The Entrepreneurial Mind

Understanding the Entrepreneurial Perspective

UNIT 2 Corporate Entrepreneurial Mind-Set

At the end of the lesson, students should be able to:

o To understand the Entrepreneurial Mind-Set in organizations
o To illustrate the need for Entrepreneurial thinking in organizations
o To define the term Corporate Entrepreneurship
o To illustrate the interactive process of Corporate
Entrepreneurship

Engage:

Identify one (1) of your favorite shop or store, where you purchase goods or services regularly.
Then enumerate five (5) characteristics or features of the store/shop that attracted you to buy
regularly from them.

Name of store:
Characteristics: 3.
1. 4.
2. 5.

Explore:

Reading 3
10 Examples of Companies with Fantastic Cultures
Sujan Patel (Aug 6, 2015)
7. Google
It would almost seem wrong not to mention
Google on a list of companies with great culture.
Google has been synonymous with culture for years,
and sets the tone for many of the perks and benefits
startups are now known for. Free meals, employee
trips and parties, financial bonuses, open presentations by high-level executives, gyms, a dog-
friendly environment and so on. Googlers are known to be driven, talented and among the
best of the best.
As Google has grown and the organization has expanded and spread out, keeping a
uniform culture has proven difficult between headquarters and satellite offices, as well as
among the different departments within the company. The larger a company becomes, the

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more that culture has to reinvent itself to accommodate more employees and the need for
management.
While Google still gets stellar reviews for pay, perks and advancement, there are
also some employees who note growing pains that you’d expect from such a huge company,
including the stress associated with a competitive environment. Hiring and expecting the best
from employees can easily become a stressor if your culture doesn’t allow for good work-life
balance.

Takeaway: Even the best culture needs to revisit itself to meet a growing company’s team.
The most successful company culture leads to successful business, and that requires an
evolving culture that can grow with it.
https://www.entrepreneur.com/article/249174

Upon reading the article above, what do you think are the specific
practices of google that other companies can emulate to create a good
working environment? And why?
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Explain:

The resistance against flexibility, growth, and diversification can, in part, be overcome
by developing a spirit of entrepreneurship within the existing organization, called corporate
entrepreneurship. An increase in corporate entrepreneurship reflects an increase in
social, cultural, and business pressures toward entrepreneurial action.

Corporate entrepreneurship is most strongly reflected in entrepreneurial activities as

well as in top management orientations in organizations. These entrepreneurial endeavors
consist of the following four key elements: new business venturing, innovativeness, self-
renewal, and proactiveness.

New business venturing (sometimes called corporate venturing) refers to the creation
of a new business within an existing organization. These entrepreneurial activities consist of
creating something new of value either by redefining the company’s current products or
services, developing new markets, or forming more formally autonomous or
semiautonomous units or firms. Formations of new corporate ventures are the most salient
manifestations of corporate entrepreneurship. Organizational innovativeness refers to
product and service innovation, with an emphasis on development and innovation in
technology. It includes new product development, product improvements, and new
production methods and procedures. Self-renewal is the transformation of an organization

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through the renewal of the key ideas on which it is built. It has strategic and organizational
change connotations and includes a redefinition of the business concept, reorganization, and
the introduction of system-wide changes to increase innovation. Proactiveness includes
initiative and risk taking, as well as competitive aggressiveness and boldness, which are
particularly reflected in the orientations and activities of top management. A proactive
organization tends to take risks by conducting experiments; it also takes initiative and is bold
and aggressive in pursuing opportunities. Organizations with this proactive spirit attempt to
lead rather than follow competitors in such key business areas as the introduction of new
products or services, operating technologies, and administrative techniques.

MANAGERIAL VERSUS ENTREPRENEURIAL DECISION MAKING

Howard Stevenson, a professor at Harvard University, believes that entrepreneurship

represents a mode of managing an existing firm that is distinct from the way existing firms
are traditionally managed. Entrepreneurial management is distinct from traditional
management in terms of eight dimensions: (1) strategic orientation, (2) commitment to
opportunity, (3) commitment of resources, (4) control of resources, (5) management
structure, (6) reward philosophy, (7) growth orientation, and (8) entrepreneurial culture.

Strategic Orientation and Commitment to Opportunity

The first two factors that help distinguish more entrepreneurially managed firms from
those that are more traditionally managed relate to strategic issues—strategic orientation
and commitment to opportunity. An emphasis on strategy in developing a deeper
understanding of entrepreneurship at the firm level is not surprising because both
entrepreneurship and strategy have important implications for the performance of the firm.

Strategic orientation refers to those factors that are inputs into the formulation of the
firm’s strategy. We can think of it as the philosophy of the firm that drives its decision about
strategy; the way that it looks at the world and the way it looks at itself and these perceptions
are the driving factors behind the firm’s strategy. The strategy of entrepreneurial
management is driven by the presence or generation of opportunities for new entry and is
less concerned about the resources that may be required to pursue such opportunities.

Entrepreneurially and traditionally managed firms can be distinguished in terms of

their commitment to opportunity. More entrepreneurially managed firms have an
entrepreneurial orientation toward opportunity in that they are committed to taking action
on potential opportunities and therefore can pursue opportunities rapidly, making the most
of windows of opportunity. They also are able to withdraw their resources from a particular
opportunity and do so rapidly, such that if initial feedback from the pursuit of a potential
opportunity provides information suggesting that it might not be the right opportunity for the
firm, then management can “pull the plug,” minimizing losses from the initial pursuit.

Commitment of Resources and Control of Resources

It is important to note that entrepreneurs still care about the resources they must
commit to the pursuit of an opportunity, but they have an entrepreneurial orientation toward

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the commitment of resources that is focused on the opportunity. Thoughts of resources turn
more to how the firm can minimize the resources that would be required in the pursuit of a
particular opportunity. By minimizing the resources that the firm must invest to initially
pursue an opportunity, the amount of resources at risk if the opportunity does not “pan out”
is also minimized.

Over and above their commitment of resources, entrepreneurially and traditionally

managed firms differ in their control of resources. Entrepreneurially managed firms are less
concerned about the ownership of resources and more concerned about having access to
others’ resources, including financial capital, intellectual capital, skills, and competencies.
Entrepreneurially managed firms operate from the standpoint, “Why do I need to control
resources if I can access them from others?”

Access to resources is possible to the extent that the opportunity allows the firm to
effectively deploy others’ resources for the benefit of the entrepreneurial firm and the owner
of the invested resources. In contrast, traditionally managed firms focus on the ownership of
resources and the accumulation of further resources. They believe that if they control their
own resources then they are self-contained. For these firms, the control that comes with
ownership means that resources can be deployed more effectively for the benefit of the firm.

Management Structure and Reward Philosophy

An entrepreneurial orientation toward management structure is organic. That is, the

organizational structure has few layers of bureaucracy between top management and the
customer and typically has multiple informal communication channels. In this way,
entrepreneurially managed firms are able to capture and communicate more information
from the external environment and are sufficiently “fluid” to be able to take quick action
based on that information.

Firms are organized not only by their structures but also by their reward philosophy.
The entrepreneurially managed firm is focused on pursuing opportunities for new entry that
represent new value for the firm (and hopefully for others, including society as a whole). It is
not surprising then that entrepreneurially managed firms have an entrepreneurial philosophy
toward rewards that compensates employees based on their contribution toward the
discovery/generation and exploitation of opportunity.

Growth Orientation and Entrepreneurial Culture

In a firm that has an entrepreneurial orientation toward growth, there is a great desire
to expand the size of the firm at a rapid pace. Although traditionally managed firms may also
desire to grow, they prefer growth to be slow and at a steady pace. That is, they prefer a pace
of growth that is more “manageable” in that it does not “unsettle the firm” by putting at risk
the resources that the firm controls and thus does not put at risk the jobs and power of top
management.

Culture also distinguishes entrepreneurially and traditionally managed firms. A firm

with an entrepreneurial orientation toward culture encourages employees to generate ideas,

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experiment, and engage in other tasks that might produce creative output. Such output is
highly valued by entrepreneurial management because it is often the source of opportunities
for new entries. Opportunities are the focus of the entrepreneurially managed firm.

Evaluate:

Write an analysis on Reading 4, based on the following questions:

1. What were the ‘new corporate ventures’ SM adopted through the years?
2. Based on the explanation above, what do you think were the
Entrepreneurial Decisions they accomplished, which promoted their
success?
3. Use the case analysis format included in the course guide.
(Kindly follow the format provided in the assessment guide)
Reading 4
SM’s successful corporate life
By Edge Davao

INTRODUCING MODERN SHOPPING – By going regional, the SM Holdings Group wants to

succeed. The country’s largest shopping and retailing company is making a name for Filipino
enterprises. The SM Group is a retailing giant employing several thousand with annual
revenue of not less than US$2 billion in rough estimate.
Every businessman has its ups and downs, but company owner Henry Sy, Sr. is
considered a perennial winner in the complex retail and mall business. Like so many of Asia’s
successful entrepreneurs, the grand old man of the retail empire started almost from scratch.
He was a proprietor of a tiny store in Manila peddling cheap American shoes in the 1950s.
In the late 50s, Sy, Sr. branched out into department stores and supermarkets in the
1970s. But the biggest opportunity came in 1985 when the company opened its first supermall
in Quezon City that was then practically underdeveloped. Since that time there’s no stopping
the SM Group from expanding its business – purchasing vast track of lands to make way for
shopping malls, call centers and IT parks.
The company wants to target niche sectors especially the middle-class and at the same
time cultivating the grassroots. SM Group’s long-term plan is to establish full-service
commercial venues that offer shopping, entertainment and food under one roof. The
company’s air-conditioned business venues eventually introduced modern shopping in the
Philippines and changed the lifestyles of the people.
In span of ten years, the business empire continues to grow in size and sophistication.
SM Group now operates 46 modern shopping malls in the country, the latest of which is SM
City Gen.Santos and will be open to the public today, August 10, 2012. Also scheduled to open
next month is SM Lanang Premier located in a sprawling area along J.P.Laurel Avenue, Lanang,
Davao City. The company expects to open two or three more malls probably by next year.
It may be a big business somewhere else so the company entered the booming China
market few years back with the establishment of malls in Xiamen and more malls in the
mainland. SM also wants a piece of the real estate action and down the road has diversified
into commercial real estate and high-end tourist resorts. It hardly matters to the SM Group,
business, after all, is business.

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What’s really the secret for SM’s long and successful corporate life? As much as the
Sy’s value family tradition, their company has survived by being flexible. The Sy siblings
envision a different role for each of them in running the family’s business empire while
providing oversight to professional managers handling the day-to-day operations. The Sy
children had started to veer away from the tight-knit family business tradition after realizing
that this all-in-the-family management style is becoming outdated.
Unlike in the past where family has been very hands-on in running the business and
has to delegate more work, more responsibility of the department stores, malls and
supermarkets, the day-to-day management over the past years has been handed off to
recruits, and professionals right now even assist in financial decisions.
The patriarch of the SM Group is not getting any younger and his role will diminish
soon, but the family repertoire will continue and expand even more. His case is especially
sensitive because of his reputation as a brilliant and self-assured entrepreneur whose instinct
may be impossible to duplicate. Well, SM Group has become too large for just a family to
manage and right now the Sy siblings rely upon a modern management style approach.
Property consultants and economists have noted that the shopping mall boom led by
the SM Group raises not only consumer spending, but most importantly generates
employment and revenue for the government. Perhaps, it may not be too much to say that
what the SM Group is doing is not only to make money, but to create something exceptional
that contributes to society.
https://edgedavao.net/the-economy/2012/08/10/sms-successful-corporate-life/

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