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.

According to Shaker A. Zahra, “corporate entrepreneurship is a set of activities to enhance a company’s ability to innovate, take a risk, and seize the opportunities that are allocated in the market.”

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.

Now more than ever organizations are faced with the challenge of leveraging innovation to accelerate growth to emerge out of the current crisis.  According to the article Strategic Resilience During the Covid-19 Crisis by McKinsey, “As companies start to prepare for post-pandemic world, those that have fallen behind more resilient players will need to take fast, bold action to make up for lost ground.” This requires a concerted effort to shift the focus from exploitation to exploration.  A key driving factor behind corporate entrepreneurship.

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.  Allowing managers to step up and outside the boundaries of traditional management practices.  Enabling employees to think and act entrepreneurial.  Setting aside notions of what is not possible and believing anything is possible.

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 involvement of the senior management team. Not on an ad-hoc basis but emersed in the process.

Understanding the nuances of what it takes to identify, develop. and deliver innovations into a rapidly changing environment. Strengthening relationships with customers. Seeing first-hand the barriers and obstacles that can get in the way. Making decisions without having all the data. Feeling the resistance and reluctance to change the status quo. Experiencing the emotional roller coaster that inevitably exists in these types of efforts. Dealing with uncertainty, ambiguity and the unknown. Only then will senior management be better able to refine their thinking, sharpen their focus and integrate innovation into the fabric of the organization.

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.”

If business model innovation has become the post-pandemic model for success.  Perhaps corporate entrepreneurship is the best way to go about building that new model.

Is corporate entrepreneurship a strategic priority in your organization?

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Originally published in 2014, updated in 2021.

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