For decades, the business world consisted of set business types. However, the ever-evolving U.S. economy has pushed businesses to adapt and become more innovative than ever, blurring the lines between startups, small businesses, big businesses, etc. To sustain organic growth, organizations need to continuously analyze, identify, create and maintain innovative new businesses. This concept is known as corporate entrepreneurship.
Ahead, we discuss corporate entrepreneurship, how it differs from classic entrepreneurship and the four models of corporate entrepreneurship. In addition, we address its pros and cons and provide notable examples.
Corporate entrepreneurship is a business approach that helps create new business opportunities. This approach challenges companies or teams within an organization to be innovative and creative by shifting their way of thinking into a startup mindset. This approach includes brainstorming, identifying and pursuing new opportunities in their products, market and services. The goal of this approach is to harness the full potential of a company’s resources to stay competitive and agile.
There are four models of corporate entrepreneurship: opportunist, enabler, advocate and producer. Organizations may use these models as is, or they may combine specific elements from different models to personalize their corporate entrepreneurship plan to fit their unique needs and goals. The model, or combination of elements from these models, a company uses will depend on factors, such as its industry, size, culture and current situation. Learn more about the four models below.
Companies often use an opportunist model when they are at the beginning of their entrepreneurial journey. This model focuses on developing resources and identifying ownership throughout the organization, encouraging employees to pursue new ideas and opportunities proactively. The best workplace culture for this model is engaging and collaborative, enabling an organization to quickly capitalize on emerging market trends.
The enabler model is the opposite of the opportunist model. With this model, employees are free to come up with and act on their ideas if they benefit the company. Unlike the opportunist model, the enabler model uses specific resources to pursue a business venture when employees come up with new ideas.
Organizations that use this model sometimes employ a contracted team of entrepreneurs to work on a business venture. This model best suits organizations that support employees in freely brainstorming and experimenting with new ideas.
The success of the advocate model hinges on the development of organizational ownership, or the shared commitment and desire among employees of all levels to achieve company growth. The idea is that this sense of ownership will drive employees to create new business ideas with the goal of scaling them for long-term success.
Companies that use this model encourage their teams to come up with ideas for new business ventures and allocate funding to the business units for distribution. Once a team completes their business plan, they pitch their idea to management for approval and funding.
Companies that use the producer model typically have a dedicated team or select a few people to focus on creating new business ideas. These teams are given special resources to facilitate ideas, product development and partnership.
This model is usually best for large organizations with sufficient resources to allocate for developing new projects. The goal of this approach is to create new business units to build new routes to business growth.
Fostering innovation in a large organization can be challenging because of roadblocks, such as bureaucracy, organizational structures or a weak company culture. Implementing corporate entrepreneurship provides organizations with a roadmap to achieve innovation and growth. However, like any new approach, corporate entrepreneurship has both pros and cons.
Pros of Corporate Entrepreneurship
Cons of Corporate Entrepreneurship
Many U.S. companies have successfully implemented corporate entrepreneurship. Notable examples include innovations from Procter & Gamble (P&G), Google and Intel. Ahead, we look at how those companies have used the models of corporate entrepreneurship.
P&G has created an internal development team known as Growth Works, which is an example of the producer model. The team works to innovate, develop new products and foster collaboration across the company. A prime example of an innovation developed by this group is the Oral-B iO electric toothbrush.
Google is a prime example of the enabler model. Google is a powerful business, but it continuously invests in new ideas and keeps them running in all stages of development. Many of these ideas help to support Google’s core business. Examples of Google innovation include Google Maps, Google Earth Immersive View and AdSense.
Intel is another example of the producer model. The company has its own venture capital firm, Intel Capital, that invests in various startups. Another example of how Intel innovates is through its technology conference, Intel Innovation, which encourages the development of entrepreneurial ideas unique to the company.