The perception of what a great company is and should be is changing. To remain competitive, even established organizations need to become more entrepreneurial and build innovative new businesses.
The so-called corporate entrepreneurship combines the financial resources and structures of a large corporation with the entrepreneurial energy of start-ups.
What is corporate entrepreneurship?
Corporate entrepreneurship or intrapreneurship is the creation of new businesses, products or services within an organization to generate new revenue growth through entrepreneurial activity.
Corporate entrepreneurship works in two ways. An established company either develops an idea internally, builds up the startup, sells it externally and later brings the startup back into the overall organization.
Or the company may identify an early-stage startup to partner with or acquire, and then integrate the company into the broader organization.
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Why is corporate entrepreneurship important?
In a rapidly changing business environment, innovation and responding to change through corporate entrepreneurship are crucial. Corporate entrepreneurship can also lead to increased productivity and morale in a workforce, which is given the space and opportunity to take on new challenges and implement new ideas.
But corporate entrepreneurship has even greater benefits, says Markus Venzin, professor of global strategy and dean of innovation at the Bocconi University.
Only 100 companies are the source of 70% of global carbon emissions. Corporate entrepreneurship is important, says Markus, because it can help lay the groundwork for action to combat climate change.
“If we want to create a more sustainable world, we need to focus on making businesses more sustainable,” he says.
On October 28th, Markus will host a free online Master class in management There he will discuss how new technologies – data science, artificial intelligence and the Internet of Things (IoT) – can be used to make companies more sustainable.
Whether these are established banks collaborating with fintech startups or creating their own; traditional farmers incorporating the latest innovations in artificial intelligence or biotechnology to make their farms more sustainable; or energy giants partnering with dynamic, agile clean energy startups to reinvent the energy sector, the potential of corporate entrepreneurship is enormous.
And Markus believes that companies no longer have a choice whether to adopt it or not.
“It has to be possible,” he says. “You need to go beyond your core product, take on broader challenges, work with startups, and that takes a lot more than just your work as a manager.
“It requires taking risks, entrepreneurial risks as individuals, and that will be a key aspect of making the world more sustainable.”
Implement corporate entrepreneurship
In order to successfully implement corporate entrepreneurship, companies must have the right culture to promote and enable innovation.
Managers must select employees with an entrepreneurial drive and be open to creating a culture that supports the creation and implementation of innovative ideas. Businesses also need to invest in the skills needed to segment the market, forecast trends, and understand customer needs.
Internally, companies also need to reduce what Markus calls “corporate uncertainty.” In other words, they should work to clarify how good ideas are supported by the company.
Markus explains that this is done by reduction:
→Communicative insecurity: Managers must ensure that their ideas are recognized as opportunities. They have to package their ideas and convince others.
→Behavioural uncertainty: Good ideas must be allocated resources. Behavioral uncertainty arises when the actions of the managers involved in this process do not fully reveal their true intent.
→ Uncertainty of value: How are the benefits of entrepreneurial ideas shared? Issues of appropriation, international commercialization, transfer pricing, and the application of incentive systems are important at the individual and unit levels. Entrepreneurs need to know what rewards to expect when engaging in innovation processes.
Examples of corporate entrepreneurship
Markus is also Managing Partner of venture builder Corporate Hanger, an organization set up by Italian electrical cable company Prysmian Group to identify and develop innovative ideas inside or outside the company.
Most startups are then managed by Corporate Hanger for up to five years before they are introduced to customers’ operations. Examples include Kablee, a cable e-commerce platform, and Cultifutura, a vertical farming solutions startup.
Italian energy company Enel is another company actively practicing corporate entrepreneurship. The Enel Innovation World Cup is an internal competition created by the company’s Innovation & Sustainability department to promote risk acceptance and give Enel employees worldwide the opportunity to develop businesses related to the energy sector.
Employees can control the entire production process alone or in a team. They come up with ideas, test them, and then collect customer feedback so that the product goes to market according to customers’ expectations.
The students of Markus’ Corporate Entrepreneurship course at Bocconi University learn from his personal experiences as well as from his network in the form of guest speakers.
You’ll hear from the likes of Emanuela Trentin, director of renewable energy company Siram Veolia, as well as Srini Sirapurapu, head of global research and development at Prysmian, Fabio Romeo, former chief of strategy at Prysmian, and Marco Di Dio, CEO of Jakala -Science consulting company.
The course also builds students’ understanding of how to successfully integrate a culture of corporate entrepreneurship into a company and the importance of large organizations using their resources to create and develop the best ideas.
“Corporate entrepreneurship has a lot of potential to make the world more sustainable, because when you have a startup that makes things more sustainable, by collaborating with a larger company, the startup can grow much faster and penetrate many countries at the same time,” says Markus.
Whether it’s using the skills you can gain at Bocconi University to build a startup in-house at a company, or to lead the search and acquisition of innovative early-stage ventures to work with, more talent is needed to meet the demands of corporate entrepreneurship. And, as Markus points out, companies have no choice.
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