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Welcome back

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In previous session,

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we talked about two different types of innovation

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One, incremental innovation from big company

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Two, radical innovation from
small and entrepreneur company

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Then, we discussed about

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why we care for radical innovation

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from small and entrepreneur company

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Why?

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Because these radical innovations

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can sometimes kill us

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although you are big company

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although you dominate the market

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It doesn't matter

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If you become victim of disruptor

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Disruptors

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with radical innovation can kill you at any time

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How do we avoid this problem?

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Only solution is

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to act like an entrepreneur company

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You think like a startup

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although you are a big company

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It doesn't matter

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To avoid this problem,

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you always have to put effort in it

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to be an entrepreneur company inside big company

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This is behind logic

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of corporate entrepreneurship

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Let's define the corporate entrepreneurship

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Corporate entrepreneurship is the practice

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of developing new products, services, processes,

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or even entire ventures within your company

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Why?

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Because you want to avoid 
being victom of disruptor

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It aims to bring 
startup-like agility into corporations

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Before we go into the main topic,
let's compare

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the general entrepreneurship
and corporate entrepreneurship

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As you already know,
general entrepreneurship is based on

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independent founders

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On the other hand,

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corporate entrepreneurship 
is focused on employees

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Who own the company?
Who has the ownership?

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In general entrepreneurship,

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individual entrepreneur own the company

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What about the corporate entrepreneurship?

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Corporate entrepreneurship is
owned by the parent company

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So, the owner is the parent entrepreneur

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What about risk?

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In the independent general entrepreneurship,

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there would be high personal and financial risk

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On the other hand, corporate entrepreneurship

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employees can act as entrepreneurs 
inside the company

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But they received the salaries,

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and they had resources, people,

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infrastructure in the company

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So, they don't have too much risk on it

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Lower personal risk,

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and risk shared with the company

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And, funding

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If you start your business,

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then you should secure outside funding
by yourself

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On the other hand,

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if you do something in the company,

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as a corporate entrepreneurship,

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then, your project can be 
funded by internalization

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These are all differences

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Let's move on to the key characteristics of 
corporate entrepreneurship

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What are they?

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There are 3 key characteristics 
of corporate entrepreneurship

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Innovation

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Risk-Taking

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Proactiveness

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What is innovation?

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Everybody knows what innovation is

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Pursuing novel ideas,

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creative processes, and experimentation

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Those are innovation

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What about risk taking?

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Risk-Taking means

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willingness to commit significant resources to

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unknown opportunities

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That is risk-taking

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What about proactiveness?

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Proactiveness means,

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you anticipate and act on future opportunities

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rather than current situation

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Remember, innovation, 
risk-taking, and proactiveness

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We say those three elements

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make entrepreneur orientation 
in big corporation

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If the corporation
have a entrepreneur orientation

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High level of entrepreneur orientation

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Then, we expect to have higher performance

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Other than that, we cannot

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generate higher performance

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This is basic idea about 
corporate entrepreneurship

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Why corporate entrepreneurship matter?

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Again, the first and foremost reason
why we care for

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corporate entrepreneurship is

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We want to avoid
being a victim of disruptors

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The best way to avoid

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the situation of victim of disruptor is that

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We act, think, and behave

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like entrepreneur company

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although we are big company
and have long history

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Second reason

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Corporate entrepreneurship 
diversify revenue streams

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and reduce reliance on your current products

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Third one

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Corporate entrepreneurship help companies

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stay ahead of market trend and competitors

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Then later, what happen?

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You can get competitive advantage

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Another reason is,
entrepreneurial culture

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attract top talent

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and help retain high performers

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You can keep your great employees

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If you don't have entrepreneurial culture inside,

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then they will leave your company

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because they feel boring

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The high quality employees,
they want to challenge something

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They want to make something new

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Do not make them feel boring

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I want to introduce the current research

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I participated in this research

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So basically, we conducted two studies

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The basic idea of this study is

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to replicate a seminar research

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about entrepreneurial orientation

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In 1989,

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Covin and Slevin conducted 
research and they analyzed

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the relationship between

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entrepreneurial orientation in a big corporation

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and the performance of the big corporation

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And they found that

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the more entrepreneurial orientation they have,

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the better their performance are

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This is a empirical finding

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We wanted to replicate this research,

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this result again

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So we conducted study 1

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with 119 American companies

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And we conducted study 2

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with 1479 Chinese public companies

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from 2010 to 2017

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Then we investigated the relationship

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between entrepreneurial orientation 
and the performance

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Exactly the same as 
Covin and Slevin's 1989 study

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EO, entrepreneurial orientation, 
is characterized by three components

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Remember that?

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Innovation, and risk-taking, and proactiveness

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What is the result?

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Both studies found that

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higher EO, entrepreneurial orientation,

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is associated with better firm performance

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So, our finding is consistent with 
the seminar paper's findings

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Study 1 said that EO had

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a significant positive effect

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on the performance in American companies

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Study 2 revealed the same

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EO was positively related to

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ROA, which is performance,

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in Chinese public companies

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So more important thing is,

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when the companies are 
in the hostile situation,

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entrepreneurial orientation 
is more beneficial

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If your outside situation is great, fine,

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then, entrepreneurial orientation
is not important

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But if you are in the horrible situation,

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then entrepreneurial orientation 
is a total payoff

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This is very important message

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Think about why we care for
the corporate entrepreneurship

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First, we want to avoid 
situation of victim of disruptor

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Also, we want to

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attract the high quality employees

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Also, we want to increase our performance

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There are several reasons

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Let's move on to real situations

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Real example

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Look at this Asahiyama Zoo

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Have you heard about Asahiyama Zoo?

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This zoo is in Hokkaido

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You know where is Hokkaido?

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Hokkaido is far north area of Japan

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This zoo was opened in 1967

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And this zoo recently faced

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the possibility of the close down

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because of low number of visitors

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Only 260,000 people a year

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Why no number of people?

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Because it's really far

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But later on, what happened?

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This zoo became 
the most famous zoo in Japan

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because of its turnaround story

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Do you remember 
when you need entrepreneur orientation?

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When you face the horrible situation,

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then entrepreneur orientation totally pay off

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So, entrepreneur orientation means

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you should have innovation,

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you should have proactiveness,

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you should take a risk

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Those three elements are very important

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for your corporate entrepreneurship

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So, the Asahiyama Zoo management team

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tried to change this situation

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The zoo started changing 
the exhibition itself

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from the passive exhibition 
to the active exhibition

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Specifically, they changed
the exhibition from

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traditional boarding 
to the behavioral exhibition style

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What do you mean by that?

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The zoo let visitors see animals walking

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See animals behave

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And since then, attendance

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increased dramatically

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and the monthly visitors 
reached 320,000 people in 2004

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Then annual visitor reached out

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3 million people

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So, what happened?

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Asahiyama Zoo became

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the number two ranked zoo in Japan

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Number one zoo is located in Tokyo,

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Ueno Zoo, that is number one

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And then it's ranking two,

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Asahiyama Zoo,

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because of the behavioral exhibition style

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So anyway, this innovation, 
risk-taking, proactiveness,

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saved Asahiyama Zoo

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I'm going to give you another example

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There is Nintendo

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You know that Nintendo is 
the number one company

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in the video game industry, right?

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And this company generated
$13.9 billion in revenue

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and $3.15 billion in profit, 
I think, in 2003

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Anyways, they performed very well

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and they enjoyed much of a normal profit

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But 130 years ago,

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this company looked like this

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The major product of the Nintendo
was not video game

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Their major product was playing card

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You can see the playing card

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This is a traditional playing card,

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Hanafuda, in Japan and Korea

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And then later, what happened?

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Grand-grandson took over the company

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His name was Hiroshi, Yamauchi Hiroshi,

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and he changed the company in 1960 entirely

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He changed this company

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from the traditional playing card company

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to the video game companies

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Because of his innovation,

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his risk-taking 
and his proactiveness made it happen

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Let's move on to another example

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This is a Korean case

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Have you heard about Samjin Fishcake?

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Samjin Fishcake has a long history

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Samjin Fishcake was started in 1953 
in Busan, Korea

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Busan is very close to the ocean

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And then, the last picture

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is the old factory to produce the fish cakes

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Original fish cake was 
a side dish for the Korean

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Then, the factory produced fish cake,

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and they delivered this product

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to the grocery store

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This is the process

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Then later, what happened?

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Samjin Fishcake, 
made a decent amount of the money,

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and the son of the founder

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took over this company,

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and grandson of the founder 
studied abroad in America,

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and the grandson of the founder 
became the accountant in America

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That's what happened

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Then later, what happened?

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Son of the founder was ill

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Then he called his son,

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which is a grandson of the founder,

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as an accountant,

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and called him just to come back to Korea

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and take over the company

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So, he is a grandson of the founder

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Then when he came back to Korea,

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he saw the market situation is changing

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And competition is increasing

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Our revenue is just staying the same

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So, he felt that, we need to change it

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So, after that, what happened?

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He makes different types of food

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He introduced a bakery style fish cakes

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Previous Samjin Fishcake focused on B2B

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B2B means from factory to the grocery store

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But later on, he introduced B2C types

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The B2C style businesses

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Like a bakery,

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they produce a menu 
for the bakery style fish cake store,

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and they open up the fish cake stores 
all over the world

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Then later, what happened?

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The revenue of this company

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jumped up 10 times

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Think about 10 times

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From $8 million in 2013

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to $90 million in 2018

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This is a new type of business

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It's kind of a bakery

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Let's look at another example in Europe

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This company is OP Group in Finland

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Originally, this company

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was a fire insurance company in 1891

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Then later, this company became

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the largest financial company in Finland

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They had more than 12,000 employees

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What happened in this company? 
What happened?

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This company

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established a new business unit

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with about 150 employees

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and provided tons of 
the money annually to this team

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and ask them to
develop the new product, new services

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And ask them to apply

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some entrepreneurial method

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Entrepreneurial methods such as

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lean startup, design thinking, 
and agile methodology, something like that,

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in order to develop the new product

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So, what is the result?

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This new business unit produced

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more than 40 new services every year

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Can you imagine?

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Although they are in the big company, 
which is the OP Group,

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they act and behave and think 
like an entrepreneurial company

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So, that's why they produce 
a lot of new services

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Such as car sharing services,

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mobile vehicle inspection services,

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checkbook services,

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healthcare services,

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funeral services, even real estate services

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They produced a lot of services

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Based on their effort, 
OP Group achieved high success

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Without those kind of efforts, 
they cannot be sustainable

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Or they cannot enjoy 
the above-normal profits sustainably

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Because achieving 
sustainable competitive advantage

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is really difficult

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Also, there is radical innovation out there

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that kills us suddenly

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So, we always keep an eye on

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the new technology out there

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Why?

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Because nobody knows who will kill us

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So, in this session,
we discussed about

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the concept of corporate entrepreneurship

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and why we care for 
the corporate entrepreneurship

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Also, we discussed about real examples