations.
Entrepreneurs have been a leading force driving businesses and innovation for centuries. From Thomas Edison and Henry Ford to Bill Gates and Mark Zuckerberg, entrepreneurs transform the world. This passion for creation is part of the American character; over 55 percent of adults in the US having started a business at some point in their lives.
Small and midsize businesses (SMBs) in their nascent stages face substantially different hurdles than do large corporations. Whereas SMBs struggle with capital and talent, large companies face problems like rigid policies and procedures that often obstruct innovative thinking.
29 percent of entrepreneurs say their biggest motivation for starting their own business is the idea of being their own boss, while 16 percent want to pursue their passion. What can large organizations do to lure these independence-minded people into the corporate fold? It’s simple. Companies need to start adopting corporate entrepreneurship.
What does corporate entrepreneurship look like? We review some examples of corporate entrepreneurship in this article to answer that question. We also address:
- What is corporate entrepreneurship?
- What are the four types of corporate entrepreneurship?
- 3M: the innovation powerhouse
- P&G’s Tripled Innovation Success Rate
- One-Click Buy: The Amazon Success Story
- How to become a corporate entrepreneur
What Is corporate entrepreneurship?
Corporate entrepreneurship is an approach that enables employees to pursue novel business opportunities while working within an established organization. This strategy encourages innovative ideas and risk taking, allowing the company to build new businesses, products, and processes. It connects the start-up mindset with the capital and assets of a well-established company.
However, the constant change that defines the entrepreneurial spirit must coexist with the existing policies and procedures upon which corporations rely to operate efficiently. That can pose problems, because ideas from corporate entrepreneurship aim to disrupt. While all organizations crave growth opportunities, not all of them have the framework to encourage it. In many instances, entrepreneurial disruption within the conservative confines of the corporate world draws strong resistance.
Academics categorize four types of corporate entrepreneurship. We discuss these in the following section.
What are the four types of corporate entrepreneurship?
While the idea of corporate entrepreneurship has existed since the 70s, there have been many changes along the way. Obviously, it’s not a one-size-fits-all arrangement. Many firms have added their own spin to it. These differences arise mainly across two points:
- Who takes ownership of the new businesses formed in the organization?
- How are these new business concepts funded?
These two differences make a two-by-two table of ownership and funding. The four cells represent the four types of corporate entrepreneurship
__ 1. The opportunist model__
This model is how most companies begin. The ownership of the new businesses isn't controlled by an individual or dedicated group of people; instead, it is diffused throughout the organization. Innovation is often driven by a single but extremely motivated employee who takes on the challenge of finding new opportunities and setting up new products and business models. The allocation of company resources for creating these new ventures is also ad-hoc and often subject to change across projects.
This model works successfully in corporate environments that prioritize experimentation and have boards willing to approve risky projects. However, when a company becomes large, it usually finds this model unreliable.
2. The enabler model
The enabler model assumes that employees will generate new ideas if they are given sufficient support from the company. There is no formal organizational ownership of new businesses; the employees have autonomy to pursue their ventures as long as it fits the company's broader strategic frame.
Google is the most prominent endorser of this model and, at any given point, funds at least a hundred new concepts in varying degrees of development. The majority of these projects support Google's core businesses in some way, while the rest bring radical new ideas and designs to the table.
Companies need to do more than invest capital into their ideation teams to reach this stage. There need to be clear criteria for approving new ideas and fund allocation. Additionally, employees must be recruited based on their entrepreneurial and intellectual ability.
3. The advocate model
Under this model, the company at large promotes start-up ventures but delegates funding to the business-unit level. Teams work on developing business plans to present senior management. Ultimately, they approach the business-unit leadership for approval and funding. As more and more business units become involved, the development team becomes critical in bringing change.
Du Pont offers a prime example of success using the advocate model of corporate entrepreneurship. Their coveted 'Market Driven Growth Initiative Program' includes activities like "business-builder," a seminar aimed at assisting employees in generating diverse business concepts and prioritizing them. The employees are then grouped into teams assigned to develop detailed business strategies and given an additional 180 days to evaluate the proposed strategies. Proposals are then forwarded to the senior management and, if approved, implemented by a business unit.
4. The producer model
As with the other models, the producer model aims to develop in-house entrepreneurs. It encourages cross-unit collaboration, protects emerging businesses from turf battles, and offers employees an opportunity to explore their ideas outside their business units.
Companies provide substantial funding to their business units while also exerting significant control over their fund allocation. IBM, Motorola, and Cargill Inc. are some of the largest organizations that endorse the producer model of corporate entrepreneurship.
Now, let’s look into some leading examples of corporate entrepreneurship.
3M: the innovation powerhouse
3M was founded in 1902, originally known as the Minnesota Mining and Manufacturing company. Back then, its founders would have found it hard to believe that their small organization would one day have over 60,000 products in its portfolio. This includes products like Scotch-Brite, Post-Its, and ACE bandages that you can find in virtually any home across the US. It's safe to say 3M is a powerhouse of innovation.
But what drives their innovative streak? An environment that promotes corporate entrepreneurship. 3M has freed 15 percent of its employees' company time each day to focus on individual projects; they call this their 'innovation rule.' Their management actively supports the idea by assisting employees and providing them with necessary resources.
3M's corporate entrepreneurship spirit is best summarized by the invention story of Post-It, a $1 dollar product. Dr. Spencer Silver, a scientist at 3M, tried to invent a super sticky adhesive but ended up with a mildly sticky substance that didn't quite bond with the surface. This discovery remained unused until Arthur Fry, another 3M scientist, thought it would make for a good bookmark. Voila, the Post-It was born!
P&G’s tripled innovation success rate
Innovation is built into P&G's DNA. As ex-CEO and Chairman Bob McDonald once said, "We know from our history that while promotions may win quarters, innovation wins decades."
In 2004, P&G established its 'new growth factory' to churn out innovative and disruptive ideas that could drive their growth in the market. The result? Profits from their household care product, Tide, doubled from $12 billion to $24 billion in 10 years.
P&G's first step was to encourage an entrepreneurial mindset in the senior management and product team members. The training included modules assessing demand for products and multi-day courses in disruptive innovation. Next, they created new-growth business guides and organizational structures to develop this mindset further. They redesigned the FutureWorks department into a business unit that focuses on building new models and businesses.
Finally, P&G demonstrated some of their projects to showcase the factory's new work and allowed customers to 'vote using their wallets.'
One-click buy: the Amazon success story
If you've ever used Amazon's services, you're probably well-aware of the 'buy with one-click' option. Customers need only enter their payment details and shipping address once initially and they can then purchase products any time with just one click. It sounds pretty standard now but it was revolutionary when it was first invented. In fact, by the time its patent expired in 2017, Amazon had already been leasing it out to companies like Apple for years.
The invention of this technology was pioneered by an in-house programmer, Peri Hartman. He was just looking for a way to make the ordering process more effortless and time-efficient. Ultimately, many believe that his idea became one of the most significant elements that made Amazon the behemoth it is today.
How to become a corporate entrepreneur
If you're feeling inspired by these examples and wish to become a corporate entrepreneur, here are some steps you should follow.
Just do it!
You don't need a license, a certification, or any particular degree to become a corporate entrepreneur. You just have to be in the right place at the right time. And then, of course, you have to impress someone enough with your ideas and potential to be entrusted with a critical role.
People have done it, but this path clearly poses challenges. Credentials and experience matter in the corporate world, and if you have neither, your chances of ascending to a desirable impact role are not great. You can improve your odds by obtaining an MBA degree or taking corporate entrepreneurship courses. These credentials can give you the skills, tools, and knowledge you'll need to develop your next big idea and turn it into reality.
Get an MBA with a concentration in entrepreneurship
An MBA is the most popular graduate degree in the United States and might be the perfect way for you to pursue your dream of becoming a corporate entrepreneur. There are a lot of schools across the US that offer an MBA degree with a concentration in entrepreneurship, including:
- Babson College’s F.W. Olin School of Business
- Harvard University’s Harvard School of Business
- Massachusetts Institute of Technology’'s Sloan School of Management
- University of California - Berkeley's Haas School of Business
- Saint Louis University's Richard A. Chaifetz School of Business
- University of Pennsylvania’s Wharton School of Business
- Washington University in St Louis's Olin Business School
Top online MBA programs offering an entrepreneurship concentration include:
- Ball State University's Miller College of Business
- Carnegie Mellon University's Tepper School of Business
- Indiana University - Bloomington's Kelley School of Business
- Pennsylvania State University - World Campus Smeal School of Business
- The University of Texas at Dallas School of Management
- University of Massachusetts - Amherst's Isenberg School of Management
- University of Southern California's - Marshall School of Business
- University of Washington - Seattle Campus's Michael G. Foster School of Business
Take courses in corporate entrepreneurship
If you're sure you want to be a corporate entrepreneur, the best way forward is to opt for tailored courses in corporate entrepreneurship. Some examples of the corporate entrepreneurship courses you can choose from (in addition to core MBA courses) are:
- Business Modeling
- Business Strategy
- Entrepreneurship and New Ventures
- Innovation Management
- Lean Entrepreneurship
- Negotiation Skills
- Plan, Pitch, and Fund an Entrepreneurial Start-up
- Product Development
- Venture Capital
Columbia University offers an online course entitled Corporate Entrepreneurship taught by internationally renowned expert Rita McGrath.
While it's true that most successful entrepreneurs don't typically have degrees in entrepreneurship, the high startup failure rate might make you reconsider forgoing a graduate degree. Why not take advantage of every possible opportunity to improve your odds?
Additionally, the rise of online and hybrid master's programs means that you don't need to relocate to your favorite school to access the program. You can typically complete all requirements for the degree online. This format also fits well for busy professionals. Customizing your schedule and coursework is not only possible with such a degree but also encouraged.
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