Copyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/IrwinStrategic Management: Text and Cases, 4e

12

Managing Innovation and Fostering Corporate

Entrepreneurship

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Types of Innovation

• Degree of innovativeness- Radical innovation- Incremental innovation

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Continuum of Radical and Incremental Innovations

Exhibit 12.1 Continuum of Radical and Incremental Innovations

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Types of Innovation

• Degree of innovativeness- Radical innovation- Incremental innovation

• Product and process innovations

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Innovation Challenges

• Seeds versus Weeds

• Experience versus initiative

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Innovation Challenges

• Seeds versus Weeds

• Experience versus initiative

• Internal versus external staffing

• Building capabilities versus collaborating

• Incremental versus preemptive launch

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Defining the Scope of Innovation

• Firms must define the “strategic envelope” (scope of the innovation efforts)

• In defining the strategic envelope, a firm should answer several questions. What are these questions?

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Managing Innovation

• Firms need to regulate the pace of innovation- Incremental innovation (six months to two years)

- Radical innovation (Typically 10 years or more)

• Innovation often requires collaborating with others who possess complementary knowledge and skills

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Dispersed Approaches to Corporate Entrepreneurship

• Dedication to entrepreneurial principles and practices

• Entrepreneurial culture

• Product champions

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Product Champions

• Bring entrepreneurial ideas forward

• Identify what kind of market exists for the product or service

• Find resources to support the venture

• Promote the venture concept to upper management

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Business Incubators

• Business incubators are designed to “hatch” new businesses

• Incubators provide some a number of resources to a new venture

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Entrepreneurial Orientation

Autonomy

Innovativeness

Proactiveness

Competitive aggressiveness

Risk-Taking

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Entrepreneurial Orientation

Dimension Definition

Autonomy Independent action by an individual or team aimed at bringing forth a business concept or vision and carrying it through to completion.

Innovativeness A willingness to introduce novelty through experimentation and creative processes aimed at developing new products and services as well as new processes.

Proactiveness A forward-looking perspective characteristic of a marketplace leader that has the foresight to seize opportunities in anticipation of future demand.

Source: J. G. Covin and D. P. Sleving, “A conceptual Model of Entrepreneurship As Firm Behavior,” Entrepreneurship Theory & Practice, Fall 1991, pp. 7-25; G. T. Lumpkin and G. G. Dess, “Clarifying the Entrepreneurial Orientation Construct and Linking It to Performance,” Academy of Management Review 21, no. 1 (1996), pp. 135-72; D. Miller, “The Correlates of Entrepreneurship in Three Types of Firms,” Management Science 29 (1983), pp. 770-91.

Adapted from Exhibit 12.3 Dimensions of Entrepreneurial Orientation

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Entrepreneurial Orientation

Dimension Definition

Source: J. G. Covin and D. P. Sleving, “A conceptual Model of Entrepreneurship As Firm Behavior,” Entrepreneurship Theory & Practice, Fall 1991, pp. 7-25; G. T. Lumpkin and G. G. Dess, “Clarifying the Entrepreneurial Orientation Construct and Linking It to Performance,” Academy of Management Review 21, no. 1 (1996), pp. 135-72; D. Miller, “The Correlates of Entrepreneurship in Three Types of Firms,” Management Science 29 (1983), pp. 770-91.

Adapted from Exhibit 12.3 Dimensions of Entrepreneurial Orientation

Competitive An intense effort to outperform industry rivals. It is characterized by a combative posture or an aggressive response aimed at improving position or overcoming a threat in a competitive marketplace.

aggressiveness

Risk taking Making decisions and taking action without certain knowledge of probable outcomes; some undertakings may also involve making substantial resource commitments in the process of venturing forward.