What is corporate entrepreneurship?
Corporate entrepreneurship refers to the practice where businesses promote entrepreneurial thinking and innovation within their organisation. This strategy involves encouraging employees to act like entrepreneurs by developing new ideas and processes that contribute to the company's growth and competitiveness. Corporate entrepreneurship helps companies stay competitive, adapt to market changes, and explore new business opportunities. Here is a breakdown of its key features:
- Encourages innovation and creativity within established companies.
- Promotes the development of new business ideas and products.
- Involves risk-taking and exploring new opportunities.
- Fosters a dynamic organisational culture.
- Enhances a company’s competitive edge.
- Helps employees think beyond their traditional roles.
- Encourages flexibility and adaptability within a corporate environment.
The importance of corporate entrepreneurship
Corporate entrepreneurship plays a significant role in business growth by promoting innovation and fostering a culture of risk-taking. Companies that embrace this model often outperform their competitors and lead in innovation. Here are key points highlighting its importance:
- Drives innovation and continuous improvement.
- Helps businesses adapt to changing markets.
- Encourages employees to take ownership of new projects.
- Provides a platform for testing new business models.
- Enhances the company’s ability to respond to competition.
- Leads to the discovery of new revenue streams.
- Facilitates long-term growth and sustainability.
Implementing corporate entrepreneurship
Implementing corporate entrepreneurship involves strategic planning and a shift in company culture. Successful implementation requires support from leadership and the creation of an environment that promotes creativity and innovation. Here is how it can be achieved:
- Encourage a culture of innovation through leadership support.
- Provide employees with autonomy to experiment with new ideas.
- Establish clear goals and incentives for entrepreneurial initiatives.
- Create cross-functional teams to foster collaboration.
- Allow calculated risk-taking to encourage new ideas.
- Invest in resources for research and development.
- Regularly review and assess entrepreneurial efforts for effectiveness.
Four Models of Corporate Entrepreneurship
The four types of corporate entrepreneurship are detailed below:
- The Opportunist model: This is the initial stage for entrepreneurial firms, concentrating on creating resources and centralising ownership. Every company starts as an opportunist. This model suits organisations that are willing to try new things and have a wide range of informal networks backing the official structure. However, for many businesses, this opportunist strategy is unreliable due to its inconsistent nature
- The Enabler model: In this model, the focus is on fostering new business ideas that contribute to both the company's betterment and the professional growth of its staff. The idea behind this model is that employees will come up with innovative concepts if they receive enough support. A well-structured enabler approach helps senior leaders to spot and develop talented, ambitious staff, shaping future company leaders. Unlike the opportunist model, the enabler model typically involves designated resources
- The Advocate model: The advocate model is about growing new businesses into larger companies. It involves guiding and aiding business units in exploring new opportunities and backing teams focused on corporate entrepreneurship. A key challenge is to identify executives who can drive business growth. Advocate organisations act as specialists in innovation, promoting corporate entrepreneurship in collaboration with various business units.
- The Producer model: Some firms encourage corporate entrepreneurship by setting up dedicated groups with substantial funding or significant influence over business units. The producer model employs concentrated authority, where a few owners hold the shares, and dedicated resources are used to support emerging projects, enhance collaboration, and develop new business segments. This model also seeks to foster cooperation between units, build potentially game-changing businesses, and create routes for executives to explore roles beyond their current units.
Types of corporate entrepreneurship
Corporate entrepreneurship can take several forms, depending on the organisational goals and industry demands. These include corporate venturing, intrapreneuring, organisation transformation, and industry rule-bending.
1. Corporate venturing
Corporate venturing involves a company creating or investing in external start-ups or new ventures. This enables businesses to expand their portfolios and tap into new markets. Key features include:
- Investing in new, innovative companies.
- Partnering with start-ups to explore emerging technologies.
- Creating subsidiaries or spin-offs for new ventures.
- Sharing resources with smaller companies to drive innovation.
- Providing funding and mentorship to start-ups.
- Diversifying company offerings.
- Generating new revenue streams through external ventures.
2. Intrapreneuring
Intrapreneuring allows employees within an organisation to act like entrepreneurs, developing new products or services. It fosters innovation and empowers employees. Key features include:
- Encouraging employees to develop entrepreneurial mindsets.
- Allowing experimentation within the corporate structure.
- Providing resources and support for internal projects.
- Rewarding innovation and creative problem-solving.
- Reducing bureaucratic barriers to innovation.
- Promoting ownership of new ideas among employees.
- Aligning employee goals with company growth objectives.
3. Organisation transformation
Organisation transformation refers to a strategic overhaul of a company's structure, processes, and culture to remain competitive. This can involve embracing new technologies or shifting focus to emerging markets. Key features include:
- Redesigning company structure for greater flexibility.
- Implementing new technologies or processes.
- Shifting the company’s focus towards future trends.
- Encouraging a culture of continuous improvement.
- Aligning business objectives with market demands.
- Enhancing collaboration between departments.
- Redefining roles and responsibilities within the company.
4. Industry rule-bending
Industry rule-bending involves companies challenging existing industry norms or regulations to gain a competitive advantage. This allows businesses to redefine market boundaries and create new opportunities. Key features include:
- Challenging traditional industry practices.
- Introducing disruptive technologies or business models.
- Creating new markets by defying industry rules.
- Encouraging risk-taking for market leadership.
- Engaging in strategic partnerships to push boundaries.
- Innovating in product development and service delivery.
- Shaping the future of industry standards.
Advantages and disadvantages of corporate entrepreneurship
Corporate entrepreneurship has its benefits and drawbacks, depending on the company’s readiness to embrace change and innovation. Here are the advantages and disadvantages:
Advantages:
- Encourages the development of new business ideas.
- Improves employee engagement and retention.
- Promotes growth by exploring untapped markets.
- Increases competitiveness through innovation.
- Enhances problem-solving and adaptability.
Disadvantages:
- Requires significant investment in resources.
- Can result in internal resistance to change.
- Involves risk and uncertainty.
- May lead to focus diversion from core business.
Examples of corporate entrepreneurship
Corporate entrepreneurship has been successfully implemented by numerous companies worldwide. Below are some examples:
- Google – Employees are encouraged to spend time on personal projects, which led to the development of Gmail and Google Maps.
- 3M – Known for its Post-it Notes, which were created by an employee through intrapreneuring.
- Intel – Invests in start-ups through Intel Capital to drive innovation.
- Apple – Continuously reinvents its products, pushing industry standards with each iteration.
- Unilever – Invests in sustainability-focused start-ups to diversify its portfolio.
How to become a corporate entrepreneur?
Becoming a corporate entrepreneur requires developing the skills and mindset necessary to innovate within a corporate environment. Here is how to become a successful entrepreneur in the corporate world:
- Understand the company’s goals and align your ideas with them.
- Develop a risk-taking mindset and be open to experimentation.
- Build strong relationships with leadership and decision-makers.
- Identify gaps in the market and propose solutions.
- Seek out mentorship and guidance from experienced professionals.
- Cultivate resilience to handle failure and setbacks.
- Continuously improve your skills and knowledge in entrepreneurship.
Conclusion
Corporate entrepreneurship provides businesses with the tools to innovate, remain competitive, and explore new business ideas. By fostering a culture of entrepreneurship within organisations, companies can unlock new growth opportunities. Whether through corporate venturing or intrapreneuring, corporate entrepreneurship creates a pathway for employees to contribute meaningfully to business success. If you are planning to explore corporate entrepreneurship, a business loan can help fund your ventures and bring innovative ideas to life.
