Corporate entrepreneurship begins and ends at the executive suite. It requires strategic oversight and involvement. If the chief executive officer and board don’t fully understand or commit themselves to corporate entrepreneurship it will not fly.
In many organizations corporate entrepreneurship is being set up to fail because it is not a strategic priority. There is a deep divide between strategic management of the existing business and corporate entrepreneurship. The two collide – one is about exploiting the core business, the other about exploring new businesses.
Corporate entrepreneurship impacts executive responsibilities, strategic decision making and the allocation of resources. It shifts the balance of power and changes the political landscape. It raises new questions and challenges long held beliefs. It can create conflict and be divisive. It can turn the organization upside down.
In the article The Relationship between Corporate Entrepreneurship and Strategic Management, the author states that, “Corporate entrepreneurship requires integrating the seemingly opposing activities of preserving the existing business and stimulating change through innovation.” These are two different types of activities that require two different types of capabilities, resources and cultures.
Corporate entrepreneurship needs to be an explicit process articulated by the senior management team, based on an assessment of core competencies, and competitive position of the organization consistent with the strategic direction. There needs to be a specific corporate strategy for entrepreneurship.
A strategy that includes many of the following things:
1. A distinct vision with clear objectives of what the organization wants to achieve.
2. Identification of internal constraints, external influences and competitive forces.
3. A process for allocating resources; funding, leadership, sponsorship and workers.
4. A clear articulation of decision making rights, authority, responsibility and accountability.
5. A plan to develop the entrepreneurial competencies of individuals and the organization.
6. A change effort designed to create a culture of risk taking, pro-activeness and innovation.
7. A definition of the types of innovation initiatives the organization intends to pursue.
8. An innovation process used to discover, design, develop and implement ideas.
9. An investment portfolio over various time horizons to manages risk and reward.
10. A policy to tolerate failure, learn from the experience and capture lessons learned.
11. A definition of the metrics used to measure success, tangible and intangible.
12. A direct channel of communication to and from the senior management team.
Instituting corporate entrepreneurship in an established organization isn’t easy but establishing corporate entrepreneurship as a strategic priority is one place to start.
Corporate entrepreneurship is a major transformational effort that must be guided by the vision and strategy articulated by the senior management team. A vision that describes what needs to change and how that change will happen. Ensuring that the systems and processes are in place to enable and support corporate entrepreneurship. Aligning the resources and metrics needed to drive growth.
According to the Model for Corporate Entrepreneurship by Covin and Slevin, “Strategic variables such as the mission statement, business practices and competitive tactics all impact a firm’s ability to adopt an entrepreneurial posture.” Corporate entrepreneurship is not something that can be delegated – its success depends on the active participation of the senior management team.
This was reinforced in the study Nurturing the Corporate Entrepreneurship Capability, “Without strategic commitment and support from top management, there is little incentive for traditional organizational systems to change and support existing and future corporate entrepreneurship initiatives.”
Is corporate entrepreneurship a strategic priority in your organization?