Chapter 11

Exploiting
Entrepreneurship and
New Ventures
Managing Innovation: Integrating Technological,
Market and Organizational Change, 5th Edition
Joe Tidd and John Bessant
ISBN: 978-0-470-99810-6

Overview
Explore how firms develop and commercialize
technologies, products and businesses outside their
existing strategy and core competencies. We will
discuss the role and management of internal
corporate ventures and new ventures in the creation
and execution of new technologies, products and
businesses, specifically:
1. internal corporate ventures, or intrapreneurship
2. new ventures and spin-out firms
3. factors which influence success and growth.

Copyright Houghton
Mifflin Company. All
rights reserved.

10 - 2

What is a Venture?
Ventures, broadly defined, are a range of different ways of
developing innovations, alternative to conventional internal
processes for new product or service development.

Figure 11.1

What is a Venture? (Cont)

Figure 11.1 suggests a range of venture types that can be
used in different contexts.
1. Corporate ventures are likely to be most appropriate where
the organization needs to exploit some internal
competencies and retain a high degree of control over the
business.
2. Joint ventures and alliances involve working with external
partners, discussed in the previous chapter, will demand
some release of control and autonomy, but in return
introduce the additional competencies of the partners.
3. Spin-out or new venture businesses are the extreme case,
often necessary where there is little relatedness between
the core competencies and new venture business.

Profile of a Venture Champion

The creation of a venture is the interaction of individual skills and
disposition and the technological and market characteristics. Thus
the background, psychological profile and work and technical
experience of a technical entrepreneur interact to contribute to
the decision to create an NTBF (Figure 11.2).

Figure 11.2

Venture Business Plan

Funding
New ventures are different
from the relatively simple
assessment
of
new
products, as there is often
no
marketable
product
available before or shortly
after
formation.
Studies
identify stages of
development, each having
different
financial
requirements:
1. Initial
financing
for
launch.
2. Second-round
financing
for
initial
development
and
growth.

Figure
11.3

Internal Corporate Venturing

The term corporate venturing or internal corporate venturing,
sometimes confusingly referred to as intrapreneurship, to
distinguish it from venturing which takes the form of
investments in external business. A corporate venture differs
from conventional R&D and product development activities in
its objectives and organization. The former seeks to exploit
existing technological and market competencies, whereas the
primary function of a new venture is to develop new
competencies.

Expanding Beyond a Single Industry

Advantages of staying in a single industry
Focus resources and capabilities on competing
successfully in one area
Focus on what the company knows and does
best

Disadvantages of being in a single industry

Danger of the industry declining
Missing the opportunity to leverage resources
and capabilities to other activities
Resting on laurels and not continually learning

Copyright Houghton
Mifflin Company. All
rights reserved.

10 - 8

There are a wide range of motives

for establishing corporate ventures:

Grow the business.

Exploit underutilized resources.
Introduce pressure on internal suppliers.
Divest non-core activities.
Satisfy managers' ambitions.
Spread the risk and cost of product development.
Combat cyclical demands of mainstream activities.
Learn about the process of venturing.
Diversify the business.
Develop new technological or market competencies.

Copyright Houghton
Mifflin Company. All
rights reserved.

10 - 9

Managing Corporate Ventures

Definition Stages
1. Establish an environment that encourages the generation
of new ideas and the identification of new opportunities,
and establish a process for managing entrepreneurial
activity.
2. Select and evaluate opportunities for new ventures, and
select managers to implement the venturing programme.
3. Develop a business plan for the new venture, decide the
best location and organization of the venture and begin
operations.
Development Stages
4. Monitor the development of the venture and venturing
process.
5. Champion the new venture as it grows and becomes
institutionalized within the corporation.
6. Learn from experience in order to improve the overall

Managing Corporate Ventures

Assessing the Venture
In assessing any venture it is essential to specify the purpose
and criteria for success in the new market, business or
technology. Ultimately the style of assessment adopted will
depend on the size of the potential venture, the abilities of the
people who currently understand the product and whether
new partners or managers are expected to be introduced
following assessment.