international entrepreneurship
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Strategic Entrepreneurship in the Global Discourse
Anirudh Agrawal aag.ikl@cbs.dk 2
Anirudh Agrawal aag.ikl@cbs.dk 3
Anirudh Agrawal aag.ikl@cbs.dk
Concorde
https://www.youtube.com/watch?v=V1Nrge4gOj8
Anirudh Agrawal aag.ikl@cbs.dk
Does R and D leads to high performance?
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
A Model of Strategic Entrepreneurship
Individual
Corporation
Anirudh Agrawal aag.ikl@cbs.dk
Entrepreneurial Strategy
What determines the best strategy for the enterprise?
What are the various tools and techniques to determine strategic choices?
Anirudh Agrawal aag.ikl@cbs.dk
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).
Anirudh Agrawal aag.ikl@cbs.dk
Entrepreneurial Resources
• Tangible and Intangile resources• Financial resources• Later-stage (not seed) financing• Human capital• Social capital• Government resources• Tacit Knowledge• History• Reputation
Anirudh Agrawal aag.ikl@cbs.dk
Entrepreneurial Skills vs Managerial Skills
Launching a new venture requires a special kind of leadership
Characteristics needed (not exclusive)VisionDedication and driveCommitment to excellence
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Innovators DNA
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Entrepreneurial Strategies
Inventing (Apple)Imitating (Samsung)Adapting (Nokia)All of these strategies require Innovation
(organizational vs Product/Service)
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
What is Innovation?
Institutional Innovation
Product-Service Innovation
Organizational Innovation
Organizational EnvironmentOrganizational Boundary
Organizational Structure
Organizational actors
Anirudh Agrawal aag.ikl@cbs.dk
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)
Anirudh Agrawal aag.ikl@cbs.dk
Types of Innovation?
Incremental innovationIOS 5.1 to IOS 6.0Windows 7 to Windows 8
Radical InnovationWindows 95Iphone first generation, Ipad1, Ipod 1Inductive charging
Anirudh Agrawal aag.ikl@cbs.dk
What is closed Innovation?
Schumperters’ viewSystems or architects of Production houses hold the keys of Innovation
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Innovation Funnel
25 Sept 2012
25
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
Anirudh Agrawal aag.ikl@cbs.dk
Los Alomos Laboratory
25 Sept 2012
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Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Question the obvious?
25 Sept 2012
28
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Why only NASA can create space-craft?
30
Anirudh Agrawal aag.ikl@cbs.dk
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)
Anirudh Agrawal aag.ikl@cbs.dk
Anyone among us can be the next Einstein or Edison or Zuckerberg
32
Anirudh Agrawal aag.ikl@cbs.dk
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?
Anirudh Agrawal aag.ikl@cbs.dk
What is OPEN Innovation?
Anirudh Agrawal aag.ikl@cbs.dk
http://www.youtube.com/watch?v=_GAferFgSF8
http://www.youtube.com/watch?v=xBEv7ukmz2U
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Open Innovation
Ref: chesbourgh
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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
42
• Grameen Danone JV• Mahindra Renault JV
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Why will I learn from you?
44
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
What can you do for me?
46
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Customer Involvement
• Customer involvement : User driven
innovation
• Examples : Apps for Android and IOS
• Examples from Social Entrepreneurship
perspective : www.NIF.org
Anirudh Agrawal aag.ikl@cbs.dk
Can customers innovate?
25 Sept 2012
49
Anirudh Agrawal aag.ikl@cbs.dk
Can customers innovate?
25 Sept 2012
50
Anirudh Agrawal aag.ikl@cbs.dk
Open Innovation video..geeky
• http://fora.tv/2008/04/08/MITs_Eric_von_Hippel_Open_Innovation
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Selling Inside Capabilities
• Selling : Selling inside capabilities
• Example : Selling patents, copyrights, trademarks
Anirudh Agrawal aag.ikl@cbs.dk25 Sept 2012
55
Anirudh Agrawal aag.ikl@cbs.dk
Licensing Out
• Licensing Out : Servitization of inside capabilities
• Example : Google Maps
Anirudh Agrawal aag.ikl@cbs.dk
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 :
Anirudh Agrawal aag.ikl@cbs.dk 58
Anirudh Agrawal aag.ikl@cbs.dk
• Open Source : Revealing internal technologies/capabilities to the market without any immediate selfish incentive
• Example : Opening up Android platform for third party aap development
Anirudh Agrawal aag.ikl@cbs.dk 60
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
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/
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
International
Entrepreneurship (Risks)
Unstable foreign currencies• Inefficient markets• Insufficient infrastructures to
support businesses• Limitations on market size
and growth
Anirudh Agrawal aag.ikl@cbs.dk
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
Anirudh Agrawal aag.ikl@cbs.dk
Corporate Social Entrepreneurship• GE Mec 40https://www.youtube.com/watch?
v=yB47wx-b6sY
• Danone Grameen Yogurdhttps://www.youtube.com/watch?
v=ZDkTDcI53hg
Anirudh Agrawal aag.ikl@cbs.dk
Anirudh Agrawal aag.ikl@cbs.dk
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)
Anirudh Agrawal aag.ikl@cbs.dk
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
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