Commercial Profile - Intertrade Ireland:Corporate entrepreurship can allow companies to reinvent themselves from the inside out

THE ROLE of entrepreneurship in creating new businesses and wealth in economies is generally well understood. Not so well understood, however, is the role it plays in enabling established companies to reinvent themselves and become more innovative. This is known as corporate entrepreneurship and was the theme of the latest in the series of lectures and seminars that make up InterTradeIreland’s All-island Innovation Programme.

The programme aims to promote and encourage innovation across the island by sharing international best practice and expertise in different areas of innovation with business leaders, policymakers, academics and knowledge transfer professionals. It is run in partnership with Queen’s University Belfast, NUI Galway and University College Dublin and is made up of a series of seminars, lectures and masterclasses. The latest lectures in the series took place in Dublin and Belfast last month and were delivered by Prof Peter Russo of the European Business School, who focused on how companies can become more entrepreneurial.

Corporate entrepreneurship has been defined as the process by which individuals inside organisations pursue opportunities without regard to the resources they currently control. An entrepreneurial manager draws together the various pieces of new technical knowledge that will provide a solution to a customer problem and matches this technical capability with the market. After this they garner the resources and skills needed to take the venture to the next stage. This process leads to the birth of new lines of business and to the transformation of companies through a renewal of their ideas, products and services.

Corporate entrepreneurship is key to making innovation happen inside established organisations, according to Russo. “In general, corporate entrepreneurship allows established companies to be more innovative,” he says. “And innovation has to be defined. If innovation just means the incremental improvement of existing products, this is probably not something for the corporate entrepreneur. Corporate entrepreneurship is about more radical innovation and exploring new products.”

It is also a vehicle to take advantage of the innovative opportunities that don’t fit neatly into a company’s core business. For most organisations, generating new ideas within a business is not a problem but the real challenge is to successfully commercialise those ideas. Corporate entrepreneurship requires employees to behave like entrepreneurs.

“It’s about doing things differently,” he says. “It is about leaving the path the company has followed over decades. It becomes vitally important as soon as a company sees the necessity of moving from its existing path.”

It is also a question of culture. “If you have a culture where everyone is following the rules and carrying out what’s in their job description that’s a sign the company needs to change,” he adds. “I’m not saying rigid structures don’t have their advantages . . . but they can also be barriers to innovation.”

He cites the example of Nokia as a company that became more entrepreneurial and innovative. “When Nokia manufactured toilet rolls they had certain processes and structures in place. When they moved over to making mobile phones, they had to throw them out. This is an extreme example . . . but it shows the benefits of corporate entrepreneurship.

“If we zoom in on the four areas – structure, people, culture and control – it can quickly be seen how it can be done. Take people, for example. The organisation has to ask what kind of people it wants – followers of rules or creative people. If it’s creative people, it needs to have a culture that allows them to be creative.”

He also believes that a sense of corporate optimism must prevail. “You need to see the glass half full,” he argues. “There is a likelihood of failure in every project and this must be recognised. In fact, it is important in some ways to motivate people to fail.

“You must eliminate the fear of failure without posing risks to the company itself. After that you must decentralise competencies in the company and give people the freedom to innovate. You cannot call an employee every day and ask them how many ideas they developed yesterday – it doesn’t work like that.”

Aidan Gough, InterTradeIreland strategy and policy director, believes innovation is critical to the future of both economies, north and south.

“As markets contract, businesses need to become more innovative in aligning their products and services to market needs and exploiting new opportunities quickly,” he says. “InterTradeIreland has a key focus on innovation as a means to improve business capability and competitiveness.”

See: innovationireland.org