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IBU5COV Corporate Venturing

IBU5COV Corporate Venturing Module 5: Creating entrepreneurial organisations (Part 1: Strategy and Structure) Chapter 8 Morris et al. (2011) Corporate Strategy and Entrepreneurship Prof. Alex Maritz & Dr. Anton de Waal La Trobe Business School 2017.

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IBU5COV Corporate Venturing

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  1. IBU5COV Corporate Venturing • Module 5: Creating entrepreneurial organisations (Part 1: Strategy and Structure) • Chapter 8 Morris et al. (2011) • Corporate Strategy and Entrepreneurship • Prof. Alex Maritz & Dr. Anton de Waal • La Trobe Business School • 2017

  2. Dominant Logic Fitting the Competitive Landscape? • Dominant Logic refers to the way in which managers conceptualize the business and make critical resource allocation decisions. • The dominant logic that is optimal for the firm in today’s environment may well be inappropriate for the environment that will exist five years hence. • As dominant logic, entrepreneurship promotes strategic agility, flexibility, creativity, and continuous innovation throughout the firm.

  3. Integrating Entrepreneurship with Strategy The integration of entrepreneurship with strategy has two aspects: • Entrepreneurial Strategy • The first of these is concerned with applying creativity and entrepreneurial thinking to the development of a core strategy for the firm • Strategy for Entrepreneurship • The second aspect concerns the need to develop a strategy for the entrepreneurial activities of the firm

  4. Developing a Strategy for Entrepreneurship Where does the firm want to be in the entrepreneurial grid? To what extent is the entrepreneurial emphasis in the company that of growing new business and starting new ventures outside the mainstream of the firm vs. transforming the existing enterprise and its internal operations into a more entrepreneurial environment? In what areas does the firm want to be an innovation leader vs. an innovation follower vis-a-vis the industry? In what areas of the firm is management looking for higher vs. lower levels of entrepreneurial activity? What is the relative importance over the next three years of product vs. service vs. process innovation? To what extent is innovation expected to come from senior management, middle management, or first-level management?

  5. Elements of Technology Strategy Technology choices – e.g., analogue or digital electronics technology? Technology sources – e.g., develop internally or acquire from external sources? Competitive timing – e.g., be a technology pioneer or follower? Technology investment level – e.g., level of R&D funding? Technology policies – e.g., criteria for evaluating R&D project proposals? R&D focus – e.g., product development and engineering, applied research, or basic research? Model of technological innovation – e.g., is the firm product-driven, market-driven, technology-driven?

  6. Investment in technology Supports your core competitive advantage?* Become Pioneer YES Aim for Parity YES Do you need it? NO Technology is an enabler not an end in itself. It accelerates the journey but does not set the direction NO Ignoreit *Source: Collins, J (2001), Good to Great: Why some companies make the leap and others don’t, William Collins

  7. Technology Limits and Platforms Sustaining Technologies – maintains a rate of improvement, giving customers more or better in the attributes, cannot get much better • Speed, quality, size Disruptive Technologies – introduces a different sets of attributes than ones customers historically value • Introduction of microwave oven • Creates new markets or new applications

  8. Technology-Push Versus Market-Pull Technology-push – employees within the firm (usually technically qualified engineers or scientists) see a technical possibility and strive to capitalize on it. These individuals see a new way in which a technology might be applied. Market-pull – innovations start with the customer and are typically driven by marketing people. Customers are often the source of the new idea.

  9. Key Strategic Concepts: Entrepreneurship as the Driver Strategic Advantage • Competitive advantage – “an enduring value differential between the products or services of one organization and those of its competitors in the minds of customers” • Innovation is the key to developing and successfully exploiting competitive advantages • The challenge is to develop innovation as a core competence of the firm. Moreover, the firm’s strategy for entrepreneurship serves to stimulate such innovation • Strategic Positioning • …is concerned with how the firm wants to be perceived in the marketplace • Entrepreneurial strategy is all about positioning. It is a process of perceiving new positions that attract customers from established ones or draw new customers into the market • Effective strategic positioning is critical for competitive advantage

  10. Key Strategic Concepts: Entrepreneurship as the Driver Strategic Flexibility and Adaptation • Strategic flexibility involves a willingness to rethink continuously and make adjustments to the firm’s strategies, action plans, and resource allocations and to the company structure, culture, and managerial systems • The following 5 factors contribute to building strategic leadership: • A unique set of dynamic core competencies • Creative approaches to human capital • Effective incorporation of new and emerging technologies • Strategic alliances and a global market presence • Company structures that are flattened and cultures that stress learning and accountability for innovation

  11. Build dynamic core competencies ExerciseStrategicLeadership Strategicflexibility • Focus and develop human capital • Contingency workers and outsourcing • Developing employee skills • Effectively use new technologies • Manufacturing technologies • Information technologies Competitiveadvantage • Engage in valuable strategies • Exploit global markets • Use cooperative strategies • Develop new organization structure and culture • Horizontal organization • Learning and innovative culture • Manage as a bundle of assets

  12. Entrepreneurial Strategy: Contributing Factors All of these factors may involve changing the corporate culture • Developing an entrepreneurial vision • Increasing the perception of opportunity • Institutionalizing change • Instilling the desire to be innovative • Investing in people’s ideas • Sharing risks and rewards with employees • Recognizing the critical importance of failure

  13. Let’s have a culture like Google’s! Deal and Kennedy published “Corporate Cultures: The rites and rituals of corporate life” in 1982. It attracted a lot of interest from managers who called the authors in to consult to their businesses. The most common request? “We want to have a culture like XYZ company”

  14. Unfortunately… I wouldn’t start from here if I were you… But starting from where you are is the only option 

  15. Situation analysis • (OT) What can we expect to face from the external environment? • Opportunities? • Threats? • (SW) What is our corporate entrepreneurship health like? Strengths and weaknesses compared to our rivals • Entrepreneurial intensity? • Corporate Entrepreneurship Climate • Given these S, W, O, Ts what should our Entrepreneurshipstrategy be? • How should the company use its entrepreneurial strengths to pursue opportunities? • How can the company address its entrepreneurial weaknesses? • How should it respond to potential threats? • Etc

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