Managing

Innovation and
Fostering
Corporate
Entrepreneurship

Chapter Twelve

McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
 Learning Objectives
After reading this chapter, you should have a
good understanding of:
LO12.1 The importance of implementing strategies
and practices that foster innovation.
LO12.2 The challenges and pitfalls of managing
corporate innovation processes.
LO12.3 How corporations use new venture teams,
business incubators, and product champions
to create an internal environment and culture
that promote entrepreneurial development.
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 Learning Objectives (cont.)
LO12.4 How corporate entrepreneurship achieves
both financial goals and strategic goals.
LO12.5 The benefits and potential drawbacks of
real options analysis in making resource
deployment decisions in corporate
entrepreneurship contexts.
LO12.6 How an entrepreneurial orientation can
enhance a firm’s efforts to develop promising
corporate venture initiatives.

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 Managing Innovation
Innovation
 using new knowledge to transform
organizational processes or create
commercially viable products and services
 Latest technology, results of experiments,
creative insights,
competitive information

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 Types of Innovation
Sustaining Disruptive
innovations innovations
 extend sales in an  overturn markets
existing market, by providing an
usually by enabling altogether new
new products or approach to
services to be sold meeting customer
at higher margins. needs.

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Challenges of Innovation

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 Managing the Pace of Innovation
Incremental Radical innovation
innovation  Typically long term
 May be six months – 10 years or more
to two years  Often involves
 May use a open-ended
milestone approach experimentation
driven by goals and and time-
deadlines consuming
mistakes

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 Rules for Fostering Innovation
Exhibit 12.3

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 Focused Approaches to Corporate
Entrepreneurship
New venture group
 a group of individuals, or a division within a
corporation, that identifies, evaluates, and
cultivates venture opportunities.

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Focused Approaches to Corporate
Entrepreneurship
Business incubator
 supports and nurtures
fledgling
entrepreneurial
ventures until they can
thrive on their own as
stand-alone
businesses.

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 Entrepreneurial Culture
Culture of entrepreneurship
 Search for venture opportunities permeates
every part of the organization
 Strategic leaders and the culture generate a
strong impetus to innovate, take risks and
seek out new venture opportunities

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 Product Champions
Product (or project) champions
 Bring entrepreneurial ideas forward
 Identify what kind of market exists for the
product or service
 Find resources to support the venture
 Promote the venture concept to upper
management

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 Measuring the Success of Corporate
Entrepreneurship Activities
Exit champions
 individual working within a corporation who is
willing to question the viability of a venture
project by demanding hard evidence of
venture success and challenging the belief
system that carries a venture forward.

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 Real Options Analysis
Real options analysis
 for each investment step the investor has the
option of (a) investing additional funds to
grow or accelerate, (b) delaying, (c) shrinking
the scale of, or (d) abandoning the activity.

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 Dimensions of Entrepreneurial
Orientation
Exhibit 12.4

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