This is the last in a series of posts describing the essence of the four models of corporate entrepreneurship and the conditions it takes to succeed. The four models are based on organizational ownership—who, if anyone, within the company has primary ownership for creating new businesses?—and resource allocation—is money dedicated to corporate entrepreneurship or are new business concepts funded in an ad hoc manner, from any sources that have the interest and the available budget?
In our last posting, we described the Advocate Model, in which a company assigns organizational ownership for driving the creation of new businesses to a designated corporate-level group, but it intentionally provides the group with only a modest budget. In the Producer model, the group assigned to drive new business creation is also provided significant dedicated funds.
Because business units may shun longer-term investments, the literature often suggests that companies set up a separate innovation organization. A separate innovation organization can protect emerging projects from turf battles and encourage cross-unit collaboration. The Producer Model is appropriate for companies seeking to conquer new growth domains or discover breakthrough opportunities. It is usually employed when there is turbulence or high entry barriers in existing or targeting markets—such as in many high technology markets—requiring an integrated and consistently resourced approach. It’s one of the better ways to build truly disruptive concepts that would otherwise be suppressed by the existing businesses that feel threatened.
However, such “skunk works” typically have problems transitioning proven new businesses back into the mainstream company. To succeed, contemporary Producer organizations stay closely tied to corporate leadership and strategy and support the commercialization, transition and scaling of new businesses. Otherwise, they are prone to become isolated and can be undermined by existing business units, particularly if they are perceived as pilfering top creative talent.
So what’s your best approach for being a business builder within the Producer model? First, make sure that it is organized to create a real career advancement pathway for you. Producer organizations are expensive and hence prone to cutbacks, especially when there are leadership changes at the top. Second, don’t underestimate the time and effort required to move proven concepts out of the innovation organization and back into the mainstream business. You need to plan up front for the transition of a new business, to anticipate where needed changes to the existing business system might create problems or even directly challenge existing business units. Often, special efforts must be made to experiment in the market with the new business system, in order to win over internal skeptics.
Read more from Robert Wolcott and Michael Lippitz on how corporate entrepreneurs can take their vision to market and help their companies Grow From Within.
Robert Wolcott and Michael Lippitz are leading authorities on innovation and corporate entrepreneurship at the Kellogg School of Management at Northwestern University, and co-authors of Grow From Within: Mastering Corporate Entrepreneurship and Innovation (McGraw Hill, 2009). In the past six years, they have studied more than 30 companies across industry sectors and developed an ongoing dialogue with them about corporate entrepreneurship through the Kellogg Innovation Network (KIN).