Mgmt 6700, 4962 Corporate Entrepreneurship Fall 2009 Syllabus Instructor Name: Professor Gina Colarelli O Connor Email: oconng@rpi.edu Office Location: Pittsburgh 1108 Tel. No.: 276-6842 Office Hours: by appointment Classroom: Pitts 5114 Class time: M, Th 12:00-1:50 p.m. COURSE DESCRIPTION AND OBJECTIVES: The world s economic development has been profoundly influenced by the entrepreneurial spirit, captured in the creation of new businesses within both startups and complex mature organizations, and requiring a continual infusion of new ideas and new energy. Corporations caught up in the web of commoditization, stagnation, down-sizing, costcutting and re-engineering have come to realize that entrepreneurs can co-exist within the structure of corporations. As a result, many are attempting to boost their entrepreneurial capabilities, recognizing that such activities can improve their competitive positions, create new markets, even transform their industries. Yet overall, these efforts have produced uneven success. Although entrepreneurs in organizations can benefit from the knowledge resources, experience, and financial assets and networks of the large firm, they are constrained by the firm's inertial structure and entrenched management practices, as well as by the influence of current customers. Many firms have demonstrated exceptional abilities to innovate, however, through their willingness to allow for the intrapreneur either as the proud exception or the cultural norm, and many persistent entrepreneurs have navigated through their bureaucratic organizations to create significant new businesses. Recent evidence points to firms renewed attention to developing management systems that work with, rather than against intrapreneurs. Organizations that increase their capacity for entrepreneurship build a foundation for long term competitiveness in their industries. This course will examine how organizations can create and sustain this capability, and better manage the innovation process and infrastructure to ensure the success of entrepreneurial initiatives. We focus at the organizational level rather than the individual project level, seeking insights about how organizations can institutionalize structures and processes for entrepreneurship, even within a dominant culture of operational excellence that, of necessity, pervades most large established firms. Our objectives are to understand: the nature and complexity of entrepreneurship in organizations; how organizations can increase their capacity for entrepreneurship; 1
how the entrepreneurship process can be managed in organizations in terms of specific organizational capabilities; alternative approaches to achieving a sustainable breakthrough innovation capability; how those organizational capabilities can be modified to fit companies ever-changing appetite for entrepreneurship. To achieve these objectives, we will draw from: (1) readings on corporate venturing and radical innovation, (2) cases illustrating the breadth of issues involved in managing entrepreneurial activities at the project, program, and organization level, (3) guest speakers who have experienced or researched corporate venturing in large, established organizations, and (4) a field research study involving twelve large established companies attempts to build a sustainable Breakthrough Innovation capability. Additionally, students will conduct their own research on one specific company of their choosing. REQUIRED READING(S): 1. O Connor, Leifer, Paulson, Peters, Grabbing Lightning: Building A Capability for Breakthrough Innovation. Jossey-Bass. 2008. 2. See www.rpi.edu/~oconng for most readings. 3. Purchase cases and readings listed in italics on the readings list from HBS online. I will give you the website reference in class. 4. Visit www.grabbinglightning.com weekly. Make some comments. Give me ideas for posts. Tell your friends about it. COURSE REQUIREMENTS: This course will focus largely on cases and lectures, and will involve one project. 1. Cases: Class preparation and participation will be assessed on the basis of attendance, case preparation (including response to case questions) and contribution to class discussion. Much of the latter will require that you know the readings as well as the cases. a. You are expected to prepare a mini write-up (2-3 pages, 12 pt. font, double spaced) for each case listed on the schedule. (No write up is required for the readings). The mini write ups should list the primary issues in the case, and your analysis of the alternative approaches the company/team could take. Be prepared to justify your answer in class and discuss a broader range of issues relating to the case. 2. Project: a. Graduate Students will be asked to write a case, in Harvard Business School format and of like quality, based on interviews conducted with a company of your choosing (I can help with access if necessary). The case should focus on the development of a capability for breakthrough innovation in the firm. Analyze all of the elements of the management system, and how well they work together, as 2
well as how well they interface with the mainstream organization. You may work in pairs for this project if you choose, since gaining a common understanding of the issues is critical. Students are expected to conduct the interviews and collect other sources of data by mid semester, and develop a timeline of the evolution of the management system for innovation, which will be presented to the class. That presentation will highlight the key players, the chronology of events, and issues that are emerging as interesting in the case specifics, and will propose a set of teaching points that will shape the case. Once approved, a draft case will be written and presented to the class for comment, which highlights the teaching points. Final cases will be evaluated based on clarity of the writing, standardization vis-à-vis Harvard format, accuracy of the case facts, interest, and insight into the potential learning points of the case. Note: I will submit cases of high enough quality to HBS for review and potential publication. b. Undergraduate students are asked to select a large (annual revenues >$1Billion) and mature (> 10 years old). Via primary and secondary data, learn how the company manages for major innovation. Which model does it most closely follow? What approaches has it tried in the past? How are all the elements of the management system for innovation executed? How well are they integrated? How do they interact with the mainstream organization? How well do they manage Discovery, Incubation and Acceleration? How successful is the company in terms of commercializing major innovation? Assess the maturity of the company s capability for breakthrough innovation. What would you do if you were CEO of the company to help it improve its Corporate Entrepreneurship capability? GRADING: Class Preparation and Participation 70% Case/Company reports 30% Write-up 20% Presentations 10% Total 100% ACADEMIC INTEGRITY: Students are expected to uphold an honor code of academic integrity, to preserve the reputation of RPI s Lally School with its alumni, employer market, and other constituents. All forms of academic dishonesty are violations of the trust between students and faculty. All student course work should provide an honest effort in completing the assigned work by his/herself and group partners. Each student is encouraged to discuss course material and problems with other students, but the student s solution must be his/her own. If a student is inspired by another s work, or if a student is extending an existing approach, the student should explicitly cite this work. Any student found to have participated in academic dishonesty will receive an F and may be subject to further disciplinary action. The university code of Academic Integrity prohibits a student from committing the following acts of academic dishonesty: academic fraud (i.e. changing solutions to appeal a grade), copying from others or allowing one s work to be copied, collaboration except as permitted on team assignments (including reusing previous project reports), fabrication/falsification, plagiarism, sabotage of others works, or substitution. 3
COURSE SCHEDULE Class Date Topic To Prepare # 1 8/31 Introductions Review syllabus, course structure, and expectations (mine and yours). Definitions of Corporate Entrepreneurship? 2 9/3 Radical Innovation Read Grabbing Lightning, Preface, Intro and Ch. 1. 9/7 Labor Day No Class. 3 9/10 1. The Need for Corporate Entrepreneurship and organizational renewal. 2. Range of Growth/Renewal Approaches 3. CE Challenges Readings: 1. Block and MacMillan, Corporate Venturing Ch.1 (pp.13-32) Corporate Venturing: What Is It? Why Do It? 2. Garvin, David (2004) What Every CEO Should Know about Creating New Businesses, HBR (July-August), 18-21. 3. Sull, Donald (1999), Why Good Companies Go Bad HBR July-Aug, pp. 42-52. 4. Kanter (2006), Innovation: the Classic Traps Harvard Business Review Nov.: 73-83. 5. Craumer, (2002) The Sputtering R&D Machine HBR Aug, pp. 25-36. 4 9/14 Need for CE continued: Case of family owned businesses. 5 9/17 Model 1a: Individual CE in cultures that support entrepreneurship and those that do not. (Focus on those that do not). Discuss: Bring in an example of a large established company that failed due to lack of Corporate Entrepreneurship success. Case: HBS 9-396-268 Seaman Corporation. (on public directory) Readings: 1. Pinchot, Gifford, III Intrapreneuring New York: Harper and Row. 1985. Ch 1 (pp 22 and 31), 2 and 9. 2. Amabile, How to Kill Creativity, HBR Sept-Oct 1998, pp. 76-87. 3. Burgleman, Robert A. (1983) A Process Model of Internal Corporate Venturing in the Diversified Firm Administrative Sciences Quarterly (28): 233-244. Note: read Intro, method and results sections only. 4
6 9/21 Research Project Identify company, (can you establish contact?), and start collecting secondary data. 7 9/24 Research Project Learn about Gerber Scientific (prepare for Guest Speaker Elaine Pullen Oct 1) 8 9/28 Model 1a: Individual CE in cultures that support entrepreneurship and those that do not. (Focus on those that do not). 9 10/1 Model 1b: Individual CE in cultures that support entrepreneurship and those that do not. (Focus on those that do). Case: IMD 145: Internal Entrepreneurship at the Dow Chemical company. Discuss (in class) Bruce Griffing at GE, Bernie Meyerson at IBM, Terry Fadem at Dupont. Consider: What aspects of a company s culture discourage innovation? Describe in terms of leadership, network development, resource fluidity & organizational flexibility. Readings: 1. Dess, Lumpkin and Taylor (2007), Fostering Corporate Entrepreneurship, in Strategic Management, McGraw-Hill/Irwin: New York. Chapter 12, pp. 454-463 on Entrepreneurial Orientation. 2. McGrath and McMilllan (2000) The Most Important Job: Entrepreneurial Leadership. In The Entrepreneurial Mindset.HBS Press: Boston. Ch. 12, pp. 301-335. Assignment: Each student submit 3 questions to Prof O C for Elaine by 9/30, midnight. Guest: Dr. Elaine Pullen, Former CTO of Gerber Scientific, entrepreneur, and member of Lally School Advisory Board. 10 10/5 Model 1b (Con t) Case: HBS 9-395-017: 3M Optical Systems: Managing Corporate Entrepreneurship In Class: View 3M video Consider: What aspects of a firm s culture encourage innovation? 11 10/8 Model 2 Arms Length Approaches- External Incubators and Corporate VC funds Readings: 1) Kanter, Rosabeth Moss; Lisa Richardson, Jeffrey North, and Erika Morgan (1991), Engines of Progress: Designing and Running Entrepreneurial Vehicles in Established Companies; The New Venture 5
12 10/13 Tues Model 2 (con t). Process at Eastman Kodak, 1983-1989 Journal of Business Venturing, vol. 6, pp. 63-82. 2) Douglas K. Smith and Robert C. Alexander. Fumbling the Future: How Xerox Invented, then Ignored, the first Personal Computer. iuniverse, Inc. 1999. (Need to determine which parts and hand out/post). 3) E-131 Corporate Venture Capital Vignettes 4) Chesbrough, Henry (2000), Designing Corporate Ventures in the Shadow of Private Venture Capital California Management Review Spring 42(3): 31-49. 5) Not required: Corporate Venture Capital: Managing Equity Investments for Strategic Returns Corporate Strategy Board, May 2000. Case: 9-807-059 Corporate Venture Capital at Eli Lilly. 13 10/15 Model 3: The CE group as an appendage: Spinout/Spin-in models for Corporate Ventures Read: The New Venture Division: Attributes of an Effective New Business Incubation Structure, Corporate Strategy Board, May 2000. Case BAB057: Nortel Networks Business Ventures Group: One Corporation s take on Corporate Entrepreneurship. 14 10/19 Model 3 (con t) Case 9-300-085 Lucent Technologies New Ventures Group Case BAB 049-C99A-P Xerox New Enterprises. 15 10/22 Model 3 (con t) Case 609043 Intel NBI: Intel Corporation s New Business Initiatives (A) Case 609102 Intel NBI: Intel Corporation s New Business Initiatives (B) 16 10/26 Model 4: Integrated but Loosely coupled CE groups In class: Case comparisons. Read: 1) Kanter, Rosabeth Moss; Jeffrey North, Lisa Richardson, Cynthia Ingols and Joseph Zolner (1991), Engines of Progress: Designing and Running Entrepreneurial Vehicles in Established Companies; Raytheon s New Product Center, 1969-1989, Journal of Business Venturing, vol 6
6, pp. 145-165. 2) Safeguarding Discontinuous Innovation: Nokia New Business Idea Accelerator, Corporate Strategy Board report pp. 39-49. 17 10/29 Model 4 (Con t) Case 9-897-088 Corporate New Ventures at Procter & Gamble 18 11/2 Model Review Models Comparisons 19 11/5 Model Review Models Comparisons 20 11/9 Model 5: Institutionalized CE-Innovation as a Function. a) Mgmt System elements; b) Organizational Capacity c) Discovery Read: 1) Grabbing Lightning, Ch. 2 & 3. 2) Burgelman, Robert A. and Valikangas, Liisa (2005), Managing Internal Corporate Venturing Cycles, Sloan Mgmt.R vol 46, no 4, pp. 26-34. Students writing cases present timelines and emergent case issues to Gina 21 11/12 Model 5 (Con t): Read: Grabbing Lightning, Ch. 4 & 5. a) Incubation b) Acceleration 22 11/16 Model 5 (Con t): a) DIA System b) Orchestration Read: Grabbing Lightning, Ch. 6 & 7. 23 11/19 Model 5 (Con t): a) Executing b) Mature System 24 11/23 Model 5: Case Example? 11/26 Thanksgiving No Class 25 11/30 Model 5: Case Example (under development) 26 12/3 Model 5: Case Example (Mature System) Read: Grabbing Lightning, Ch 8 & 9. Case: 9-907-048 GE s Imagination Breakthroughs: The Evo Project. Case(s): 1.SM167(A): Corning Inc: Reinventing New Business Development 2.SM167(B): Corning Inc: Bringing Rigor to Early Stage Opportunity Identification. Read: HBS reading 6581: O Reilly and Tushman, The Ambidextrous Organization. Case 9-304-075 Emerging Business Opportunities at IBM (A), (B) and (C) 27 12/7 Student Presentations Students present their case write-ups, including teaching/learning points (Grad students) or company reports (UG) s 28 12/10 Wrap Up and Evals What have you learned? 7
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