international entrepreneurship

Strategic Entrepreneurship in the Global Discourse

Anirudh Agrawal aag.ikl@cbs.dk 2

Anirudh Agrawal aag.ikl@cbs.dk

Concorde

https://www.youtube.com/watch?v=V1Nrge4gOj8

Does R and D leads to high performance?

US Patents filed in 2012

6457 patents to IBM, headquartered in Armonk, New York5043 patents to Samsung Electronics Co., headquartered in Suwon, Korea3173 patents to Canon Kabushiki Kaisha, headquartered in Tokyo, Japan3017 patents to Sony Corporation, headquartered in Tokyo, Japan2748 patents to Matsushita Electric Industrial Co., Ltd., headquartered in Kadoma, Osaka, Japan2610 patents to Microsoft Corporation, headquartered in Redmond, Washington,2415 patents to Toshiba Corporation, headquartered in Tokyo, Japan1650 patents to General Electric Company, headquartered in Schenectady, New York1617 patents to LG ELECTRONICS INC., headquartered in Seoul, Korea1527 patents to Fujitsu Limited, headquartered in Tokyo

Entrepreneurship and Entrepreneurial Opportunities• Purpose of entrepreneurship: • Create wealth• Create Value• Create Sustainable Competitive Advantage

•Firms that foster entrepreneurship are:• Risk takers

• Committed to innovation

• Proactive in creating opportunities rather than waiting to respond to opportunities created by others

Strategic Entrepreneurship

Strategic entrepreneurship: entrepreneurial actions (exploiting found opportunities in the external environment) through a strategic perspective (innovation efforts)

Entrepreneurship dimension: identifying opportunities to exploit through innovationsStrategic dimension: determining the best way to manage the firm’s innovation efforts

A Model of Strategic Entrepreneurship

Individual

Corporation

Entrepreneurial Strategy

What determines the best strategy for the enterprise?

What are the various tools and techniques to determine strategic choices?

Opportunity Analysis Framework

Adapted from Exhibit 8.2 Opportunity Analysis FrameworkSources: Based on J. A. Timmons and S. Spinelli, New Venture Creation, 6th ed. (Burr Ridge, IL: McGraw-Hill/Irwin, 2004); and W. D. Bygrave, “The Entrepreneurial Process,” in W. D. Bygrave, ed., The Portable MBA in Entrepreneurship, 2nd ed. (New York:Wiley, 1997).

Entrepreneurial Resources

• Tangible and Intangile resources• Financial resources• Later-stage (not seed) financing• Human capital• Social capital• Government resources• Tacit Knowledge• History• Reputation

Entrepreneurial Skills vs Managerial Skills

Launching a new venture requires a special kind of leadership

Characteristics needed (not exclusive)VisionDedication and driveCommitment to excellence

Innovators DNA for Enterprising Firm

Associating : technology association, industry association

Curiosity, Questioning : Why, what, if, But, why not, how, does that, really?

Observation : Marketing, your customers, your suppliers, your value chain, your employees, your competitors

Experimenting, Risk, Entrepreneurial MindSet, Never Give Up

Networking : Individual / Skill based resource management

Innovators DNA

Characteristics of Good Opportunities

AttractiveAttractive

AchievableAchievable DurableDurable

Value Value creatingcreating

Good Business Good Business OpportunityOpportunity

Before launching opportunity as a business•Consider the resources available to undertake it•Consider the characteristics of the entrepreneur pursuing it

Three types of innovation activities according to Schumpeter

● Invention● Innovation● Imitation

Three ways to innovation● Internal - autonomous vs. induced● Cooperative strategies (e.g.,

strategic alliances)● Acquisitions

Entrepreneurial Strategies

Inventing (Apple)Imitating (Samsung)Adapting (Nokia)All of these strategies require Innovation

(organizational vs Product/Service)

What is Innovation?

• Change/ Creativity/ Ideation/invention normally

towards more pleasant/efficient than the present

• Methods/Innovations/Inventions/Creativity that

reduces the transaction costs of doing that business…

R Coarse

• Better, efficient, productive products, processes,

services, technologies or ideas that are readily

available to the markets, governments and society…

Wikipedia

What is Innovation?

Institutional Innovation

Product-Service Innovation

Organizational Innovation

Organizational EnvironmentOrganizational Boundary

Organizational Structure

Organizational actors

Types of Innovation?

Structural level innovation (process, systems)Actor level innovation (HR, work methods, team, function-skill level)Organizational boundary level innovationEnvironmental level innovation (region, culture, taste, macro-political-economical)

Types of Innovation?

Incremental innovationIOS 5.1 to IOS 6.0Windows 7 to Windows 8

Radical InnovationWindows 95Iphone first generation, Ipad1, Ipod 1Inductive charging

What is closed Innovation?

Schumperters’ viewSystems or architects of Production houses hold the keys of Innovation

Closed Innovation : Organizations

Hire bright people : Mostly Top ranked university graduates/ PhDs with publications/Post-docs

Put them in special conditions (Well funded Labs, Good Wages Packages)

Research and Develop a range of Ideas

Funnel some of those ideas to product/service stage towards the end-users/ waiting customers

Copied with Pride from the presentation on Open Innovation models by Charles Leadbeater

Innovation Funnel

25 Sept 2012

From the Presentation of Prof Henry Chesbrough UC Berkeley, Open Innovation: Renewing Growth from Industrial R&D, 10th Annual Innovation Convergence, Minneapolis Sept 27, 2004

Political

Los Alomos Laboratory

25 Sept 2012

Closed Innovation : Assumptions

Knowledge is sticky (only creators of knowledge know

everything about the knowledge)

Only inventors knows the best use of their inventions

Intellectual Property provides competitive edge ,

hence it should be protected

Innovation comes from within, self-reflective process ;

Users are passive – cannot provide information to the

firm on innovation

Copied with Pride from the presentation on Open Innovation models by Charles Leadbeater

Question the obvious?

25 Sept 2012

Examples of Closed Innovations

Elite Education : Harvard University (best

comes from best universities)

Investment gets innovation (you put in

resources, you will get innovation) …sort of a

black box model of the innovation

Assumption Only NASA can make a Space-Craft

to Mars

Why only NASA can create space-craft?

Challenges to Closed Innovation

• Innovation can arise from anywhere : Ex: Google still don’t have a challenge for Facebook or LinkedIn or Twitter

• User can innovate, add value to final product ..empowering end user? Hmmm..

• In a highly networked world, closed innovation can

always have threats (stealing of secrets)

Anyone among us can be the next Einstein or Edison or Zuckerberg

Close Innovation : Need for reforms

• Should Innovation be a closed , blackboxed department, isolated from the environment of the firm

• Should consumer to part of developing the product/ service for the firm..if so how?

• Should there be cross –functional teams?

Marketing + R and D …is it ok?

What is OPEN Innovation?

http://www.youtube.com/watch?v=_GAferFgSF8

http://www.youtube.com/watch?v=xBEv7ukmz2U

What is Open Innovation?

Maximizing return on investment through actively exploiting external ideas and knowledge and internal ideas and knowledge.. Henry Chesbourgh

Economically important innovations are developed by users and other agents who divide up the tasks and costs of innovation development and then freely reveal their results to the public ..Eric Von Hippel

Open Innovation

Ref: chesbourgh

External Open Innovation

Purchasing : Buying technologies – IP rights, trademarks, copyrights, trademarks from external players instead of developing inhouseLicensing –In : Obtaining the right to exploit technologies by paying royalties to external partnersJoint Venture : Establishing a JV with other partners to commercialize technologiesJoint Development : Developing capabilities, products, services and technologies by outside collaboration such as Firms, Universities, LabsContract R & D : Buying R and D services from Universities, IndustriesVenture Capital : Investing in promising products/services/capabilities through external funding..Mergers and Acquisition for capability enhancementCustomer involvement : User driven innovationExternal networking : Outsourcing, consultants, experts

Ref: Open innovation management and challenges : Abdul Hadi G, Junbae Lee . Procedia Social and behavioral sciences

Purchasing

Purchasing : Buying technologies – IP rights, trademarks, copyrights, trademarks from external players instead of developing in-house

Firms strategy towards make or buy? ROI, Investment, Risks associated, Dominant Logic

Examples : Patent war between Samsumg and Apple or Google maps vs Apple Maps

Example form Social Enterprise perspective : Using first world technologies through special arrangements to solve third world problems of energy, food, water, housing, education, health-care, finance

Licensing-In

Licensing –In : Obtaining the right to exploit technologies by paying royalties to external partners

Examples : Facebook integration in Iphone 5 , Google maps in Iphone 4S

Example from Social Entrepreneurship Perspective : Royalty on AIDS medicine patent for every medicine sold in third world / royalty to paypal for every donation made to a charity organization

Joint Venture

Joint Venture : Establishing a JV(a new company) with other partners to commercialize technologies

Example : Starting a JV company in a new country to develop market expertise of that country

Examples : Social entrepreneur can contact a designing firm in Denmark and co-create products for developing world markets or social problems

Anirudh Agrawal aag.ikl@cbs.dk25 Sept 2012

• Grameen Danone JV• Mahindra Renault JV

Joint Development

• Joint Development : Developing capabilities, products, services and technologies by outside collaboration such as Firms, Universities, Labs

• Example : Smart phone development Nokia/Microsoft ; Fundamental science related development : Development of Micro-chip

• Example from social entrepreneurship perspective : Development of base of the pyramid solution at MIT media labs; WRI report .. The next billion

Why will I learn from you?

Contract R and D

• Contract R & D : Buying R and D services from Universities, Industries

• Example: Completing outsourcing capability development , knowledge creation, product innovation aspects of the company to a third party player ; Firms hiring designing firms like IDEO to develop products and capabilities

• Example From social entrepreneurship perspective : UNICEF developed cheap /special energy food packets for the humanitarian disaster areas

What can you do for me?

Venture Capital

• Venture Capital : Investing in promising products/services/capabilities through external funding

• Example : Ihubs in Nairobi, VC funded By Google to raise new technologies and dot.coms in Nairobi

• Examples from Social Entrepreneurship Perspective : Gates-Melinda foundation

Customer Involvement

• Customer involvement : User driven

innovation

• Examples : Apps for Android and IOS

• Examples from Social Entrepreneurship

perspective : www.NIF.org

Can customers innovate?

25 Sept 2012

Can customers innovate?

25 Sept 2012

Open Innovation video..geeky

• http://fora.tv/2008/04/08/MITs_Eric_von_Hippel_Open_Innovation

External Networking : How can an outsider know more than us?

• External networking : Outsourcing, consultants, experts

• Example : Hiring consultants, experts to bring in new capabilities, insights into the firm without actually creating a ful-time position for it

Internal Open Innovation

• Selling : Selling inside capabilities

• Licensing Out : Servitization of inside capabilities

• Spin Off : Creating a new organization based on internal capabilities with the parent organizer as the major funder, organizer and mentor

• Open Source : Revealing internal technologies/capabilities to the market without any immediate selfish incentive

Ref: Open innovation management and challenges : Abdul Hadi G, Junbae Lee . Procedia Social and behavioral sciences

Selling Inside Capabilities

• Selling : Selling inside capabilities

• Example : Selling patents, copyrights, trademarks

Anirudh Agrawal aag.ikl@cbs.dk25 Sept 2012

Licensing Out

• Licensing Out : Servitization of inside capabilities

• Example : Google Maps

Spin Off

• Spin Off : Creating a new organization based on internal capabilities with the parent organization as the major funder , mentor and chief architect

• Example : Intel• Example :

• Open Source : Revealing internal technologies/capabilities to the market without any immediate selfish incentive

• Example : Opening up Android platform for third party aap development

Organizations for Open Innovation

• Able to set up systematic procedures for problem solving

• Motivation for new knowledge acquisition• Risk Taking, entrepreneurial • Developing capabilities to create knowledge

and capabilities• Team Management

Factors that Promote Open Innovation

• Organizational Factors– Flexible Organizations– Hierarchy (Flat vs Pyramidal)– Information hoarding vs Information sharing– Service based vs Product based vs Project based

• Market Factors– Lead User innovation– User education and Sensiblization– Price, method of Promotion , place of promotion– Competition

Open Innovation vs Closed InnovationClosed Innovation Principles Open Innovation Principles

Smart People get hired, work for Large companies, are PhDs or Ivey League Universities, give them money

Smart People are everywhere, they can work from anywhere for anyone, their motivations are not just money

To profit from Innovation orientation, we must discover it ourselves, develop it ourselves, and get it to market

Firms must be receptive to Innovation surrounding us, innovation can come from both inside and outside firm boundaries

Patents, IP rights, copyrights give us undisputed monopoly in the market

We don’t really have to create innovation in order to profit from it

We must protect our capabilities from others, must not let anyone see or use our capabilities

We can create competitive advantage by letting outsiders use our capabilities and generate revenue as well

http://www.openinnovation.eu/open-innovation/

International

EntrepreneurshipFirms creatively discover and exploit

opportunities outside their domestic markets in order to develop a competitive advantage

Entrepreneurship has become a global phenomenon as internationalization typically leads to improved firm performance

EXAMPLE - Large multinational companies (MNCs) generate roughly 54% of their sales outside their domestic market, and more than 50% of their employees work outside of the home country

Anirudh Agrawal aag.ikl@cbs.dkKeupp and Gassmann 2009 (the past and future of international entrepreneurship:a review and suggestions for developing the field)

Review of International Entrepreneurship Literature

International

Entrepreneurship (Risks)

Unstable foreign currencies• Inefficient markets• Insufficient infrastructures to

support businesses• Limitations on market size

and growth

Corporate Venture Capital

• CVC refers to direct minority equity investments made by established companies in privately-held entrepreneurial ventures

• CVC investments also provide strategic benefits to ventures, including access to complementary assets thatwould be costly and time-consuming to build

• https://www.youtube.com/watch?v=LIdWue-yh3o

Corporate Social Entrepreneurship• GE Mec 40https://www.youtube.com/watch?

v=yB47wx-b6sY

• Danone Grameen Yogurdhttps://www.youtube.com/watch?

v=ZDkTDcI53hg

Creating Value?

Entrepreneurial ventures:• Produce more radical innovations• Possess strategic flexibility and

willingness to take risks• Do more opportunity seeking• Must learn how to gain a competitive

advantage (advantage-seeking behaviors)Larger, well-established firms:

• Produce more incremental innovations• Possess more resources and capabilities to

exploit identified opportunities• Must relearn how to identify

entrepreneurial opportunities (opportunity-seeking skills)

Strategic and Tactical Competitive Actions

• Entering new markets• New product introductions• Changing production

capacity• Mergers/Alliances

• Price cutting (or increases)• Product/service

enhancements• Increased marketing efforts• New distribution channels

Actions

Strategic Actions

Tactical Actions

Exhibit 8.8 – Strategic and Tactical Competitive Actions

international entrepreneurship

excellenceanirudh agrawal

tokyoanirudh agrawal

othersanirudh agrawal

innovators dnaanirudh

innovation proactive

types of innovation

japan2748 patents

japan1650 patents

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