In our six years of research on innovation and corporate entrepreneurship, we did not find a single company that felt they lacked good ideas. Rather, the difficult task was creating an organization and processes that refine ideas, build businesses, and bring the best of them to market.
There is no one-size-fits-all structure and process to building entrepreneurial capabilities within a corporation. The right model depends, first and foremost, on strategic objectives. It also depends on contextual factors such as internal structure and culture (including business unit autonomy and diversity) and external business environment (including market turbulence, capital requirements for commercialization, and regulatory restrictions).
Surprisingly, corporate entrepreneurs sometimes do better if they are compelled to convince business unit and/or functional leaders to provide resources. Companies can, though, make this process more effective and efficient.
We have identified four basic models to structure and organize innovation and around which companies can design new businesses successfully.
The opportunist – diffused ownership and ad hoc resource allocation.
All companies begin as opportunists. Without any designated organizational ownership or resources, corporate entrepreneurship proceeds (if it does at all) based on the efforts and serendipity of intrepid “project champions” – people who toil against the odds, creating new businesses often in spite of the corporation. Small entrepreneurial companies are opportunistic by their very nature. They are typically built around visionary champions and have leadership whose primary job is turning dreams into reality. Yet in large, established companies, encouraging visionaries and allocating sufficient management attention to these individuals is more rare.
The enabler — diffused ownership and dedicated resources.
The premise of the Enabler Model is that employees will be willing and able to develop new business concepts if they are given adequate support and attention to believe that there is a good chance of the new business becoming real. Dedicating resources enables such teams to pursue opportunities largely on their own. Because there is no formal organizational ownership for such efforts, success depends on top management support to be turned into new businesses.
The advocate — focused ownership and ad hoc resource allocation.
When business units enjoy significant autonomy from the corporate core, a new opportunity must be adopted by a business unit in order to come to fruition. In the Advocate Model, a company assigns organizational ownership for driving the creation of new businesses to a designated corporate-level group, but it intentionally provides the group only a modest budget, so that they develop compelling value propositions for business units. The Advocate Model is a relatively new and in some ways counterintuitive form of corporate entrepreneurship.
The producer — focused ownership and dedicated resources.
A separate innovation organization is a common suggestion in the current corporate innovation literature. Unlike the separate organizations of the 1970s and 1980s, however, current implementations of the Producer model recognize the difficulties such separated organizations have traditionally had in bringing proven new businesses back into the mainstream company. They are more than privileged versions of central R&D. Modern Producer organizations are more closely tied to corporate leadership and strategy, and they provide much greater support for the commercialization, transition and scaling of new businesses.
In future posts, we will explore specific examples of each model. If you have any questions, or examples you think are relevant, please let us know in the comments area below.