Critical Analysis Of Real Life Cases Of Corporate Entrepreneurship

Nature of Creative Thinking and Innovation

Question:

Write a Research Paper with a Critical Analysis of real life Cases of Corporate Entrepreneurship.

The essay is based on the subject entrepreneurship and innovation. Corporate entrepreneurship is the process of creating the new organisation or innovation in association with the existing organization and group of people (Kuratko et al. 2015). In any entrepreneurial activity, innovation is the intrinsic element. Creative thinking is correlated with the innovation, especially the ideas generation stage of the innovation process (Kuratko and Audretsch 2013). If an organisation defines innovation as critical for long-term success, or rewards individual innovation then it is considered as best practice. There are many barriers to innovation The essay explores the nature of creative thinking. A number of strategies are offered, that leaders may find helpful in their efforts to build a more creative and innovative enterprise. The essay is focused on critical analysis of research demonstrating depth and breadth of understanding of key concepts regarding innovation and corporate entrepreneurship.  The line of enquiry used for this purpose is- “what are some of the barriers to corporate entrepreneurship being sustained in an organisation, and what kinds of strategies help to overcome those barriers?’” The essay critically analyses the real life cases of the corporate entrepreneurship in this regard as an example.  

Those organisations that were more creative and innovative are the ones that have succeeded in the long haul. These organisations use innovative ideas to develop unique product, application and service. For large companies, it is challenging to create new business. Cost cutting and downsizing have been problems since years. It is not an option to lose success. It is imperative from the advancement in technology and aging product portfolios that companies must create innovative business develop it and sustain the innovation. However, corporate entrepreneurship is risky job. There, are many barriers to the corporate entrepreneurship being sustained in the new organisation.

Well established businesses when start their new ventures or business face the problem of two cultures. With the existing operations bulk of revenue is generated due to tuned support system in the organisation. In the well established organisations, efficiency, stability and incremental growth are the main executive goals. It is easy to predict the operating environment.  This culture is different from the new business. New business may plan to offer cutting edging products. However, it may happen that in market place their technologies are not widely diffused and they lack hard data. It is common to have large errors as new businesses are not well defined and financial forecasts are undependable (Davidsson 2015). New ventures always require innovation which comes from fresh ideas and mavericks. Instead most leaders are trapped in unconventional thinking for instance, media companies distastes blogs.  Too many radical ideas are foolish argued. According to Kuratko et al. (2015) it is challenging to fit between the old and new business. It holds true  in regards to human resource management and budgeting. Some business design HR system in manner that is well suited to the well developed business. New corporations require entrepreneurial skills that are more strategic and conceptual. In conclusion the two culture problem is the barrier to sustain the corporate entrepreneurship. Not only the new but existing corporations also fail to sustain its corporate entrepreneurship due to traditional responses.

Barriers to Corporate Entrepreneurship

Traditional strategies such as imposing aggressive targets lead to diffused responsibility. It is very commonly found that employees are promised to give compensation if they can contribute 30% of the sales from the product developed in last few years (2-3). Diffusing responsibility may fizzle out argued (Morgan and Sisak 2016). According to Mathias et al. (2015) this approach has drawbacks as new ventures may get dominated by the traditional ones. In case of veteran employees, it was observed that new ideas are suppressed by ignoring the incentives. It may be due to new ways of working or because it renders the old skills obsolete. It thus, acts as a barrier to the corporate entrepreneurship. This barrier can be well explained by discussing the example of US giant, RR Donnelley.

RR Donnelley founded in 1864, is the largest printing company in US by revenue. The company provides, commercial printing, business communications, and marketing services. The organisation failed in its first attempt of making the digital printing popular. It was due to international resistance as per literature review. There was decrease in demand for paper and  print. According to Sandler (2017) the sales managers were uncomfortable in selling the solutions to managers at senior level as demanded by the company. The sales people were accustomed to sell long term contracts. These contracts were sold to customers’ purchasing managers. It was possible due to the personal relationships with the clients and sold it on the basis of price per page.  The management did not consider that the employees were uncomfortable selling solutions to senior managers. The employees also did not wanted to send orders its way or share the expertise with the digital printing division. There was no way the management could point fingers at them as they were good with the numbers. It was indicative of poor commitment and was observed by one of the executive of Donnelley. These employees were resistant to the new business ideas.  It was found that few managers were taking responsibility but only for the project that they viewed as diversions. In relation this case it was mentioned by DeTienne et al. (2015) that new ventures must fit with the product lines of the existing companies. Else it will be trouble finding an organisational home. It can be interpreted that the entrepreneurs may have overwhelmed the employees in the quest to create new ideas in Donnelley. Other barriers to sustain the corporate entrepreneurship were the out dated technology. As per the report of www.xerox.de (2017) the employees of R R Donnelley, complained that the policies of the company were not employee friendly and there was lack of transparency. There were no rewards and recognitions for the employee even when they gave their best performance. Most of the employees overworked and were underpaid. These factors acted as barriers to sustain the corporate entrepreneurship in this organisation. 

Real Life Cases of Corporate Entrepreneurship

To sustain the corporate entrepreneurship, there is a need to balance the actions. The barrier to sustain the corporate entrepreneurships is the conflict between the old and the new cultures. Leaning too much in one direction may lead a company to lose the entrepreneurial equilibrium. There is a need of balance in three areas that are operations, strategies and organization. It is not possible to function with two opposing ideas at the same time (Bruton et al. 2015). This barrier can be well explained by the scandal of Enron. Enron grew its business without discipline. It did not measure progress with the nonfinancial milestones. It had no idea on when to pull the plug with the new or infant business. The company did not test its assumptions about products and services using prototypes. Before diving deep it failed to narrow the range of choices. These indicate the weak strategies (Investopedia 2017). According to Boddy (2017) Enron did not balance the operational experience with inventions. The company invested in various new ventures but never shared the operational responsibilities. The leaders of the company were unethical. Profit maximisation was the only goal of the organization. The corporate entrepreneurship failed due to high level of ambiguity. Very soon the company with its cowboy culture led to loss of financial discipline and was devastated in 1990s. It made less strategic sense as the company pushed its executives for new trading ideas and rewarded them for same. This was based on tremendous success from its natural gas business. Consequently, it started to outpour its trading business such as broadband, pulp, paper, coal, water, semiconductors, data storage, and media services. It makes less financial sense and the climate of the organisation was affected by the negative attitude of the managers.  Lack of creativity and innovation led to downfall of its company. It can be justified with the view of Krasniqi and Desai (2016), which says that, without fresh thinking and innovative approaches to operations, it is not possible to have successful differentiations.  It is evident from the Enron’s case that the leaders were too inexperienced as they failed in innovativeness and risk-taking. Due to lack of innovativeness the organisation lost its entrepreneurship (Tang and Wezel 2015).

There are many kind of strategies by which an organisation can sustain its corporate entrepreneurship. According to Townsend and Busenitz (2015) the evidenced based strategies to support the risk taking in rational manner are open communication system, participative collaborative management, constructive feedback that is developmental, recognition of the creative work and access to tools for solving problem innovatively. A well established business should avoid extreme behaviour. Only if efforts are taken to maintain the entrepreneurial equilibrium, the corporate entrepreneurship will flourish. It is recommended by Dutta and Folta (2016) that, an organisation should develop strategy by trial and error. Even the matured corporate entrepreneurs may not get it right in the first attempt as there is always ambiguity when trying something new in the organization. Managers must engage in experimenting with new ideas. They must validate and invalidate their strategies. There is a need of disciplined planning with the open minded opportunism argued Bruton et al. (2015).    It means that there is the need of coupling rigour and discipline with trial and error. For companies like Enron, it is recommended to formulate a hypothesis and test the hypothesis to ensure what is the right model or product for the successful business. It is also necessary to identify the customer needs to formulate hypothesis.  

Strategies to Overcome the Barriers

To sustain the corporate entrepreneurship it is necessary to make choices that ensure it is advantageous for the business. The companies must identify the sectors that are worth pursuing. The technologies and the market should be combined with the best judgement of executives about the latest trends in the industry. Every well established company must try to expand itself by starting new line of business, expand to new region or country if it is considered having the potential   to generate incremental sales at least $100 million in three times. For instance, went from idea to $1 billion in less than two years (Lindsey-Mullikin and Borin 2017). It is necessary to evaluate any new idea. Prototypes should be used to test any new business model before adopting it. It will help test the assumptions about the customer needs. It will help the potential users to give informed responses. Thus, it will give life to new products. To measure the business progress it is necessary to track through nonfinancial measures. The targets should be measurable.

Traditional responses in most cases were found to fail. Most of the entrepreneurs are trapped in the conventional thinking. Unconventional thinking is needed for new ideas. It is also necessary to consider the social entrepreneurship that is solving problems by creating valuable solutions. Entrepreneurial activities should not be profit oriented (Zahra Newey and Li, 2014). Talking about R. Donnelley, it is transforming itself. It is striving to become the multi-channel communication company. It is planning to sell its customers both its print and digital media services. As per Sandler (2017), the company needs to focus more on the digital marketing and communications. The companion is implementing this recently. There is less dependence on the printing. This strategy is effective as there are many advantages with focus on the digital marketing and communications. To increase the revenue, it is planning to master the digital marketing. In 2015, this company was recognised as innovator for combining the digital/print communications. It ranked 47 in the InformationWeek Elite 100 list (www.piworld.com 2017). The company applied information technology in unconventional manner. Using the creative ay the company delivered extraordinary business value. It can be concluded that with the help of the innovation technology, the company turned to integrated communications services provider. Currently the company delivers and develops innovative communication solutions. For optimised communication the company merges the print and digital. It helps deliver integrated messages across multiple media. It reaches clients in virtually all sectors. This is the strategically located operations provide the responsiveness   and the local services. This innovative strategy helped the company to leverage the economic benefits as well as the technical advantages of the global organisation.

Conclusion

An organisation must build on its strengths. In order to get new advantages continuously, it must start with clean slate. If the corporations start making the decisions based on personal benefits, it will result in inappropriate processes, people, and systems. The same was the case of Enron. It was building on unethical leadership and considered it as strength, which led to its downfall. Working with the processes that are well proven to be profitable will save any organisation and sustain the corporate entrepreneurship. Implementing the proven processes with the combination of old and new ones is required. It will entail the blend of experience and invention.  There is need of harvest strategy that does not sacrifice customers and products for profit earning (Korhonen et al. 2016).  

Innovation approaches is necessary for differentiation. For instance, Bill Gates took the senior team of the Microsoft to a week long retreats for a year. During this time the discussion was mainly focused on company and identification of the company threats. This was innovative strategy that will help in sharing the responsibility for critical choices. There is a need of changing the veteran’s thinking by altering the incentives and promotion criteria. It is called sharing the wealth with those who created it. Both Enron and R R. Donnelley, failed to use such innovative approaches to establish strong relationship with their employees. Leadership must promote high performance and instil a vision of greatness   (Spinelli 2016).  

Conclusion

The essay focused on critical analysis of research demonstrating depth and breadth of understanding of key concepts regarding innovation and corporate entrepreneurship.  The essay discussed the barriers to corporate entrepreneurship being sustained in an organisation. The essay discussed the strategies helpful to overcome those barriers. The essay critically analysed the real life cases in this regard that are R. R. Donnelley and Enron. It can be concluded that in order to be successful with corporate entrepreneurship a company must not view the success as either-or proposition. There is a need of series of balancing acts. The management disciplines should be well combined with the entrepreneurship. It is evident from the critical analysis that an organization to sustain the entrepreneurship it is required to adopt short term and long term thinking and perfectly blend the established or proven and the new ideas. If an organisation defines innovation as critical for long-term success, or rewards individual innovation then it is considered as best practice. There are many barriers to innovation. A number of strategies are offered, that leaders may find helpful in their efforts to build a more creative and innovative enterprise.

References

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