Entrepreneurship in Corporate Organizations

Entrepreneurship means acting in a special modus: experimental, connected to the outside, being authentic and looking for mastery. How does this fit into the typical corporate culture of global organization?

The drive for Innovations in often described in strong marketing language in order to invite employees to come with new business opportunities. But what will happen if you really want to go for this new opportunities? Experimental is oke as long as it fits into our company compliances rules. Connected to the outside world is good but as long as we can protect our knowledge and ideas. Being authentic is fantastic as long as it fits in with our personal development plan template. Mastery is important but needs to be profitable on short notice. As we experience so often, there is a huge gap between the (marketing) company values and the daily practice of balancing between freedom to take risks (entrepreneurship) and the security of our environment (hold on to your job and material benefits).

In the great story of Eric Ries's Lean Start-up we can learn how to practice entrepreneurial skills in a hostile corporate environment.

Focus shift in Innovation: from Technology to Business Model towards Value Networks

For many of us, Innovation is still related to New Technology (Research and Development). From the global Laboratories the new technology race is heating up: Nano-thechnology, BIO-technology and several non existing technology combinations will bring huge future applications. Interesting surveys shows us that in past history economic crunch, large (global) wars will boost new technology. We can expect R&D spending will rise in the coming years looking for breakthrough innovation protected by Intellectual property (IP). New innovation methodologies like TRIZ will be used more. Only the large global companies will be able to raise significant R&D organizations and budget what is needed to sustain. In technology driven innovation, focus will be on R&D effectiveness: more innovation with spending less money and speeding up the time-to-market. That means hardness on non performing innovation projects, attract and retain top scientists and a rate race for start-up companies with state of the art technology.

But new technology is not enough in the world of successful breakthrough Innovation. Starting with new ideas like the Blue Ocean Strategy, Co-creation and Open Innovation companies are shifting focus from creating new technology to creating more money using different Business Models. Business Model Innovation is changing the way companies will earn money: different ways to create value than they are used to. It’s no longer true that breakthrough technology automatically means that the revenues will boost and the competition is beaded. Significant change in earning can be reached to shift your role and contribution in the value chain (for example low cost carriers in the airline industry and the new Apple concept). So know the focus will be on getting connected and innovate with the consumer (LEGO), co-create with partners and suppliers (P&G), intertwine existing value chains to new ones (Cirque du Soleil). It’s all about making more money with less investments and making the shareholders more happy. Therefore you need to integrate the ‘Golden Triangle’ of R&D, Operations and Marketing & Sales in the company and integrate Value Chains. New Innovation Strategy Implementation methods and Toolkits are needed. This way of Innovation is still a result of the last period of our Neo-Capitalism: create value for a happy few and outperform the enemies in the ‘free’-market.

A New Generation of people has started a much more sophisticated strategy for Innovation: creating new value with the crowd and accessible for everyone. The way they do it is building Value Networks. A Value Network is based on different core-values like: Authenticity, Experimentation, Mastery, and Connectedness. They are using new set of tools to get connected (like social networks), contribute on their own core competences (and getting status for) instead of what the boss is telling them to do, demanding a fair pricing and transparency of governance.

The success of innovation is based on much more variables than only money, it will be based on the volume of people and next generations who benefits from this innovation. The success will be visible in the term: Reputation. And reputation is a gift of members, connectors and users. Reputation is non-negotiable and will be endorse continuously. They will choose their own leaders and are flexible in the accept different role over time. The speed of creating , executing and the use of innovations will be incredible.

The great thing about a Value Network is that is exist and lives on a global level. Even currently closed global regions will be breaking open and joining up. National Governance and large and global companies will be bypassed in light-speed. This is what I will call a real breakthrough Innovation and it will benefits all who joins the Value Networks.

Business Model Innovation: Rational versus Emotional value performance

In my Innovation Team we work with clients on innovation and the influence on their current business model. We analyze the current business model using a framework based on the ideas of Alexander Osterwalder. We focus on the business model impact of the innovation portfolio of the client. In addition to the financial (Rational) performance of the business model we analyze the emotional side of the performance as well. We find out that two value performance indicators can be measured and managed on the emotional side of the business model: Reputation and Experience.

Reputation is the way stakeholders think of, speak about and act upon the image of your company. If you can create a company that people identify with, that is responsive to their sense of values, justice, fairness, ethics, compassion and appreciation, they will help you to be successful [Walter Haas, Jr., Chairman of Levi-Strauss].Reputation can be measured and managed. Good examples and cases can be tracked from the Reputation Institute. RI is the leading international organization devoted to advancing knowledge about corporate reputations and to providing professional assistance to companies interested in measuring and managing their reputations proactively.

Experience is a well known term in marketing for many years. In relation to innovation a new term is out: Experience Innovation. Clients and customers choose products and services more and more for emotional reasons. The get a first idea of what Experience means look at Wikepedia: Value can be placed on a continuum from undifferentiated (referred to as commodities) to highly differentiated. A possible classification for each stage in the evolution of value is:
- If you charge for undifferentiated stuff, then you are in the commodity business.
- If you charge for distinctive tangible things, then you are in the goods business.
- If you charge for the activities you perform, then you are in the service business.
- If you charge for the feeling customers have because of engaging you, then you are in the experience business.
- If you charge for the benefit customers (or "guests") receive as a result of spending that time, you are in the transformation business.
Experience can also be measured and managed. In 2005 Thomas Thijssen, director of research of the European Centre for the Experience Economy developed, together with Ed Peelen (Nyenrode Business School) and Susan Bink (University of Amsterdam), a new tool to measure the impact of meaningful experiences.

To become successful in business model innovation is is vital to include the two additional building blocks in the business model framework: REPUTATION and EXPERIENCE.

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Reputation extremely important in Open Innovation network

Last Thursday, 29 March, I (Koen Klokgieters) was present as one of three guest speakers at the LogInn Event 2007. This annual conference is organised by and for the MBA students at the Erasmus University in Rotterdam. The theme was SCM and Innovation Management, and I was asked to indicate which issues relate to both SCM and innovation. I thought it would be a good idea to shine a light on the social consequences of Open Innovation Networks.
Following an opening speech by Martijn Lofvers (chief editor of SCM Supply Chain Magazine), Coca-Cola Logistics manager, Jan Broekhuizen, discussed the far-reaching consequences of the new Coca-Cola bottle for the organisation of the supply chain. Director Procurement of ASML, Hans Dijkhuis, then explained how important and complicated it is to involve suppliers in high-tech product development. The subject material of both gentlemen laid an excellent basis for my talk on open innovation networks.
From SCM to Open InnovationIn my speech, I explained that Supply Chain Management in combination with innovation alone is not the optimum co-ordination of business processes in the value chain. There is also the question of how, as a company, you organise your R&D to the best effect and what consequences such a setup will have for your company structure and business model.
A relatively new trend is that R&D and innovation are carried out together with, or outsourced to, suppliers or partners within the existing supply chain and beyond it. Companies that decide to carry out the innovation process on a structural basis with each other, or that choose to have it largely carried out externally, are operating in Open Innovation Networks.
PhilipsOne of the companies leading the field in this is Philips. Philips has outsourced a large part of its R&D and carries out innovation projects with an ecosystem of partners from within and outside of the existing supply chain. The best-known results of this are perhaps Senseo with DE and the Perfect Draft with various breweries. But many components and part-products are developed in this way on behalf of Philips.
If you opt for a sustainable open innovation network with partners, you not only need to adapt your business model, but you should also take account of the social consequences that such a network brings with it. First of all, one way or another, a kind of flexible input of R&D staff will be required. Also, as an organisation you will be dependent on the reputation of your network partners. As soon as one of your partners makes a mistake, this will have consequences for you. There are two developments that raise these modern network issues: Flexecurity and Reputation Management.
FlexecurityThe word ‘flexecurity’ is suggestive of both ‘flexibility’ and ‘security’. The flexible part refers to a flexible input of personnel and a flexible right of dismissal. ‘Security’ gives the employees some guarantee of work and income, despite a relaxation of the right of dismissal. This ‘security task’ must shift from the individual organisation to the network. The government must play a facilitating role in this by making people more widely deployable, by means of retraining and schooling and the encouragement of universities and schools. Motivating people to set up their own companies could also help here.
Reputation ManagementIt used to be that as an organisation you only had to worry about your own reputation and the perception the stakeholders had of you. If you operate in a network, each partner in your ecosystem can influence your reputation positively or negatively. An example of a branch that featured negatively in the news recently was the pension funds sector. An investigation by the VPRO news programme Zembla showed that some of the money in the pension funds was being invested without their knowledge in the manufacture of cluster bombs. If as an organisation you participate in an open (innovation) network, Reputation Management is therefore of vital importance.Together with universities and network organisations, we (Capgemini) carry out research into open innovation networks and the social consequences of these. I believe that we are well on the way to helping customers to solve issues in the area of open innovation, but we definitely need to undergo further development collectively. And as an organisation we are continuously developing an ecosystem (read I-network) of partners. But it will be necessary for us to take on even more responsibility ourselves on behalf of the value chain, the partners and the customer!