Lecture Organizational strategies for the 21st century - Chapter 13

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Chapter 13 - Corporate entrepreneurship and innovation. Studying this chapter should provide you with the strategic management knowledge needed to: Define strategic entrepreneurship and corporate entrepreneurship; define entrepreneurship and entrepreneurial opportunities and explain their importance; define invention, innovation, and imitation and describe the relationship among them; describe entrepreneurs and the entrepreneurial mind-set;...

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Nội dung Text: Lecture Organizational strategies for the 21st century - Chapter 13

The Strategic Management Process 1
Strategic Entrepreneurship  Entrepreneurship is concerned with:  The discovery of profitable opportunities  The exploitation of profitable opportunities  Entrepreneurship: the process by which individuals, teams, or organizations identify and pursue entrepreneurial opportunities without the immediate constraint of the resources they currently control  Purpose of entrepreneurship:  To create wealth or value 2
Strategic Entrepreneurship  Entrepreneurs  Individuals, acting independently or as part of an organization, who perceive an entrepreneurial opportunity and then take risks to develop an innovation to exploit it  Entrepreneurial Mind-set  Person who values uncertainty in the marketplace and seeks to continuously identify opportunities with the potential to lead to important innovations  Firms that foster entrepreneurship are:  Willing to take risks  Committed to innovation  Proactive in creating opportunities rather than waiting to respond to opportunities created by others 3
Strategic Entrepreneurship  Strategic entrepreneurship: taking entrepreneurial actions through a strategic perspective  Entrepreneurship dimension: identifying opportunities in the external environment to exploit through innovations  Strategic dimension: determining the best way to manage the firm’s innovation efforts  Corporate entrepreneurship: the use or application of entrepreneurship within an established firm  Critical to the survival and success of established organizations as well as startup entrepreneurial ventures (or “startups”)  Three ways organizations can innovate  Internally  By cooperating (e.g., strategic alliances)  Through acquisitions 4
Strategic Entrepreneurship  Firms engage in three types of innovative activities  Invention  The act of creating or developing a new product or process  Brings something new into being  Technical criteria determine the success of an invention  Innovation  Process of creating a commercial product from an invention  Brings something new into use  Commercial criteria determine the success of an innovation  Imitation  Adoption of an innovation by similar firms  Results of imitation  Product or process standardization  Products made with fewer features 5  Products offered at lower prices
Internal Innovation  With internal innovation firms take deliberate efforts to develop inventions and innovations within the organization  Often called internal corporate venturing or intrapreneurship  Firm internal innovation is reflected in efforts in research and development (R&D) and patents  Firms innovate internally in two ways  Autonomous strategic behavior  Induced strategic behavior  Firms produce two major types of internal innovations  Incremental innovations  Radical innovations 6
Internal Innovation  Autonomous strategic behavior  A bottom up process in which product champions pursue new ideas, often through a political process, by means of which they develop and coordinate the commercialization of a new good or service until it achieves success in the marketplace  Can facilitate incremental and radical innovations  Primarily - Radical Innovation  Induced strategic behavior  A top down process whereby the firm’s current strategy and structure foster innovations that are closely associated with the current strategy and structure  Can facilitate incremental and radical innovations  Primarily - Incremental Innovation 7
Internal Innovation  Incremental Innovation  Is evolutionary and linear in nature  Most innovations are incremental  Build on existing knowledge bases and provide small improvements in current product lines/processes  Primarily - induced strategic behavior  Radical Innovation  Is revolutionary and nonlinear in nature  Is rare because of difficulty and risk involved  Provide significant technological breakthroughs and creates new knowledge  Requires creativity  Use new technologies to serve newly created markets  Primarily - autonomous strategic behavior 8
Innovation Through Cooperative Strategies  Most firms lack the breadth and depth of resources in their R&D activities to continually develop innovations and remain competitive  To successfully develop and commercialize inventions, firms may need to cooperate and integrate knowledge and resources  Entrepreneurial new venture firms may need investment capital and distribution capabilities  More established companies may need new technological knowledge possessed by newer entrepreneurial firms  To innovate via cooperative relationships, firms must share their knowledge and skills – strategic alliances and joint ventures allow this to occur 9
Innovation Through Acquisitions  Firms can acquire companies to gain access to new innovations and innovative capabilities  This can rapidly extend the firm’s product line and increase the firm’s revenues  KEY RISK: a firm may substitute its ability to buy innovations for its ability to produce innovations internally and thus  Lose its intensity in R&D efforts  Lose its ability to produce patents  Research demonstrates that subsequent to acquisitions, firms introduce fewer new products into the market 10
Process Management Tools  The use of process management tools can improve an organization’s strategy implementation efforts.  Each tool has to do with making improvements to how a firm performs a business process or series of activities.  Common process improvement tools include:  Best Practices - a technique for performing an activity or business process that has been shown to consistently deliver superior results compared to other methods  Benchmarking - a tool for improving a company’s own internal activities that is based on learning how other companies perform them and borrowing their best practices 11
Process Management Tools  Common process improvement tools (cont.):  Reengineering - involves radically redesigning and streamlining how an activity is performed with the intent of achieving dramatic improvements in performance  Total Quality Management - a philosophy of managing a set of business practices that emphasizes continuously improving the performance of every task and value chain activity  Six Sigma Quality Programs - utilize advance statistical methods to improve quality by reducing defects and variability in the performance of business processes  Lean Manufacturing - a production practice that considers the expenditure of resources for any goal other than the creation of value for the end customer to be wasteful, and thus a target for elimination; centered on preserving value with less work 12