28/03/2022, 11:50 The Four Models of Corporate Entrepreneurship

MIT SLOAN MANAGEMENT REVIEW

Copyright © Massachusetts Institute of Technology, 2007. All rights reserved. • Reprint #49115 • sloanreview.mit.edu

The Four Models

of Corporate
Entrepreneurship
FALL 2007 Companies have four ways of building businesses from within
their organizations. Each approach provides certain benefits
— and raises specific challenges.

Prof. Robert C. Wolcott r-

[email protected]
Dr. Michael J. Lippitz
[email protected]

Vol. 49, No. 1 • Reprint #49115 • sloanreview.mit.edu

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28/03/2022, 11:50 The Four Models of Corporate Entrepreneurship

The Four
Inc.’s Steve Jobs who recognized that the potential of
portable digital music could be unlocked only through the
creation of a new business, not just a better MP3 player.

Models of To investigate how organizations succeed at corporate

entrepreneurship, we conducted a study at nearly 30 global
companies (see “About the Research.”). Through that

Corporate research, we were able to define four fundamental models of

corporate entrepreneurship and identify factors guiding
when each model should be applied. This framework of

Entrepreneurship corporate entrepreneurship should help companies avoid

costly trial-and-error mistakes in selecting and constructing
the best program for their objectives.

Robert C. Wolcott and Michael J. Lippitz

About the Research
Companies have four ways of Since the late 1990s, organizations as diverse as IBM,
building businesses from within DuPont and Cargill have been developing new approaches
to corporate entrepreneurship. To make sense of such
their organizations. Each approach initiatives, we asked those companies and others — nearly
provides certain benefits — and 30 — about numerous descriptive dimensions regarding
their programs for creating new businesses. These
raises specific challenges. dimensions ranged from contextual factors, such as market
maturity and technology intensity, to the structural and
cultural characteristics of the parent company, consistent
with the dimensions commonly examined in the academic
business literature. Our objective was to design a framework
useful for managers and, after testing various approaches,
we arrived at the framework described in this article.

What is Corporate
Entrepreneurship?
First, though, what exactly is corporate entrepreneurship?
CEOs talk about growth; markets demand it. But 1 We define the term as the process by which teams within an
profitable organic growth is difficult. When core businesses established company conceive, foster, launch and manage a
begin to flag, research suggests that fewer than 5% of new business that is distinct from the parent company but
companies regain growth rates of at least 1% above gross leverages the parent’s assets, market position, capabilities or
domestic product. 2 Creating new businesses, or corporate other resources. It differs from corporate venture capital,
entrepreneurship, offers one increasingly potent solution. which predominantly pursues financial investments in
According to a recent survey, companies that put greater external companies. Although it often involves external
emphasis on creating new business models grew their partners and capabilities (including acquisitions), it engages
operating margins faster than the competition. 3 significant resources of the established company, and
internal teams typically manage projects. It’s also different
But how can established organizations build successful new from spinouts, which are generally constructed as stand-
businesses on an ongoing basis? Certainly, the road is alone enterprises that do not require continuous leveraging
littered with failures. The iPod should have been a Sony of current business activities to realize their potential.
Corp. product. The Japanese corporation had the heritage,
brand, technology, channels — everything. But it was Apple Corporate entrepreneurship is more than just new product
development, and it can include innovations in services,

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channels, brands and so on. 4 Traditionally, companies models illustrates how they help companies build corporate
have added value through innovations that fit existing entrepreneurship in different ways.
business functions and activities. After all, why would they
develop opportunities that can’t easily be brought to
market? 5 Unfortunately, this approach also limits what a Four Models
company is willing or even able to bring to market. 6
Two dimensions under the direct control of management
Indeed, the failure to recognize that new products and
differentiate how companies approach corporate
services can require significantly different business models
entrepreneurship. The first is organizational ownership:
is often what leads to missed opportunities. Corporate
Who within the company has primary ownership for the
entrepreneurship initiatives seek to overcome such
creation of new businesses? (Note: This responsibility can
constraints.
be focused in a designated group, or it can be diffused
In the past, companies have tried to implement corporate across the organization.) The second is resource authority:
entrepreneurship by emulating an innovation leader. Such Are projects funded from a dedicated corporate pool of
approaches, however, often failed. It was one thing to money or in an ad hoc manner, perhaps through business-
recognize that “organizational slack” was a key factor unit budgets? Together the two dimensions generate a
enabling 3M Co.’s success — 3M allowed its engineers and matrix with four dominant models: opportunist, enabler,
scientists to spend 15% of their time on projects of their advocate and producer.
own design — but it was quite another to implement slack
at organizations with incentives and processes that thwarted
such flexibility. As Dr. Nelson Levy, a former vice president
of research and development and president of various
global pharmaceutical companies once quipped, “I might as
well give my people 15% paid leave!”

Four Models
Clearly, what works for one company will not necessarily
work for another. Through our research, we have identified
two dimensions under the direct control of management
that consistently differentiate how companies approach
corporate entrepreneurship. The first dimension is
organizational ownership: Who, if anyone, within the
organization has primary ownership for the creation of new
businesses? (Note: Responsibility and accountability for The Opportunist Model
new business creation might be focused in a designated
group or groups, or it might be diffused across the All companies begin as opportunists. Without any
organization.) The second is resource authority: Is there a designated organizational ownership or resources,
dedicated “pot of money” allocated to corporate corporate entrepreneurship proceeds (if it does at all) based
entrepreneurship, or are new business concepts funded in on the efforts and serendipity of intrepid “project
an ad hoc manner through divisional or corporate budgets champions” — people who toil against the odds, creating
or “slush funds?” new businesses often in spite of the corporation.

Together the two dimensions generate a matrix with four Consider Zimmer Holdings Inc., a medical device company
dominant models (see “Four Models”): the opportunist headquartered in Warsaw, Indiana. 7 Zimmer has R&D
(diffused ownership and ad hoc resource allocation); the organizations that undertake new product development but
enabler (diffused ownership and dedicated resources); the no formal organization or dedicated resources for corporate
advocate (focused ownership and ad hoc resource entrepreneurship. So when trauma surgeon Dana Mears
allocation); and the producer (focused ownership and had an idea for minimally invasive surgery for hip
dedicated resources). Each model represents a distinct way replacements, he presented and explored it informally with
of fostering corporate entrepreneurship. A closer look at the Zimmer manager Kevin Gregg. The two then got the go-

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ahead from top management (including CEO Ray Elliot), colleagues, assemble teams, explore concepts and build
who approved the use of company resources for concept prototypes. Project groups form on the fly, based on
development and experimentation. The new medical requirements defined by the teams themselves. An initial
approach required innovations in training, so the company core team typically includes a project manager, technical
established the Zimmer Institute, and by 2006 more than lead, product marketing manager (for competitive analyses,
6,000 surgeons were being trained there in a dozen different focus groups, market targeting and so on), user-interface
types of minimally invasive surgical procedures. The designer, quality-assurance specialist and an attorney (for
resulting improvement in patient outcomes (and hence privacy, trademark and other legal input). If the team
lower total costs) has led to some private insurers paying a believes it has a winner, it appeals to the Google Product
premium for certain Zimmer procedures. Today, that new Council for funding. This group, which includes the
business has helped Zimmer achieve superior overall company founders, top executives and engineering team
growth despite severe industry pricing pressure. leads, provides broad strategic direction and initial
resources. Successful project teams receive assistance from
The opportunist model works well only in trusting the Google Product Strategy Forum to formulate their
corporate cultures that are open to experimentation and business models and set milestones. Importantly, Google
have diverse social networks behind the official hierarchy applies no preconceived criteria or hurdle rates to the
(in other words, places where multiple executives can say projects. As long as a project appears to have potential and
“yes”). Without this type of environment, good ideas can maintains the interest of Google employees, it can continue.
easily fall through organizational cracks or receive
insufficient funding. Consequently, the opportunist At any given time, Google typically supports more than 100
approach is undependable for many companies. When new business concepts in various stages of development,
organizations get serious about organic growth, executives and information about the projects is maintained in a
realize they need more than a diffused, ad hoc approach. As central, searchable database. Managers estimate that
a result of its past success with minimally invasive surgical approximately 70% of the projects support the company’s
procedures, Zimmer has instituted more formalized core business in some fashion, 20% represent emerging
development practices for bringing new businesses to business ideas and 10% pursue speculative experiments. If a
market. As such, the company has begun to evolve beyond project succeeds, team members can receive substantial
the opportunist model. bonuses (called Founder’s Awards), sometimes in the
millions of dollars.

The Enabler Model Google’s entrepreneurial culture, dynamic market and

extraordinary access to capital make the company difficult
The basic premise of the enabler model is that employees to replicate. Nonetheless, other organizations have had
across an organization will be willing to develop new success using the enabler model. The Boeing Co. and
concepts if they are given adequate support. Dedicating Whirlpool Corp., for example, have found that dedicated
resources and processes (but without any formal funds for innovation combined with clear, disciplined
organizational ownership) enables teams to pursue processes for allocating those funds can go a long way
opportunities on their own insofar as they fit the toward unlocking latent entrepreneurial potential. Well-
organization’s strategic frame. In the most evolved versions designed enabler practices also have the side benefit of
of the enabler model, companies provide the following: exposing senior management to ambitious, innovative
clear criteria for selecting which opportunities to pursue, young employees, allowing the company to identify and
application guidelines for funding, decision-making nurture future leaders.
transparency, both recruitment and retention of
entrepreneurially minded employees and, perhaps above all, But firms should be aware that the enabler model is not just
active support from senior management. about allocating capital for corporate entrepreneurship.
Personnel development and executive engagement are also
Google Inc. is the poster child of the enabler model. Keval critical. Google spends an extraordinary amount of time
Desai, a Google program manager, describes his company and effort on recruiting. To be hired, a program manager or
in the following way: “We’re really an internal ecosystem of senior engineering candidate might go through 20
entrepreneurs… sort of like the [Silicon] Valley ecosystem interviews in multiple stages before the company
but inside one company.” At Google, employees are allowed determines whether that individual has the right
to spend 20% of their time to promote their ideas to

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combination of “entrepreneurial DNA,” broad technical Cooper recalls, “I thought I’d spend most of my time
talent and intellectual agility. Executive engagement is helping design and build new businesses…. Instead, I spent
essential for people to trust that the process of corporate at least half my time advocating.”
entrepreneurship is being taken seriously — that is, the
company will indeed pursue the development and The core of the Market Driven Growth program is currently
commercialization of good ideas. Without sufficient staffed with five full-time employees. Becoming part of this
support from senior management, promising concepts can group has become a sought-after opportunity for up-and-
end up as casualties of conflicts with established businesses. coming managers who want to gain senior-level exposure
Another danger is that the enabler model could degenerate and have a direct impact on the company’s growth.
into “bowling for dollars,” in which people apply for funds Although DuPont’s senior executives actively and openly
for ordinary business-unit projects or for ideas that they are support the program, they have never mandated its
not really seriously interested in pursuing. adoption by the company’s different business units. To win
that support, the program worked with leaders from the
business units early on to help define the mission, growth
The Advocate Model domain and criteria for opportunities they would be willing
to fund. In 1999, DuPont’s corporate headquarters invested
What about cases in which funding isn’t really the issue? In in the process development and the pilot engagements to
the advocate model, a company assigns organizational allow the program to gain credibility, but after that each
ownership for the creation of new businesses while business unit had to pay its own way. Today, DuPont still
intentionally providing only modest budgets to the core doesn’t require its business units to participate, but they do
group. Advocate organizations act as evangelists and so because they recognize the value of the initiative. One of
innovation experts, facilitating corporate entrepreneurship the program’s early supporters was Ellen Kullman, then
in conjunction with business units. group vice president for DuPont’s safety and protection
businesses, who has since become an enthusiastic champion
Consider E.I. du Pont de Nemours and Co., the 200-year- of the initiative. By 2005, Kullman noted, “We have nearly a
old global conglomerate. In 1999, CEO Chad Holliday half a billion dollars of new revenues we would not have
realized that the company needed some new thinking had had it not been for this program.”
because, even though margins and returns had improved
during the prior six years, growth had declined. So Holliday
asked DuPont veteran Robert A. Cooper to head a small
internal group that focused on company growth, and the
The Producer Model
result was the Market Driven Growth initiative. A few companies such as IBM, Motorola and Cargill pursue
corporate entrepreneurship by establishing and supporting
The program provides employees with a wide range of formal organizations with significant dedicated funds or
assistance, everything from idea conceptualization through active influence over business-unit funding. As with the
commercialization. For instance, it includes a four-day enabler and advocate models, an objective is to encourage
“business builder” session that helps people generate and latent entrepreneurs. But the producer model also aims to
prioritize different business concepts. After this, a team will protect emerging projects from turf battles, encourage
typically spend from four to eight weeks developing a cross-unit collaboration, build potentially disruptive
detailed business plan, including a 180-day “contract” with businesses and create pathways for executives to pursue
senior management to address major uncertainties of the careers outside their business units.
proposed concept. Then the team and a facilitator from the
Market Driven Growth program will present the plan to To pursue corporate entrepreneurship, Cargill Inc., the $75
business-unit leadership for approval. billion global agriculture products and services company
based in Wayzata, Minnesota, has established its Emerging
Success within one business unit has a way of building Business Accelerator. 8 As David Patchen, the group’s
interest from others, and over time teams like those at founder and managing director, recalls, “Prior to the EBA,
DuPont can become critical change agents. Although we lacked a clearly defined process for pursuing
consultants can help the process, ultimately the best opportunities that fell outside of the scope of existing
advocates come from a company’s veteran ranks — those business units and functions…. We needed a new approach
who are well-known, respected and experienced in making
change happen within the organization. As DuPont’s

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to complement our business units and Cargill Ventures [an The producer model is not without its share of challenges
internal venture group].” and risks. First, it can require significant investments over
many years. Motorola’s corporate entrepreneurship group,
Managers often don’t know what to do with new concepts for instance, has an annual budget in the tens of millions of
that don’t fit an existing business, and incentives typically dollars and a dedicated staff of more than 35 people.
discourage them from absorbing near-term losses. That’s Second, integrating successful projects into established
where the Emerging Business Accelerator comes in. When business units can be difficult. Project teams often become
Cargill’s de-icing business unit identified a novel de-icing isolated and can be perceived as threats to existing business
technology, the group realized it might not be well-suited to units, particularly when they have pilfered top talent.
develop and commercialize the innovation. The technology Ultimately, building credibility and trust throughout the
— an epoxy overlay that inhibits ice formation — was going company is critical for the producer model to succeed. Most
be a high-end product that would be sold to road builders of the corporate entrepreneurship leaders in our study said
worldwide for critical applications such as bridges. But that they spend more than half their time on
Cargill’s de-icing business unit primarily sells commodity communications within the company, and we have found
products to transportation department agencies in North that successful producer models are generally run by senior
America. So the new technology was transferred to the leaders who have mastered the art of internal corporate
Emerging Business Accelerator, which brought the offering politics.
to market.

Such successes have helped the Emerging Business Selecting the Right Model
Accelerator become a global clearinghouse for new
Evolving from the opportunist model to any of the more
concepts and value propositions across Cargill. The group
deliberate forms of corporate entrepreneurship typically
maintains a Web site for people to submit ideas, both from
begins with a mandate for growth and a broad, clearly
inside and outside the company. When an opportunity
communicated vision. When a company’s vision for growth
appears promising, the Emerging Business Accelerator
is too narrow, it will likely end up with just incremental
develops a high-level plan, performs due diligence, recruits
concepts, whereas a broader vision helps everyone think
talent and, if approved by the group’s board of directors,
outside the proverbial box. DuPont, for instance, used the
provides capital and monitors the project’s progress. In the
phrase “beyond the molecule” to describe its desire to go
early stages, project teams focus on refining their concept,
beyond traditional bulk chemicals, adding services and
business model and market offerings. To do so, they spend
knowledge to its offerings.
considerable time with potential customers to validate the
market for their products or services. Projects that achieve
validation from real customers graduate into either existing
or new business units.
Three Deliberate Approaches
Through 2006, the Emerging Business Accelerator has
to Corporate
evaluated dozens of opportunities, and seven significant Entrepreneurship
projects have received funding of which six are ongoing.
The Emerging Business Accelerator aims to generate In the opportunist model, corporate entrepreneurship
revenues from projects within three years so that it does not proceeds (if it does at all) based on the efforts of “project
become viewed merely as a source of funds for pie-in-the- champions” who toil against the odds, creating new
sky research. It employs many development paths: businesses often in spite of the corporation. In the enabler,
greenfield investments, patent licensing, minority advocate and producer models, corporate entrepreneurship
investments tied to business development agreements and is actively managed but in different ways.
small acquisitions. It selects, staffs and monitors — but does
not operate — new business opportunities. In essence, it
manages the process but not the ideas, which helps build
trust and encourages collaboration among stakeholders.
Cargill has found that assigning projects to managers with
other profit-and-loss responsibilities does not work, so full-
time teams are created.

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option. Because of the limited resources of this model,

managers must tailor their initiatives to the interests of
existing lines of business, and employees have to collaborate
intensively throughout the organization. This enhances the
potential fit of opportunities to a company’s operations, but
also requires leadership to ensure that projects do not
become too incremental. Advocates exist to help business
units do what they can’t accomplish on their own but
should pursue in order to remain vital and relevant.
Moreover, the advocate model (as well as the producer
model) can prevent corporate entrepreneurship from
becoming a casualty of powerful business units or
competing silos.

If a company seeks to conquer new growth domains,

discover breakthrough opportunities or thwart potentially
After the vision is set, a company needs to delineate specific disruptive competition, then it should consider the
objectives. Is it seeking corporatewide cultural producer model. 9 In general, business units are not likely
transformation or renovation of particular divisions to to pursue disruptive concepts, and they often face strong
address either commoditiza-tion or disruptive threats? Or near-term pressures that discourage investments in new
perhaps the problem is that people aren’t effective in growth platforms. The producer model helps overcome this,
pursuing “white space” growth platforms. In all these cases and it can provide the necessary coordination for initiatives
— transformation, renovation or new platforms — what is that involve complex technologies or require the integration
the time frame and how specific are the goals? Are of certain capabilities across different business units.
immediate, bold results required to solve a particular
With respect to resources, the enabler model can generally
problem, or is the objective an evolutionary program aimed
be maintained in a much leaner fashion than either the
at “blue ocean” discoveries? The answers to such questions
advocate or producer models. Simple processes
will suggest the use of one model over another. (see “Three
communicated company-wide, arbitrated by a senior team
Deliberate Approaches to Corporate Entrepreneurship.”)
and managed with limited staff (sometimes just a single
Enabler programs can support efforts to enhance a person) can suffice. Clearly, the dedicated team and capital
company’s culture. When an organization already enjoys required by the producer model makes it a more resource-
substantial collaboration and ideation at the grassroots intensive choice, but even the advocate model tends to
level, the enabler model can provide clear channels for require a significant commitment. Although advocates
concepts to be considered and funded. For companies function without a large dedicated funding pool, they can
seeking cultural transformation, enabler processes in require substantial investments in the human capital and
combination with new hiring criteria and staff development methodologies necessary to help bring new opportunities to
can result in a number of employees becoming effective fruition.
change agents. The enabler model is particularly well-suited
It should be noted that, particularly in large corporations,
to environments in which concept development and
multiple models can be supported concurrently at different
experimentation can be pursued economically throughout
levels and functions. IBM, for instance, maintains a hybrid
the organization. At Google, for instance, a Web application
producer-advocate team — the Emerging Business
prototype might require only a few engineers. In companies
Opportunities program — which has generated over $15
with self-managed communities of practice and expert
billion of new revenues as of 2005. 10 Meanwhile, IBM’s
networks (examples include many consultancies and
Think-place and Innovation Jams encourage ideation and
technology organizations), enabler programs can accelerate
networking in the fashion of an advocate model. Like an
the commercialization of ideas that arise from networks of
enabler, IBM also supports divisional processes for
knowledge workers.
corporate entrepreneurship, some of which transfer projects
For companies that want to accelerate the growth of to the Emerging Business Opportunities program for
established divisions, the advocate model might be the best development and scaling. And IBM is fortunate to have a

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corporate culture that in many ways even supports an Select and support a corporate entrepreneurship model.
opportunist model. Distributed power bases enable Companies need to select the right model (enabler,
corporate entrepreneurs to find pockets of interest and advocate or producer), develop a team with the required
resources across the corporation without any structured capabilities and provide the necessary resources.
facilitation.
Start with quick wins. Corporate entrepreneurship is new

Putting the Models to Work for most companies. That’s why it’s important early on to
build credibility with tangible performance and to learn
Successful companies typically start with a small, credible lessons to protect programs from marginalization or
team and a mandate from top leadership (see “Getting cancellation.
Started”). The first task is to obtain consensus (or at least
Evolve. Successful corporate entrepreneurship requires
acquiescence) from senior management regarding
adaptation in order to generate self-sustaining new
objectives and a path forward. New leaders of corporate
businesses on a consistent basis. Objectives and contexts
entrepreneurship initiatives are often surprised by how
change over time and so must programs for corporate
much time they spend talking with corporate and business-
entrepreneurship.
unit management. Nevertheless, such communication is
essential, not only to build support for the new initiative but Each of the models requires different forms of leadership,
also to prevent internal stakeholders from regarding processes and skill sets. An enabler model depends on
corporate entrepreneurship as a drain or threat to the establishing and communicating simple, clear processes for
company’s established operations. Building new businesses selecting projects, allocating funds and tracking progress,
often requires contributions from people company-wide, all with well-defined executive involvement. Advocate
especially during launch and scaling, so communication models require individuals with the instincts, access and
remains critical even after a corporate entrepreneurship talent to navigate the corporate culture and facilitate
program has established a proven track record. change. Leading advocate organizations build an arsenal of
facilitation methodologies, new business design tools and
networks with external capabilities. The producer model
Getting Started requires considerable capital and staffing and a direct line to
top management. Understaffed, part-time or underfunded
For companies that are about to embark on a new program
producer teams are set to fail.
of corporate entrepreneurship, the following high-level
summary of tips should provide some guidance: Whatever model is selected, a set of “quick wins” will help
tremendously to garner initial lessons and build credibility
Point the way. Articulate a strategic vision for growth
and momentum. If all goes well, the organization should
consistent with the capabilities that corporate
experience a significant increase in the number of
entrepreneurship can leverage: too narrow and a company
proposals, but the challenge of growth is not simply about
will get more of the same; too broad and people won’t know
generating compelling opportunities. When opportunity
where to start. When everyone knows what they’re looking
throughput increases, new bottlenecks arise as scaling field-
for, they’re more likely to find it.
proven new businesses and finding organizational homes
Delineate objectives. Start with a small team to clearly within the company become all the more difficult. As Albert
define and communicate the company’s objectives for Manzone, president of Shelf Stable Juices at PepsiCo Inc.,
corporate entrepreneurship. Is the objective to build radical explains, “The more we develop, the more stress we put on
new growth platforms or to renovate existing business our delivery mechanisms … our supply chain, channels,
units? Is cultural transformation part of the equation, or is everything it takes to get to market and scale.” And the
the goal to unleash latent entrepreneurial talent? more distant a new concept is from the “comfort zone” of
the core business, the greater the challenge.
Neutralize the naysayers. Build corporate and divisional
leadership consensus through extensive communication. This issue of transition and scaling is certainly not new, but
Understand the motivations of vested interests and it becomes increasingly vexing as companies master the
determine how to collaborate with or mitigate the front end of innovation. Unfortunately, past research offers
opposition. little insight. In our study, we observed certain practices
that seemed to help: considering business systems

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holistically and systematically up front (rather than Technology and Innovation at the Kellogg School of
adopting a narrow focus on technologies, products or Management, Northwestern University, in Evanston,
services); selecting two or three of the core business’s focal Illinois. Wolcott is also a cofounder of the strategic
capabilities for business system innovation and building consultancy Clareo Partners LLC. Comment on this article
new competencies in those areas; explicitly addressing or contact the authors through [email protected].
business-unit disincentives for adopting immature
businesses; and recruiting forward-thinking “business Acknowledgments
builder” managers. But much more formal, empirical work
needs to be conducted in this critical, emerging area of The authors thank Mohanbir Sawhney for his
research. recommendations in the preparation of this article, and
they are grateful to Henry Pak and Geof-frey Nudd for their
UNLESS A COMPANY IS BLESSED with the right culture
efforts on behalf of this research.
— and few are — corporate entrepreneurship won’t just
happen. It needs to be nurtured and managed as a strategic,
deliberate act. The traditional, isolated “skunkworks” References
project is no longer the primary option for companies
pursuing the creation of new businesses. Indeed, as IBM, 1. See, for instance, R. Gulati (introduction), “How CEOs Manage
Growth Agendas,” Harvard Business Review 82 (July–August, 2004):
Google, DuPont and others have shown, corporate
124–132.
entrepreneurship does not have to rely solely on serendipity
and the grassroots efforts of a few “project champions.” 2. Corporate Strategy Board, “Stall Points: Barriers to Growth for the
Large Corporate Enterprise” (Washington, D.C.: Corporate Strategy
In the early stages, all innovations are defined by Board, 1998).

uncertainty. If no uncertainty exists, then an organization is 3. G. Pohle and M. Chapman, “IBM Global CEO Study 2006: Business
simply not innovating. Moreover, corporate entrepreneurs Model Innovation Matters,” Strategy and Leadership 34, no. 5 (2006): 34–
are not just creating a new product or service but changing 40.
the way a company develops, builds, markets and supports
4. M. Sawhney, R.C. Wolcott and I. Arroniz, “The 12 Different Ways for
its offerings. As such, new business creation will often Companies to Innovate,” MIT Sloan Management Review 47, no.3
compel a company to incorporate capabilities and (spring 2006): 75–81. Innovation in technologies or products might
knowledge from the outside. In fact, an effective corporate actually be just a small part of creating business value; Starbucks Corp.,
entrepreneurship program can enhance a company’s ability for example, generates innovations in customer experience. Companies
can innovate on any aspect of how they do business, but it all has to fit
to absorb external knowledge and opportunities, the together as a coherent system.
essence of “open innovation.”
5. See, in particular, M.L. Tushman and C.A. O’Reilly III, “The
Obviously, this kind of capability can hardly be built Ambidextrous Organization: Managing Evolutionary and Revolutionary
overnight, and corporate entrepreneurship will always be a Change,” California Management Review 38, no. 4 (summer 1996): 8–30.

rough-and-tumble process with few guarantees. But playing 6. Ibid.

it safe is hardly the answer for those companies looking to
grow organically. As Mike Giersch, vice president for 7. Founded in 1927, Zimmer has 6,700 employees, operations in more
than 24 countries and sales of approximately $3.5 billion in 2006. It was
strategy at IBM, explains, “You’ve got to be flexible and take
spun off from Bristol-Myers Squibb Co. in August 2001, becoming
some risks. Some things work and some don’t. Corporate independent again for the first time in 30 years.
entrepreneurship is fundamentally a learning process.”
8. With nearly 150,000 employees, Cargill operates in more than 60
countries and generated income of $1.5 billion on revenues of $75 billion
in fiscal 2006 (ending May 31).

About the Authors 9. C.M. Christensen and M.E. Raynor, “The Innovator’s Solution:
Creating and Sustaining Successful Growth” (Boston: Harvard Business
School Press, 2003).
Robert C. Wolcott is a fellow and adjunct assistant professor
of innovation and entrepreneurship and Michael J. Lippitz 10. Internal (nonconfidential) IBM presentation, February 2006,
is a research fellow with the Center for Research in Armonk, New York.

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