Corporate Entrepreneurship

Driving Corporate Innovation and Entrepreneurship: An Integral Perspective

Door dr. Ferdinand Jaspers, drs. Jorg Lescher en drs. Jeroen Veenenbos

Het opbouwen en ondernemend houden van een organisatie vergt zorg en motivatie. Ondernemerschap heeft binnen een organisatie niet één bron, maar kan door de hele organisatie op formele en informele wijze gestimuleerd worden. Op welke manieren uit zich dit in een organisatie, en hoe kan jij zelf aan het ondernemerschap van je organisatie bijdragen?

Ferdinand Jaspers, Jorg Lescher en Jeroen Veenenbos van Het Erasmus Centre for Entrepreneurship (ECE) bespreken in hun artikel ‘Driving Corporate Innovation and Entrepreneurship: an Integral Perspective’ het ECE pyramide model, en leggen aan de hand van dat model vier essentiële capaciteiten uit die een organisatie nodig heeft om ondernemend te blijven, en de manier waarop deze zich tot elkaar verhouden.

Benieuwd naar hoe je jouw organisatie kan versterken? Lees het volledige artikel hieronder.

Deze publicatie is in het kader van de How to Get There Summit van 17 november 2016 tot stand gekomen. Dit artikel is onderdeel van een serie publicaties binnen het thema Innovatie & Ondernemerschap over Corporate Entrepreneurship van SMO, powered by DutchCE.

Driving Corporate Innovation and Entrepreneurship:
An Integral Perspective

As outlined in the article ‘Ambidextrous Organisations’, by prof. dr. Justin Jansen, research shows that corporate survival and renewal depend greatly on ambidexterity: an organisation’s capability to simultaneously execute existing business models and build new business models. In this article, we firstly provide an integrative perspective on corporate entrepreneurship and ambidexterity. To this end we introduce a pyramid model composed of four distinct yet related capabilities. Secondly, informed by the pyramid model, we discuss the importance of so-called innovation drivers, i.e. those professionals who formally or informally build and maintain entrepreneurial capabilities from within their corporate organisations. We conclude this article with remarks for corporate organisations on some specific areas of attention for building and maintaining a sustainable capacity for corporate innovation and entrepreneurship.

An integral perspective on corporate entrepreneurship

At the Erasmus Centre for Entrepreneurship (ECE) we approach corporate entrepreneurship from an integral perspective based on four distinct yet interrelated capabilities: goal-setting, portfolio management, business modelling, and opportunity development. When these are positioned in a pyramid model (Figure 1), it becomes possible to explain their importance and their interrelationships. We have found this pyramid to be a useful framework in working with corporates to help develop their corporate entrepreneurship competence. Firstly, the pyramid serves as a simple means of communicating these four essential capabilities and their interrelationships to different actors within the corporation. Secondly, it can be used as an evidence-based tool for analysing and evaluating the entrepreneurial competence of organisations and to propose possible interventions. We briefly describe the four layers below as well as their interrelationships.

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Figure 1. The ECE Pyramid Model of corporate entrepreneurship

Opportunity Development

Starting from the bottom of the pyramid, organisations need to be competent in generating and managing ideas and exploring and building opportunities. Opportunities can arise from many different sources, such as fundamental research, regulatory changes, customer requests, market research, outright competitor imitation, etc. In the end, even for highly exploratory initiatives, the goal is to build insights and to arrive at a sufficient level of confidence that the specific needs of one or more segments can be served with a desirable value proposition.

Since entrepreneurial corporations are continuously executing multiple projects, individuals and teams need to develop proficiency in executing innovation projects, typically using a range of innovation tools and processes. This is a complex challenge given the many different types of innovation, for instance in terms of the level of market and/or technological uncertainty involved. Successful corporate innovators explicitly take such differences into account.

Business Modelling

The second level of the pyramid involves the organisation’s business modelling capability. It reflects the notion that only the most promising propositions should be complemented with viable business models. Like opportunity development, business modelling is a search and development process, potentially full of pivots and iterations. Ideally, organisations develop business models that are not only repeatable, but also scalable. Generally speaking, scaling and acceleration only become smart to do when sufficient confidence exists about a business model’s feasibility and its business case. Furthermore, choices at the level of the business model tend to determine the disruptive potential of a new business opportunity, much more so than its technological novelty. Organisations are advised to develop and recycle individuals and teams who are proficient in the specific activity of business modelling.

Portfolio Management

The third layer of the pyramid concerns the organisation’s competence in portfolio management. In our view, portfolio management reflects the governance of the organisation’s capability to grow and renew itself. As such, it’s fundamental to the ambidextrous capability of the organisation as discussed in ‘Ambidextrous Organisations’. Portfolio management relates to the way in which resources are allocated across different types of opportunities, ranging from incremental opportunities around the extension or operational excellence of current business models, to the exploration of radically new technologies, consumer behaviours and business models. Portfolio management is by definition an ongoing process of monitoring the development of opportunities over time. Given the different possible types and stages of opportunities and business models, organisations are advised to manage different parts of the portfolio using different metrics and milestones, possibly in different meetings by different teams. Portfolio management, inevitably, also involves decision-making about the continuation and termination of projects.

In many ways, portfolio management is the level in the pyramid where the organisation’s strategy and culture manifests itself. It reflects how priorities are set and how and why decisions are made. It not only shows the organisation’s sheer commitment to growth and entrepreneurship, but also the specific directions and areas in which it does and does not see its future. In terms of organisational structure, this is also where decisions are made about moving projects to or from specific business units. On a related note, it reflects the organisation’s open innovation strategy, for instance with regard to partnering up with external parties or spinning off projects. This also shows that the pyramid itself operates within a complex context of external forces and stakeholders. All in all, portfolio management is an important determinant of the speed, quality and efficiency of opportunity development and business modelling projects. Furthermore, it’s important to understand that the above portfolio management activities are sometimes based on informal processes and a common, tacit understanding among only a small group of people.

Goal setting

Goal setting, at the top of the pyramid, reflects the important role of senior management in providing direction, setting expectations, integrating different parts of the corporation (e.g. exploitation and exploration), and inspiring and properly stretching the organisation for growth. On the one hand, setting goals provides important guidance to individuals and teams involved in generating opportunities and in developing business models. For instance, given specific themes, trends, and organisational purposes, creativity and resources are efficiently channelled to explore and build new businesses that seem to best fit the specified goals.

On the other hand, at the level of portfolio management, top-level goals can be translated into more specific objectives for different parts of the portfolio. Ideally, this results in a consistent portfolio that contributes over time to the desired level of growth and renewal of the organisation. Finally, seen from a slightly broader perspective, a relevant question related to the top of the pyramid involves the consistency of top management behaviour and language with respect to the formally specified goals and visions. Many senior managers are aware of this and receive explicit training and coaching in communicating their decision-making and leadership style, thereby contributing to the alignment of capabilities across the pyramid.

Innovation Drivers

To build and maintain an organisation’s capability for growth, organisations need knowledgeable, capable and motivated people and teams. From a leadership and personal development perspective, the pyramid introduced above obviously covers senior management with respect to goal setting and innovation teams and individuals regarding the execution of opportunity development and business modelling projects. However, for the purposes of building and maintaining a capability for growth and renewal across all layers of the pyramid, we wish to stress the important role in many organisations of what we label innovation drivers. Innovation drivers are employees who – formally, but very often also informally – build and maintain the company’s entrepreneurship competence from within the organisation.

Innovation drivers typically support individuals and teams in the execution of opportunity development and business modelling projects. Depending on the context they can do this as coaches, mentors or workshop facilitators. However, innovation drivers can fulfill many different roles. For instance, innovation drivers can be intrapreneurs who develop innovation programmes such as hackathons and accelerators. They might build social networks across organisational units, thereby stimulating the combination of different ideas, perspectives and resources. They might also scout for best practices and possible partners outside of the organisation. In many organisations they help to break the barriers for innovation and they serve as a sounding board to senior management. All in all, innovation drivers are vital ambassadors of the firm’s entrepreneurial culture and strategy. Moreover, through their actions, expertise and social networks, they also have a strong influence on the development of the organisation’s mindset and capability for growth.

For a variety of reasons, such as technological developments, increased cross-industry competition, and pressure from rapidly growing start-ups, corporations across industries are developing an increased sense of urgency with regard to building ambidextrous organisations. This has triggered many organisations to invest substantially in the training of large numbers of employees and teams in the application of innovation tools and techniques, such as design thinking, lean start-up, and job-to-be-done market segmentation. This is an important step in building the required capability and mindset for executing innovation projects. However, to deeply master such innovation tools and techniques, repetition during on-the-job projects is required. Here, by supporting individuals and teams, innovation drivers play a pivotal role in accelerating the development of a sustainable level of innovation excellence.

However, the development of capabilities in the bottom half of the pyramid is far from sufficient to increase the likelihood of long-term growth and survival. As the pyramid model reflects, it’s important to position opportunity development and business modelling within the firm’s portfolio of growth opportunities and to connect them to the organisation’s overall goals and values. Here too, innovation drivers have an important role to play. Unlike temporary external trainers and consultants, seasoned and committed innovation drivers are able to support teams in coming to understand and infuse the firm’s values, its growth objectives, and also its – sometimes informal and tacit – portfolio management processes. As such, innovation drivers can help to eliminate inefficiencies not only from individual, ‘lean’ internal start-ups, but also from the larger corporate entrepreneurship capability. To summarise, innovation drivers can play a vital role in establishing and maintaining alignment across the four layers of the pyramid, and therefore ambidexterity.

Concluding remarks

The pyramid model introduced in this article provides an integral perspective on four vital capabilities that corporations need in order to be able to renew themselves and grow over time. At the top of the pyramid, the importance of top management leadership is recognised for the purpose of setting goals and providing direction regarding the ambidextrous ambitions of the organisation. The bottom of the pyramid shows that organisations need the capacity to develop individual propositions and business models. In between, portfolio management involves the capability to connect the top and the bottom of the pyramid over time. From the understanding we’ve gained from dozens of corporations across Europe, we believe firstly that it’s especially at this level of the pyramid where important opportunities for improvement exist. Although a detailed analysis is beyond the scope of this article, we find that the vital, integrative role of portfolio management is often ill-understood, and therefore underdeveloped. By implication, this limits an organisation’s level of ambidexterity and therefore the likelihood of successful growth and renewal.

Our second finding relates to the role of innovation drivers. As explained above, these corporate professionals can fulfil multiple integrative roles in building, guiding and fostering the many different entrepreneurial processes across the pyramid model. However, many organisations fail to effectively utilise the possible benefits of these innovation professionals. Since innovation drivers often start and fulfil their roles informally, their work often goes unnoticed by senior management or performance management systems. For instance, organisations typically lack an understanding of the vital social networks that these individuals help to establish within the organisation. As a result, organisations may fail to provide innovation drivers with the support that they need to increase their impact.

Possible support for innovation drivers can take many forms, such as additional time and resources to do their work, recognition and visible top management support, and training and personal development. As many organisations embark on a systemic organisational transformation towards ambidexterity, we advise them to recognise and empower the maturing corporate profession of innovation drivers. Given the potential of innovation drivers to represent the organisation’s values and to communicate the ambition for ambidexterity, it’s important to secure their commitment to your organisation.

Deze publicatie is in het kader van de How to Get There Summit van 17 november 2016 tot stand gekomen. Meer informatie op HTGT.nl. Dit artikel is onderdeel van een serie publicaties binnen het thema Innovatie & Ondernemerschap over Corporate Entrepreneurship van SMO, powered by DutchCE.

Dr. Ferdinand Jaspers is Adjunct Professor of Entrepreneurship at Rotterdam School of Management (RSM) and Programme Director at Erasmus Centre for Entrepreneurship (ECE). He is also a visiting professor in the MBA programme at EMLYON Business School. His teaching and training activities focus on executive education. In particular, he facilitates masterclasses and workshops on corporate entrepreneurship, new business development, and entrepreneurial start-up and growth. In his work, Ferdinand adopts an integral perspective on entrepreneurship. He holds a Ph.D. in technology and innovation management from Rotterdam School of Management.

 

Jorg Lescher MSc is responsible for various innovation- and (corporate) entrepreneurship projects within the Erasmus Centre for Entrepreneurship (ECE). He develops and runs corporate projects for varying customers, originating from amongst others the maritime, law and financial sectors. As a industrial and organisational psychologist he focusses on the human and cultural (change)factors within his projects. He also teaches bachelor- and masterstudents on the topic of (corporate) entrepreneurship and he coaches startups on their team-dynamics within the PortXL-accelerator programme. He studied at London School of Economics and graduated from the Radboud University Nijmegen (including Honours programme).

 

Jeroen Veenenbos is responsible for Education and Business Development at the Erasmus Centre for Entrepreneurship. He runs ECE’s startup programme, Get Started, which has helped 250+ early-stage entrepreneurs turn their ideas into businesses in 10 weeks. Jeroen is also a mentor of the PortXL accelerator programme. Besides his work with startups, he helps existing organisations design and speed up internal innovation efforts. He trains professionals from companies such as ING and Eneco in the areas of customer discovery and validation, business modelling and lean startup methodology. Jeroen graduated cum laude from the Rotterdam School of Management in Organisational Change & Consulting.

 

Deze publicatie is in het kader van de How to Get There Summit van 17 november 2016 tot stand gekomen. Meer informatie op HTGT.nl. Dit artikel is onderdeel van een serie publicaties binnen het thema Innovatie & Ondernemerschap over Corporate Entrepreneurship van SMO, powered by DutchCE.