At MentorCruise, we can help you implement this culture to encourage employees to take initiative through effective corporate mentoring and coaching.
In this article, you’ll learn:
- what is corporate entrepreneurship and
- how you can implement it in your company.
What exactly is corporate entrepreneurship?
By definition, corporate entrepreneurship is a set of activities that a company does to enhance its ability to innovate, take risks, and seize opportunities allocated in the market. Entrepreneurial employees know how to take initiative, target new business opportunities, help expand market reach, and so on.
Today, the most prominent research on corporate entrepreneurship comes from the studies of Joseph A. Schumpeter (1883 - 1950), an Austrian-American economist and political scientist. He was the first economist who determined entrepreneurs as the primary agents of economic growth. Entrepreneurs create new products, find and develop new methods of production, and create other innovations to stimulate economic growth.
Those are precisely the reasons why companies need to cultivate entrepreneurship. Innovation is the only way the company will grow the way you want and need it to.
4 models of corporate entrepreneurship
In 2007, MIT researchers found 4 different models of corporate entrepreneurship. Each model represents a distinct way to cultivate corporate entrepreneurship inside an established business.
Each model consists of 2 dimensions under the direct control of management. These two dimensions dictate the approach towards corporate entrepreneurship.
- The first dimension is organizational ownership, which answers the questions of who in the organization has direct ownership of the creation of new businesses.
- The second dimension deals with resource authority. It answers the question of whether there is a dedicated “pot of money” allocated to corporate entrepreneurship or whether new business initiatives are funded in an improvised manner.
The opportunist model
This model suggests that the company has no deliberate approach toward corporate entrepreneurship. Internal and external networks dictate concept selection and resource allocation. There isn’t any designated organizational ownership and resources.
This model works well only in trusting corporate cultures that are open to experimentation and have diverse social networks behind the official hierarchy of the company.
Danger: Without these components, good ideas often fall through the cracks and can’t get sufficient funding.
The enabler model
With this model, the employees across an organization will be willing to develop new entrepreneurial ideas if they have adequate support. Dedicating resources and processes without any executive meddling enables teams to pursue opportunities on their own, as long as they fit within the organization’s strategy.
In this model’s framework, the company provides funding and senior-executive attention to future projects. It works well in organizations that are aware of the importance of personnel development.
Danger: One of the biggest dangers of this model is the possibly endless spending of money on ideas employees are not really interested in pursuing.
The advocate model
Here, a company assigns organizational ownership to the creation of new businesses while intentionally providing only modest budgets to the core group. In this situation, advocate organizations act as evangelists and innovation experts, facilitating corporate entrepreneurship in conjunction with business units.
Danger: Corporate entrepreneurship is limited to the core group, implicitly discouraging others outside this to be entrepreneurial.
The producer model
Some companies pursue corporate entrepreneurship by establishing and supporting formal departments called organizations with either significant dedicated funds or active influence over business-unit funding.
Like the enabler and advocate models, the producer model’s objective is to encourage entrepreneurs. However, the producer model also aims to protect emerging projects from turf battles, encourage cross-unit collaborations, build potentially disruptive businesses, and create pathways for executives to pursue careers outside their business models.
Danger: Producer departments are often costly in time and money, and a lack of dedicated budget can cause them to become unsuccessful.
Why corporate entrepreneurship is important
#1. Corporate entrepreneurship can lead to systems innovations.
When used as an innovation method, corporate entrepreneurship depends upon the flair and improvisation of individuals instead of institutionalized processes and competencies.
Those individuals behave like partners of the organization. They are specialists and take full responsibility for their projects during all the phases.
These individuals can help foster a culture of innovation that empowers each employee to become problem solvers and creates a system of autonomous teams that do not get hindered by surmountable setbacks.
#2. It helps improve employee recruitment and retention.
When businesses allow their employees to pursue new ideas and opportunities, it leads to higher levels of job satisfaction and lower levels of staff turnover. With an excellent entrepreneurial culture, your business can also attract new and more high-profile employees who are looking for new professional challenges.
An environment that supports creativity and innovation is also very attractive to highly skilled experts. That kind of environment will give them an opportunity to develop their ideas and add value to business efforts.
#3. It encourages autonomy.
To encourage corporate entrepreneurship, it is crucial that the business has a relatively flat management structure. Too many management levels with slow decision-making processes are actually killing the entrepreneurial spirit instead of cultivating it.
#4. It increases productivity and employee morale.
Corporate entrepreneurship allows employees to work on ideas and concepts they find exciting and challenging. This will enable them to engage and engaged employees feel their contributions are appreciated, which, in return, leads to increased employee productivity.
How to make corporate entrepreneurship work for your organization
There are a few things your business can do to implement corporate entrepreneurship into your business model and give it a real try.
#1. Create mentorship and corporate coaching programs.
Professional guidance through mentorship and coaching can help teams learn effective ways to work and increase productivity and innovation in the process.
Choosing a professional coaching and mentorship program, such as MentorCruise, can bring you better results compared to a program you’ve come up with.
#2. Apply the 4 models of corporate entrepreneurship.
Before your business starts implementing any of the models, it needs to have a broad growth vision, strategic goals, and objectives to achieve. It also needs to take into account the specific challenges of each model. Large corporations can also use more than one model.
#3. Establish clear corporate innovation goals and objectives.
If you want your corporate entrepreneurship efforts to be successful, you need a goal and a plan. Get support from your business’ executives by setting these goals up. Have your team run internal benchmarking, make sure that every innovation goal is connected with your broader mission and vision, and select a team responsible for reaching those goals.
#4. Create an environment conducive to entrepreneurship, creativity, learning, and growth.
The most successful entrepreneurial environments are open to risk, encourage relationships, build skills and knowledge, offer support from management, allow access to essential resources, maintain a supportive organizational structure, and set realistic performance goals. Don’t forget to regularly evaluate your entrepreneurial environment for the best results possible.
When creating an entrepreneurial environment, keep in mind that it also needs to encourage creativity. Creativity is essential and goes hand in hand with innovation which drives and accelerates business growth.
#5. Establish corporate entrepreneurship and innovation teams.
Having a dedicated group of people with an entrepreneurial mindset and a drive to make ideas happen can almost guarantee you success with your entrepreneurial efforts inside your business.
That’s because the sole purpose of this team is to oversee the implementation and management of corporate entrepreneurship and innovation initiatives. Having a dedicated team will also allow pursuing innovation activities without disrupting the usual day-to-day work processes.
#6. Don’t be afraid to encourage risk-taking.
With any innovation, there is always some risk involved, but without taking some calculated risk, your business can’t grow the way you want it to grow. It’s essential to keep in mind that not all entrepreneurial efforts will yield benefits, and it’s not the end of the world and your corporate entrepreneurship efforts.
#7. Identify and foster talent.
Not everyone in your company will have the talent to excel at being an entrepreneur, and that’s all right. Make sure that you identify elite performers within your company, look at their traits, and screen future employees for those traits and skills. Don’t forget to allocate financial and non-financial resources to support these individuals and increase the possibility of their extraordinary performance.
Join one of the mentorship programs at MentorCruise and give your business a boost
In this guide, you’ve learned how corporate entrepreneurship can help to grow your business. You can try and implement it yourself, or you can get professional help and join one of our mentorship programs for businesses.
When you’re choosing the right mentorship program for your business, you first need to clarify the objective of the program, identify who will use it, and choose the right mentor for your needs.
Don’t hesitate and book an “Introductory Call” Session so we can figure out together how we can help your business discover new potential and equip you for successful new adventures on your business journey.