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Sunday, September 6, 2015

Corporate Entrepreneurship: Oxymoron

From Dilbert, August 30, 2015:

I’ve always thought “corporate entrepreneurship” is an oxymoron, and this nicely captures some of the reasons why.

The OED defines an entrepreneur as
c. Polit. Econ. One who undertakes an enterprise; one who owns and manages a business; a person who takes the risk of profit or loss.
with entrepreneurship defined as what the entrepreneur does.

Some scholars want to define the term as only a subset of this (those that produce high-growth startups). Others want it to be a superset — anyone who innovates and creates new value — including corporate “entrepreneurs” — even though they don’t “own” or “take the risk of … loss.”

The closest that large company employees come to being entrepreneurs — with all the risks and rewards — are when they form spinoff (or spinout) companies. Some of these spinoff companies — like the Xerox spinoffs studied by Henry Chesbrough — start with technology, people, some investment but no products or customers; the founders of these companies are truly entrepreneurs, just ones with an inside track for funding. Other spinoff companies — like Agilent from HP or Avago from Agilent — began life with thousands of customers and millions (if not billions of revenues) — and are larger and more bureaucratic than many decade-old companies; it would be a travesty to call “entrepreneur” someone handed such a business portfolio.

A third example often labelled “corporate entrepreneurship” are those that explore possibilities for new business units that will remain in the company. These examples seem to be best described by the portmanteau of “intrapreneurship” — we want our employees to be entrepreneurial,  but they will remain inside the company and contribute its growth and success.

I have participated in various corporate new venture/new value/new line of business activities, both in industry and academia. I’m also head of my second startup, and I can tell you that the risk, the effort, the lack of support (including bureaucracy) and (hopefully) the potential reward make it completely different than an internal new venture.

So “entrepreneur” is not a synonym for “innovator” or “business model innovator” or the equivalent. That’s why my business card — and that of a few other faculty — says “Professor of Innovation and Entrepreneurship.”