Corporate Entrepreneurship and its Importance in Large Companies
Though its definition is somewhat contentious, the concept of corporate entrepreneurship is generally believed to refer to the development of new ideas and opportunities within large or established businesses, directly leading to the improvement of organizational profitability and an enhancement of competitive position or the strategic renewal of an existing business. Within that system, the notion of innovation is at the very core of corporate entrepreneurship – the two inseparably bound together and responsible for driving calculated and beneficial risk-taking. Taking it one step further, corporate entrepreneurship may even significantly alter the balance of competition within an industry or create entirely new industries through this act of internal innovation. Why should established organizations consider corporate entrepreneurship? Corporate entrepreneurship is especially crucial for large companies, enabling these organizations – that are traditionally averse to risk-taking – to innovate, driving leaders and teams toward an increased level of corporate enterprising. In addition to the obvious benefits obtained through innovation, this approach also provides the organizational benefit of setting the stage for leadership continuity. In a simpler view, corporate entrepreneurship can also be considered a means of organizational renewal. For in addition to its focus on innovation, there also exists an equal drive toward venturing. These two work in unison as the company undertakes innovations across the entire organizational spectrum, from product and process to technology and administration. In addition, venturing is a primary component in the process, pushing larger companies to enhance their overall competitiveness in the marketplace by taking bigger risks. Examples of these risks, as seen in a large-scale organization, may include: redefinition of the business concept, reorganization, and the introduction of system-wide changes for innovation. Setting up the corporate entrepreneurship environment In modern business, one of the primary tasks of the business leader is to foster an environment in which entrepreneurial thinking is encouraged and readily takes places. Promoting this culture by freely encouraging creativity (and thereby innovation), business leaders motivated toward corporate entrepreneurship must continuously strive to exude and build trust, embracing the risk to fail and inspiring those around them to take similar calculated risks.But there is more to an environment of corporate entrepreneurship than simply inciting inspiration. It also relies heavily on a system of continuous analysis and feedback, potentially including the following two steps: Step 1 Set a broad direction for achievement, reevaluating it periodically for any new information that may have surfaced in regard to changes in the business environment, including competitive products and markets in which the firm is operating. Constant evaluation is essential at this stage as even the most finely-tuned direction can still lead to catastrophic failure if the approach is no longer working. Step 2 Reinforce efforts across the entire organization that coincide with the current plan for achievement. The task of a leader or senior manager is often that of the analyst, continuously promoting strategy while making adjustments based on their beliefs related to organizational goals and the feedback they receive from business units. As these business units continue to experiment with existing products and services, as well as innovate and develop new ones, senior executives can magnify the stated goals to reinforce those business unit initiatives and thereby achieve the highest degree of success.