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Four models of Corporate Entrepreneurship

Four models of Corporate Entrepreneurship

Mapping the models on two dimensions, viz. organisational ownership (ranging from diffused to focussed) and resource authority (ad hoc to dedicated), the authors find that all companies begin as opportunists.

“Without any designated organisational ownership or resources, corporate entrepreneurship proceeds (if at all) based on the efforts and serendipity of intrepid ‘project champions’ – people who toil against the odds, often creating new businesses in spite of the corporation.”

However, the opportunist model works well only in trusting corporate cultures that are open to experimentation and that have diverse social networks behind the official hierarchy, say Wolcott and Lippitz. “There need to be multiple executives who can say yes to a new business concept. Without that type of environment, good ideas can easily fall through organisational cracks or receive insufficient funding to prove feasible.”

In contrast to the opportunist model of diffused ownership and ad hoc resource allocation, the enabler model has dedicated resources. “Early stages of new business conception are explicitly supported, encouraged, and often strategically channelled, with a promise of serious management attention to those concepts that look promising.”

The book describes Google as the poster child for the enabler model. “Project teams form on the fly, based on requirements that are defined by the teams themselves… If a project team believes that it has a winner, it appeals to the Google Product Council for formal project funding… The Product Council meets weekly to hear new business ideas.”

The enabler model is not just about allocating capital for corporate entrepreneurship, the authors clarify. “Personnel development and executive engagement are also critical.”

In the third model, the advocate (with focused ownership and ad hoc resource allocation), a company assigns organisational ownership for driving the creation of new businesses to a designated corporate-level group, but it intentionally provides the group with only a modest budget.

Advocate organisations act as evangelists and innovation experts, facilitating corporate entrepreneurship in conjunction with business units, which must demonstrate their commitment to new business development by paying most of the bills, as the authors note.

They see DuPont, the 200-year-old global conglomerate, as a pioneer of this model of new business creation, and BP, the UK-based international oil giant, as having an advocate-style organisation to drive IT-based transformation across the company.

“A fundamental challenge for advocate organisations is to maintain a balance between explorations of longer-term, game-changing concepts and producing tangible near-term results. It takes time to fill the pipeline, and individual projects may have a long gestation period.”

The fourth model, the producer, with focused ownership and dedicated resources, aims to protect emerging projects from turf battles, to encourage cross-unit collaboration, to build potentially disruptive businesses, and to create pathways for executives to pursue careers outside their business units, Wolcott and Lippitz explain.

“Modern producer organisations are closely tied to corporate leadership and strategy, and they provide a great deal of support for the commercialisation, transition, and scaling of new businesses.”

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