Welcome back
In previous session,
we talked about two different types of innovation
One, incremental innovation from big company
Two, radical innovation from small and entrepreneur company
Then, we discussed about
why we care for radical innovation
from small and entrepreneur company
Why?
Because these radical innovations
can sometimes kill us
although you are big company
although you dominate the market
It doesn't matter
If you become victim of disruptor
Disruptors
with radical innovation can kill you at any time
How do we avoid this problem?
Only solution is
to act like an entrepreneur company
You think like a startup
although you are a big company
It doesn't matter
To avoid this problem,
you always have to put effort in it
to be an entrepreneur company inside big company
This is behind logic
of corporate entrepreneurship
Let's define the corporate entrepreneurship
Corporate entrepreneurship is the practice
of developing new products, services, processes,
or even entire ventures within your company
Why?
Because you want to avoid being victom of disruptor
It aims to bring startup-like agility into corporations
Before we go into the main topic, let's compare
the general entrepreneurship and corporate entrepreneurship
As you already know, general entrepreneurship is based on
independent founders
On the other hand,
corporate entrepreneurship is focused on employees
Who own the company? Who has the ownership?
In general entrepreneurship,
individual entrepreneur own the company
What about the corporate entrepreneurship?
Corporate entrepreneurship is owned by the parent company
So, the owner is the parent entrepreneur
What about risk?
In the independent general entrepreneurship,
there would be high personal and financial risk
On the other hand, corporate entrepreneurship
employees can act as entrepreneurs inside the company
But they received the salaries,
and they had resources, people,
infrastructure in the company
So, they don't have too much risk on it
Lower personal risk,
and risk shared with the company
And, funding
If you start your business,
then you should secure outside funding by yourself
On the other hand,
if you do something in the company,
as a corporate entrepreneurship,
then, your project can be funded by internalization
These are all differences
Let's move on to the key characteristics of corporate entrepreneurship
What are they?
There are 3 key characteristics of corporate entrepreneurship
Innovation
Risk-Taking
Proactiveness
What is innovation?
Everybody knows what innovation is
Pursuing novel ideas,
creative processes, and experimentation
Those are innovation
What about risk taking?
Risk-Taking means
willingness to commit significant resources to
unknown opportunities
That is risk-taking
What about proactiveness?
Proactiveness means,
you anticipate and act on future opportunities
rather than current situation
Remember, innovation, risk-taking, and proactiveness
We say those three elements
make entrepreneur orientation in big corporation
If the corporation have a entrepreneur orientation
High level of entrepreneur orientation
Then, we expect to have higher performance
Other than that, we cannot
generate higher performance
This is basic idea about corporate entrepreneurship
Why corporate entrepreneurship matter?
Again, the first and foremost reason why we care for
corporate entrepreneurship is
We want to avoid being a victim of disruptors
The best way to avoid
the situation of victim of disruptor is that
We act, think, and behave
like entrepreneur company
although we are big company and have long history
Second reason
Corporate entrepreneurship diversify revenue streams
and reduce reliance on your current products
Third one
Corporate entrepreneurship help companies
stay ahead of market trend and competitors
Then later, what happen?
You can get competitive advantage
Another reason is, entrepreneurial culture
attract top talent
and help retain high performers
You can keep your great employees
If you don't have entrepreneurial culture inside,
then they will leave your company
because they feel boring
The high quality employees, they want to challenge something
They want to make something new
Do not make them feel boring
I want to introduce the current research
I participated in this research
So basically, we conducted two studies
The basic idea of this study is
to replicate a seminar research
about entrepreneurial orientation
In 1989,
Covin and Slevin conducted research and they analyzed
the relationship between
entrepreneurial orientation in a big corporation
and the performance of the big corporation
And they found that
the more entrepreneurial orientation they have,
the better their performance are
This is a empirical finding
We wanted to replicate this research,
this result again
So we conducted study 1
with 119 American companies
And we conducted study 2
with 1479 Chinese public companies
from 2010 to 2017
Then we investigated the relationship
between entrepreneurial orientation and the performance
Exactly the same as Covin and Slevin's 1989 study
EO, entrepreneurial orientation, is characterized by three components
Remember that?
Innovation, and risk-taking, and proactiveness
What is the result?
Both studies found that
higher EO, entrepreneurial orientation,
is associated with better firm performance
So, our finding is consistent with the seminar paper's findings
Study 1 said that EO had
a significant positive effect
on the performance in American companies
Study 2 revealed the same
EO was positively related to
ROA, which is performance,
in Chinese public companies
So more important thing is,
when the companies are in the hostile situation,
entrepreneurial orientation is more beneficial
If your outside situation is great, fine,
then, entrepreneurial orientation is not important
But if you are in the horrible situation,
then entrepreneurial orientation is a total payoff
This is very important message
Think about why we care for the corporate entrepreneurship
First, we want to avoid situation of victim of disruptor
Also, we want to
attract the high quality employees
Also, we want to increase our performance
There are several reasons
Let's move on to real situations
Real example
Look at this Asahiyama Zoo
Have you heard about Asahiyama Zoo?
This zoo is in Hokkaido
You know where is Hokkaido?
Hokkaido is far north area of Japan
This zoo was opened in 1967
And this zoo recently faced
the possibility of the close down
because of low number of visitors
Only 260,000 people a year
Why no number of people?
Because it's really far
But later on, what happened?
This zoo became the most famous zoo in Japan
because of its turnaround story
Do you remember when you need entrepreneur orientation?
When you face the horrible situation,
then entrepreneur orientation totally pay off
So, entrepreneur orientation means
you should have innovation,
you should have proactiveness,
you should take a risk
Those three elements are very important
for your corporate entrepreneurship
So, the Asahiyama Zoo management team
tried to change this situation
The zoo started changing the exhibition itself
from the passive exhibition to the active exhibition
Specifically, they changed the exhibition from
traditional boarding to the behavioral exhibition style
What do you mean by that?
The zoo let visitors see animals walking
See animals behave
And since then, attendance
increased dramatically
and the monthly visitors reached 320,000 people in 2004
Then annual visitor reached out
3 million people
So, what happened?
Asahiyama Zoo became
the number two ranked zoo in Japan
Number one zoo is located in Tokyo,
Ueno Zoo, that is number one
And then it's ranking two,
Asahiyama Zoo,
because of the behavioral exhibition style
So anyway, this innovation, risk-taking, proactiveness,
saved Asahiyama Zoo
I'm going to give you another example
There is Nintendo
You know that Nintendo is the number one company
in the video game industry, right?
And this company generated $13.9 billion in revenue
and $3.15 billion in profit, I think, in 2003
Anyways, they performed very well
and they enjoyed much of a normal profit
But 130 years ago,
this company looked like this
The major product of the Nintendo was not video game
Their major product was playing card
You can see the playing card
This is a traditional playing card,
Hanafuda, in Japan and Korea
And then later, what happened?
Grand-grandson took over the company
His name was Hiroshi, Yamauchi Hiroshi,
and he changed the company in 1960 entirely
He changed this company
from the traditional playing card company
to the video game companies
Because of his innovation,
his risk-taking and his proactiveness made it happen
Let's move on to another example
This is a Korean case
Have you heard about Samjin Fishcake?
Samjin Fishcake has a long history
Samjin Fishcake was started in 1953 in Busan, Korea
Busan is very close to the ocean
And then, the last picture
is the old factory to produce the fish cakes
Original fish cake was a side dish for the Korean
Then, the factory produced fish cake,
and they delivered this product
to the grocery store
This is the process
Then later, what happened?
Samjin Fishcake, made a decent amount of the money,
and the son of the founder
took over this company,
and grandson of the founder studied abroad in America,
and the grandson of the founder became the accountant in America
That's what happened
Then later, what happened?
Son of the founder was ill
Then he called his son,
which is a grandson of the founder,
as an accountant,
and called him just to come back to Korea
and take over the company
So, he is a grandson of the founder
Then when he came back to Korea,
he saw the market situation is changing
And competition is increasing
Our revenue is just staying the same
So, he felt that, we need to change it
So, after that, what happened?
He makes different types of food
He introduced a bakery style fish cakes
Previous Samjin Fishcake focused on B2B
B2B means from factory to the grocery store
But later on, he introduced B2C types
The B2C style businesses
Like a bakery,
they produce a menu for the bakery style fish cake store,
and they open up the fish cake stores all over the world
Then later, what happened?
The revenue of this company
jumped up 10 times
Think about 10 times
From $8 million in 2013
to $90 million in 2018
This is a new type of business
It's kind of a bakery
Let's look at another example in Europe
This company is OP Group in Finland
Originally, this company
was a fire insurance company in 1891
Then later, this company became
the largest financial company in Finland
They had more than 12,000 employees
What happened in this company? What happened?
This company
established a new business unit
with about 150 employees
and provided tons of the money annually to this team
and ask them to develop the new product, new services
And ask them to apply
some entrepreneurial method
Entrepreneurial methods such as
lean startup, design thinking, and agile methodology, something like that,
in order to develop the new product
So, what is the result?
This new business unit produced
more than 40 new services every year
Can you imagine?
Although they are in the big company, which is the OP Group,
they act and behave and think like an entrepreneurial company
So, that's why they produce a lot of new services
Such as car sharing services,
mobile vehicle inspection services,
checkbook services,
healthcare services,
funeral services, even real estate services
They produced a lot of services
Based on their effort, OP Group achieved high success
Without those kind of efforts, they cannot be sustainable
Or they cannot enjoy the above-normal profits sustainably
Because achieving sustainable competitive advantage
is really difficult
Also, there is radical innovation out there
that kills us suddenly
So, we always keep an eye on
the new technology out there
Why?
Because nobody knows who will kill us
So, in this session, we discussed about
the concept of corporate entrepreneurship
and why we care for the corporate entrepreneurship
Also, we discussed about real examples