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Book review: Corporate entrepreneurship and innovation

Grow From Within: Mastering Corporate Entrepreneurship and Innovation

By Robert Wolcott and Michael Lippitz

McGraw-Hill

$37.95

Got the entrepreneurial itch?

You might want to hold off on plans to quit your day job and turn your spare bedroom into world headquarters for Your Big Idea Inc.

If your current employer’s smart and forward thinking, you’ll get the greenlight to scratch your entrepreneurial itch and unleash your inner business builder at work.

Lots of us associate entrepreneurship with start-up companies. Or we believe that innovation is driven by a lone wolf entrepreneur who, while toiling away in their garage, has a eureka moment and brings a breakthrough innovation into our world on a shoestring budget and a maxed out credit card.

And we have a hard time believing that big, established companies tightly wrapped in bureaucratic red tape can ever be hotbeds for innovation.

That’s a dangerous misperception, warn authors Robert Wolcott and Michael Lippitz, who focus on corporate entrepreneurship and innovation in their work at the Kellogg School of Management at Northwestern University.

It’s a misperception that can severely limit the vision and activities of both corporate leaders and frontline staffers who dream of building careers and companies around entrepreneurship-led growth.

“This perceptive bias against large corporations’ contributions to our economy’s new business development success is partly due to a survivorship bias in our sample set: we see only the small companies that succeed,” say Wolcott and Lippitz. “We don’t see the thousands of independent entrepreneurial ventures that fail or languish for years on life support – what some venture capitalists refer to as the ‘walking dead’.”

Unlike start-ups, big and established enterprises have greater bench strength with experienced management teams who know the rules of the game. Established companies also have deeper pockets, with the capital to carry a new venture though its early stages. And big companies already have market access and credibility, which makes recruiting partners and early customers a whole lot easier.

Wolcott and Lippitz define corporate entrepreneurship as “the process by which teams within an established firm conceive, foster, launch and manage a new business that is distinct from but leverages the company’s current assets, markets and capabilities.”

Now, building new businesses inside existing businesses can be easier said than done for a host of reasons. In big companies, there’s a built-in bias against new things and a locked-in focus on efficiency and risk avoidance. There can be an internal bias and a real reluctance to seek out external knowledge or tap into networks beyond the company’s walls. And there’s something called concept myopia. “A company’s existing ways of operating pose the most powerful barrier to a comprehensive vision of what is possible and even of what might be required.”

There’s also a risk of losing strategic focus as big new ideas and bold new opportunities quickly pile up. “People charged with leading innovation initiatives can find themselves pulled in many directions. The most successful corporate entrepreneurs tend to stay focused on the right objectives without losing the big picture.”

While they need to be protected from core business pressures, insulation can quickly turn into isolation and misalignment with strategic priorities. “An isolated corporate entrepreneurship team will find it difficult, if not impossible, to move a new business out of incubation into an appropriate line of business.”

And then there’s the culture change trap. “Many dedicated corporate entrepreneurship teams end up with the responsibility, either intentionally or by accretion, for building a culture of innovation companywide,” say Wolcott and Lipptiz. “What team, no matter how dynamic, innovative and assertive, can transform a company’s culture on its own.”

Culture change has to start and be constantly driven from the top of the house. When it comes to entrepreneurship and innovation, your CEO and senior management team has to walk the talk. If they’re all hat and no cattle, all sizzle and no steak, your culture isn’t going to change. “If the top group fails to model innovative behaviours and make an ongoing, credible case for innovation, real culture change will be a losing game.”

According to Wolcott and Lippitz, corporate entrepreneurship and innovation is essentially a new business design challenge. To meet that challenge, they offer up four models for corporate entrepreneurship and something called the Innovation Radar. “The Radar provides a simple tool for helping corporate entrepreneurs put all of the questions on the table up front, rather than stumbling on them later. Much like a compass, the Radar consists of four foundational dimensions that serve as business system anchors: the customers a business serves, the offerings it creates, the processes it employs and the points of presence it uses to take its offerings to market.”

According to the authors, our best shot at building a better world is through a fundamentally sound, vibrant entrepreneurial sector and big companies have a big role to play. “Entrepreneurship enables people to envision and create the future, something that is perhaps the fundamental path to a prosperous world. It is everyone’s responsibility – business, government, academia, and nonprofits – to create the context in which people can discover and manifest innovative solutions for human needs and desires.”

The good news is you don’t have to quit your day job, stock up on IKEA home office furniture and remortgage your house to imagine and implement those innovative solutions. Your employer may be ready, willing and able to unlock and unleash your entrepreneurial spirit.

Book review: Freedom Inc and transforming from how and why organizations

NOTE — This is a really good book — the chapter on "how" and "why" organizations alone is worth the read. "How" organizations spell out exactly what employees should do. Not surprisingly, no one makes decisions and the CEO winds up playing the part of surrogate parent and referee. How organizations also tend to manage to the 3 per cent — focusing on the handful of nonperformers who go rogue and make it their life mission to break every rule. So employers ratchet up enforcement that doesn't faze the 3 per cent and leaves the only 97 per cent of the workforce demoralized and disengaged. "Why" organizations instead offer up a clear, concise and compelling strategic vision that filters and frames all decisions and actions. If an action advances the strategic vision, it's worth doing. And trust that frontline staff who do the heavy lifting will do the right thing.

Freedom Inc. Free Your Employees and Let Them Lead Your Business to Higher Productivity, Porifts and Growth

By Brian Carney and Isaac Getz

A customer’s waiting in line to rent a car at O’Hare International and losing his patience. The trainee behind the Avis service counter is struggling to get the job done.

"Will you please hurry up," says the customer. "I’m in a hurry."

"Give me a break, I’m a trainee," says the overwhelmed trainee.

"Would you tell me how on earth a training program could pass somebody as clumsy and as ignorant as you seem to be?" asks the customer.

"Well, if you want to hear something really sick, I’m the president of the company," says Robert Townsend.

When Townsend took the helm of Avis back in 1962, the sleepy company hadn’t turned a profit in 13 years. To turn the company around, Townsend knew he had to change the culture. So he started with his senior management team. His executives had come down with severe case of us versus them. "Us being the geniuses at headquarters and them being the people in the field in the red jackets who were renting cars and paying our salaries and doing an enormous amount of hard work," says Townsend.

So at a Monday senior management meeting, Townsend casually mentioned that they were enrolling in the Avis school for rental agents at O’Hare. Classes started next week. Enrolment was optional although their bonus compensation plans were tied to earning a passing grade. "There were great screams of rage from these busy executive geniuses," recalled Townsend.

Together, they stayed at a motel by the Chicago airport. Wearing big "I’m a trainee" buttons and red jackets, they served customers in the morning. Studied in the afternoon. Wrote tests and did homework at night. And, in the process, gained a new appreciation for frontline staff.

"When we got through that course we were wearing red jackets at headquarters," says Townsend. "The us and them thing was history."

But that wasn’t all. Based on their personal experience at trainee school, Townsend and his leadership team made it their personal mission to eliminate every work practice that prevented agents from doing their best for customers. Townsend constantly asked frontline staff what made them mad, what took too long, what cost too much, what was too complicated, and what was just plain dumb. Townsend then acted on what he heard and by 1965 Avis was one of the fastest-growing companies in the U.S.

"In just three years he liberated Avis and unleashed the initiative and action of its thousands of employees," say authors and Wall Street Journal editor Brian Carney and ESCP Europe Business School professor Isaac Getz. "Townsend and his managers got busy removing the ropes and barnacles that prevented people from showing how fast and how far they could go in their boat. This freed them, too, to adjust their sails on the fly when the wind changed."

Liberating leaders like Townsend turn "how" companies into "why" companies. Instead of telling employees exactly how to do their work with a mountain of policies, procedure, rules, regulations and an army of policing command and control managers, these crusading CEOs ask a single question. Why are we doing the work that we’re doing? And does our work align with our strategic priorities? Asking that question frees up and unleashes the individual initiative and risk-taking instincts of every employee. If you want more innovation, more productivity and more engagement, liberate your people.

And according to Carney and Getz, here’s how you do it.

First, stop telling, start listening and strip away all the symbols and practices that prevent your people from feeling intrinsically equal. Executive privilege is disengaging.

Second, openly and actively share your vision for the company so everyone owns it. "Getting people to emotionally own a corporate vision is a long – indeed, never-ending – task for a liberating leader," say the authors. "Fortunately, in freedom-based companies the vision is always world-class, which facilities its acceptance."

Third, stop trying to motivate staff and instead create a work environment where staff will motivate themselves. "Provide the climate and proper nourishment and let the people grow themselves," says Townsend, the CEO who turned around Avis in the 1960s. "They’ll amaze you."

And lastly, stay alert. Your number one job as a liberation leader is to constantly define, defend and champion the culture and core values of our company. External vigilance is the price of freedom.

The final word on freedom at work goes to William L. McKnight, the legendary CEO of 3M. "If you put fences around people, you get sheep," said McKnight back in 1924. "Give people the room they need."