SESSION 1: INTRODUCTION
Course overview
- Session 1: Introduction to intrapreneurship
- Session 2: Building an environment for intrapreneurship
- Session 3: Creating new business opportunities
o Testimonial: Wendy Vermoesen (Yambla)
- Session 4: Creating/selecting new business opportunities
- Session 5: Investing in new business opportunities
- Session 6: Structuring for intrapreneurship
INTRAPRENEURSHIP
WHAT IS INTRAPRENEURSHIP?
- New business creation (which is entrepreneurship) in large firms, through innovation and
through market entry by initiatives of employees etc
WHY IS INTRAPRENEURSHIP IMPORTANT?
1) Firms operate in turbulent external environments:
o Technological environment
o Customer environment
o Competitive environment
o Legal and regulatory environment
o Resource environment
2) To survive in the long-run, companies must embrace (reactively and proactively)
environmental change
3) Intrapreneurship is a key driver of corporate growth
EXAMPLES OF INTRAPRENEURSHIP
- Nestlé and Nespresso
- Lego: Lego struggled in 2000 due to cheap Asian competitors: had to change their target
customers to also adults --> new business line: Lego architecture
- Nintendo: Nintendo realized competition was coming from mobile games so they developed
Pokémon Go
- Amazon: mainly through intrapreneurship and diversification they became so big
→ started as a damn bookstore
→ reinvented themselves
o a large company should not be scared of cannibalizing their own business (because
otherwise someone else will do it) → they released e-reader which cannibalized
book store sales
SUCCESSFUL COMPANIES ARE “AMBIDEXTROUS”
Exploration of New Businesses and Exploitation of Existing Businesses
,Ambidextrous firms need managers (exploitation) and entrepreneurs (exploration)
Ambidexterity: An empirical test
Hypothesis: best performing firms have a balanced portfolio of exploration and exploitation activities
- Inverted U-relationship between the share of technology exploration activities and firms’
long-term financial performance
Empirical approach
- Panel data (1996-2003) on 168 US, EU and Japanese firms in five sectors (pharma, chemicals,
IT hardware, (non-)electrical machinery
- Exploration share = % of firm patents in new technology domains
- Financial performance = Tobin’s Q (market value/book value)
- Control variables = R&D expenses, patent stock, prior performance
Results
inverted U-shape relationship
model1: those investing more in r&d and are more succesful in r&d do better!
model 2: quadratic term to see if there is a non-linear relationship
,Best performing firms: 80% spend on exploitation, 20% on exploration
Tobin's Q is a measure of performance
SUCCESSFUL FIRMS ADDRESS ALL GROWTH HORIZONS
- H1: short-term benefits for example improving existing tech/ service etc (small improvements
of existing way of working (exploitation part)
- H2: start experimenting with new tech with existing customers --> profits in medium-term
, - H3: explore new markets, new technologies (exploration part)
→ Reality: Too much focus on horizon 1 projects (this way you end up as Kodak)
- what changed? Technological view: from analog to digital photography
- Business model change: margins on their aftersales decreased so hard (no pictures need to
be printed anymore)
ENTREPRENEURIAL ORIENTATION OF FIRMS
Course overview
- Session 1: Introduction to intrapreneurship
- Session 2: Building an environment for intrapreneurship
- Session 3: Creating new business opportunities
o Testimonial: Wendy Vermoesen (Yambla)
- Session 4: Creating/selecting new business opportunities
- Session 5: Investing in new business opportunities
- Session 6: Structuring for intrapreneurship
INTRAPRENEURSHIP
WHAT IS INTRAPRENEURSHIP?
- New business creation (which is entrepreneurship) in large firms, through innovation and
through market entry by initiatives of employees etc
WHY IS INTRAPRENEURSHIP IMPORTANT?
1) Firms operate in turbulent external environments:
o Technological environment
o Customer environment
o Competitive environment
o Legal and regulatory environment
o Resource environment
2) To survive in the long-run, companies must embrace (reactively and proactively)
environmental change
3) Intrapreneurship is a key driver of corporate growth
EXAMPLES OF INTRAPRENEURSHIP
- Nestlé and Nespresso
- Lego: Lego struggled in 2000 due to cheap Asian competitors: had to change their target
customers to also adults --> new business line: Lego architecture
- Nintendo: Nintendo realized competition was coming from mobile games so they developed
Pokémon Go
- Amazon: mainly through intrapreneurship and diversification they became so big
→ started as a damn bookstore
→ reinvented themselves
o a large company should not be scared of cannibalizing their own business (because
otherwise someone else will do it) → they released e-reader which cannibalized
book store sales
SUCCESSFUL COMPANIES ARE “AMBIDEXTROUS”
Exploration of New Businesses and Exploitation of Existing Businesses
,Ambidextrous firms need managers (exploitation) and entrepreneurs (exploration)
Ambidexterity: An empirical test
Hypothesis: best performing firms have a balanced portfolio of exploration and exploitation activities
- Inverted U-relationship between the share of technology exploration activities and firms’
long-term financial performance
Empirical approach
- Panel data (1996-2003) on 168 US, EU and Japanese firms in five sectors (pharma, chemicals,
IT hardware, (non-)electrical machinery
- Exploration share = % of firm patents in new technology domains
- Financial performance = Tobin’s Q (market value/book value)
- Control variables = R&D expenses, patent stock, prior performance
Results
inverted U-shape relationship
model1: those investing more in r&d and are more succesful in r&d do better!
model 2: quadratic term to see if there is a non-linear relationship
,Best performing firms: 80% spend on exploitation, 20% on exploration
Tobin's Q is a measure of performance
SUCCESSFUL FIRMS ADDRESS ALL GROWTH HORIZONS
- H1: short-term benefits for example improving existing tech/ service etc (small improvements
of existing way of working (exploitation part)
- H2: start experimenting with new tech with existing customers --> profits in medium-term
, - H3: explore new markets, new technologies (exploration part)
→ Reality: Too much focus on horizon 1 projects (this way you end up as Kodak)
- what changed? Technological view: from analog to digital photography
- Business model change: margins on their aftersales decreased so hard (no pictures need to
be printed anymore)
ENTREPRENEURIAL ORIENTATION OF FIRMS
