Creating A Culture of Entrepreneurship
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Dr. G. Richard Patton is the featured speaker. He has been a faculty member at the University of Pittsburgh's Katz Graduate School of Business since 1976, where he teaches courses in entrepreneurship, innovation, and strategic management. He was also the president and CEO of an investment fund that specialized in early stage venture capital investments. The presentation overview includes topics on entrepreneurship, innovation, strategic management, and examples from companies like Google and GE. It discusses the importance of innovation, different types of innovation, traits of successful innovators, and building a systematic innovation capability in organizations.
Creating A Culture of Entrepreneurship
- 1. EMBA Worldwide Are you ready? You can be.® www.emba.pitt.edu | 412-648-1600
- 2. Today’s Featured Speaker: Dr. G. Richard Patton Specialization: Organizations and Entrepreneurship Dr. Patton has been a Katz faculty member since 1976, teaching courses in entrepreneurship, innovation and strategic management in graduate and executive programs. He has also taught at Carnegie Mellon University’s Graduate School of Industrial Administration and Chulalongkorn University’s Graduate School of Management in Bangkok, Thailand as well as MBA programs in Europe and South America. Dr. Patton was President, CEO, and Director of the Western Pennsylvania Adventure Capital Fund from 1997-2013, an investment fund that specialized in early stage venture capital investments in the Western Pennsylvania area. In addition to the fund’s portfolio companies, he is active in private equity investing and has been involved in the start-up and financing of numerous companies, serving on the Board of Directors of multiple companies. www.emba.pitt.edu | 412-648-1600
- 3. Overview • Entrepreneurship and Strategic Management • Innovation Overview • A Model of Innovation capability • Google • General Electric Corporation 3
- 4. What is Strategy? Strategy is the direction and scope of a business over the long term in order to achieve competitive advantage through its configuration of resources within a changing environment, meeting the needs of markets and fulfilling stakeholder expectation. 4
- 5. “SUCCESS” • Strategy must match environment • Capabilities must match strategy Environment Strategy Capabilities 5
- 6. Environment • Macro Forces – Social, political – Economic, technology • Competitive Forces – Customers – Suppliers – Competitors 6 Capabilities • • • • • • Financial Physical Technology Systems Human Culture
- 7. Strategic Equation at Work • Environment Strategy • Repetitive Stable Precedents Capabilities Custodial, Reject change Entrepreneurial • Turbulent Aggressive Flexible ~ Innovative 7
- 8. What is Entrepreneurship? • Individual action……. • Creating or recognizing an opportunity and pursuing it regardless of the resources controlled………… • Creating something out of nothing………. 8
- 9. What is Entrepreneurship? • A management style……. – Risk taking – Proactivity – Innovation • Integration of entrepreneurial skills into a large organizations strategic vision to nurture a climate of creativity and innovation…intrapreneurship 9
- 10. Traditional Managers versus Intrapreneurs (Gifford Pinchot) Traditional Managers Intrapreneurs Primary Motives Power-motivated Traditional corp. rewards Self-motivated Freedom, access to resources, rewards Decisions Agrees with those in power What does boss want? Gets others to agree to private vision Time Orientation Responds to quotas and budgets Urgency to meet self-imposed timetables Action Delegates. Supervising and reporting Has a bias for action Delegate when necessary Courage/Destiny Sees others as in charge of destiny/outcome Self-confident and courageous 10
- 11. Traditional Managers versus Intrapreneurs ( Con’t.) Traditional Managers Intrapreneurs Attention Focus Primarily on events inside corporation Both inside and outside sells insiders on need, focus on customer Risk Careful and risk adverse Moderate and calculated risk-taking Status Statue Symbols Treasurers symbols of freedom and achievement Failure and mistakes Avoid mistakes and surprises Learn from mistakes but manage visibility Attitude toward system Sees system as protective Dislikes system but learns to manipulate it 11
- 12. What’s Different about Corporate Entrepreneurship? • Agency Issue: representing interests of a broader set of stakeholders • Constrained Opportunities: leverage and build • Organization Reality – Implementation Focus – Short-term Pressures 12
- 14. Importance of Innovation • 65% of CEO’s in a BCG study rated innovation as one of their top 3 priorities for the next ten years. • 2/3 of CEO’s in AMA survey “extremely” or “highly” important. “The inability to innovate results in decline and extinction.” -Peter Drucker 14
- 15. Importance of Innovation • …as the business world becomes increasingly complex and still more competitive, companies are turning to innovation as one of the few durable sources of competitive advantage… • …the necessity of innovation is now universally accepted, but beyond their enthusiasm for bright ideas, most leaders know that to be successful over the long term they have to develop a strong innovation culture… 15
- 16. Drivers of Innovation • External: – – – – – Respond to customer demands Technology Rate of change ~ product life cycles Collaborations/alliances with customers Globalization/Increased competition • Internal: – Revenue/profit margins/market share – Operational efficiency 16
- 17. Types of Innovation • Business Model or Strategy Innovation • Process or Operational Efficiency Innovation • Products/Service/Markets Innovation 17
- 18. Sources of Innovative Ideas Employees Business Partners Customers Consultants Competitors Associations, trade shows, conference… Internal Sales/Service Internal R&D Academia 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 18
- 19. Traits of Successful Innovators
- 20. Traits of Successful Innovators • Senior Management Buy-in and Support • External and Customer Focus – Lead users – Market research – Customization 20
- 21. Traits of Successful Innovators • Teamwork and Collaboration – – – – Diversity Cross-functional Leader support Internal and external • Correct Resources – Time ~ Money ~ Priority – Threshold of sufficiency 21
- 22. Traits of Successful Innovators • Org. Communication and Sharing – – – – All directions Work-in-progress Lessons learned Collaboration tools • Ability to Select Right Ideas – Unit manager responsibility – Independent reviews 22
- 23. Traits of Successful Innovators • Ability to Identify Creative People – Recruit/retain – Train – Stimulating environment – Time and resources • Freedom to Innovate – Smart Risk Taking 23
- 24. Traits of Successful Innovators • Innovation Measurement and Scorecard – Innovation index – Customer metrics – Employee metrics • • • • • • Customer satisfaction Market share New products produced Innovation as % of revenues R & D spending Intellectual property 24
- 25. Traits of Successful Innovators • Compensation – Evaluation and reward models • • • • • Non-financial Assignments and autonomy Individual financial rewards Impact in promotion decisions Team rewards 25
- 26. Barriers to Innovation • • • • • • • Unsupportive culture and climate Insufficient resources No formal strategy for innovation Lack of clear goals/priorities Lack of leadership/management support Short-term mindset Structure not geared to innovation 26
- 27. Building A Systematic Innovation Capability Systematic approach and tools to promote idea generation and portfolio management Process and Tools Leadership & Organization Entrepreneurial Capability Company leaders and organization aligned around a common vision of innovation Culture & Values People & Skills Disciplined approach to building innovation capabilities across the organization Collaborative, open culture and incentives that reward challenging the status quo 27
- 28. The Google Example: Marissa Mayer’s 9 Principles of Innovation • Innovation, not instant perfection – Launch early and often – Google Labs • Ideas come from everywhere – Internal idea list and post comments – Growth in ideas • A license to pursue your dreams – 20% of engineers time (50% ideas) – 70%/20%/10% for management 28
- 29. Marissa Mayer’s 9 Principles of Innovation • Morph projects, don’t kill them • Share as much information as you can – MOMO – Monday Snippets – Friday All Hands • Users, users, users 29
- 30. Marissa Mayer’s 9 Principles of Innovation • Data is apolitical – Tests and experiments – Metrics and measurement • Creativity loves constraints • You’re brilliant? We’re hiring! – Big problems that matter – Do great things 30
- 31. The GE Example: The Jack Welch Era • • • • 20 year tenure (1981-2001) Annual return to shareholders 23% $380 billion increase in shareholder value Driven by: – Acquisitions – Timely deal making – Short-term product development and productivity – Internal focus – cost cutting/efficient operations “…a disciplined, efficient machine that delivered on its promise of consistent growth in sales and earnings…” 31
- 32. The Jeff Immelt Era: • • • • • Named CEO 9-7-2001 Internet bubble burst Enron and Tyco Global political instability Stock price decline of 60% “ I looked at the world post 9/11and realized that over the next 10 or 20 years, there was not going to be much tailwind…..It would be driven more by innovation and a premium would be placed on companies that could generate their own profits.” 32
- 33. Strategic Equation at Work • Environment Strategy • Repetitive Stable Precedents • Turbulent Aggressive Capabilities Custodial, Reject change Flexible ~ Innovative 33
- 34. Innovation Capabilities: Making Corporate Innovation a Core Competence • • • • • • • Skills Organizational Structures Organizational Processes Metrics Culture Systems Tools 34
- 35. • Skills – Technical Skills • 5000 new engineers • Enhanced status – officers • R&D funding, long-term, focus – Marketing Expertise • 2000 new hires/outsiders • CMO • External focus 35
- 36. – Growth Leadership Skills – training • • • • • External focus Think clearly Imagination and courage Inclusiveness and people In-depth expertise 36
- 37. • Structures – Commercial Council ~ best and brightest marketing – IB Review Meetings ~ front line with CEO – Business level forums ~ transportation growth council 37
- 38. • Processes – IB Process – Growth Platform Process – Growth Leader Training • Metrics – Organic growth 4% -> 8% – Net Promoter Score (focus on customers) – 5 X $100 MM IB Proposals – Growth Leader Criteria 38
- 39. • Systems – St. plans Op. budgets Org. design – Organizational and Leadership Review • Culture – Discipline – Accountability – Flexibility • Tools – best practices and analytical tools 39
- 40. GE versus Successful Traits • • • • • • • • • • Senior Management Buy-in External and Customer Focus Teamwork and Collaboration Correct Resources Organizational Communication Ability to Select Correct Ideas Identify Creative People Freedom to Innovate Measurement Compensation 40
- 41. GE versus Barriers to Innovation • • • • • • • Unsupportive culture and climate Insufficient Resources No formal strategy for innovation Lack of clear goals/priorities Lack of leadership/management support Short-term mindset Structure not geared to innovation 41
- 42. Lessons • Example of the process of “strategic Shift”acquisition-based, productivity driven strategy versus an innovation-based organic growth strategy • A company’s strategic intent needs to be matched by both organizational capability and managerial competence….an example of asset development 42
- 43. • Organizational Capability and its development as a source of competitive advantage • Translating broad strategic objectives into a program of implementable actions • The role of managers at the front, senior and top levels in shaping and implementing a growth strategy 43
- 44. EMBA Worldwide Are you ready? You can be.® www.emba.pitt.edu | 412-648-1600
- 45. Value Proposition • • • • • Our Reputation Career Success Worldwide Impact ROI Program Details www.emba.pitt.edu | 412-648-1600
- 46. Pitt’s Reputation • University of Pittsburgh celebrating 225 years of education excellence • Member of the prestigious Association of American Universities (one of only four in PA) • Nearly 300,000 graduates worldwide www.emba.pitt.edu | 412-648-1600
- 47. The Joesph M. Katz Graduate School of Business • Founding member of the AACSB • Second oldest executive education program in the world • More than 30,000 graduates in 160 countries worldwide • Top 20 public MBA program www.emba.pitt.edu | 412-648-1600
- 48. Katz Faculty Quality • 97% with doctoral degrees • 97% tenured, full-time professors • Extensively and exhaustively published research and actively involved in creation of new knowledge • Internationally recognized for teaching and research • Global perspective – teach in all three locations www.emba.pitt.edu | 412-648-1600
- 49. Rankings • 8th program among U.S. public institutions • 22nd overall in the U.S. • 57th globally - Financial Times, 2013 www.emba.pitt.edu | 412-648-1600
- 50. Career Success www.emba.pitt.edu | 412-648-1600
- 51. The Katz EMBA Worldwide program is a comprehensive experience in business management where you will gain: •The international language of business •The ability to network yourself into a more successful career •The tools to strategize effectively and lead others •The vision to manage your organization more effectively www.emba.pitt.edu | 412-648-1600
- 52. EMBA Curriculum www.emba.pitt.edu | 412-648-1600
- 53. Executive in Residence • Resource for all EMBA Worldwide students & alumni • Résumé reviews, networking advice, interview experience • Career advice on managing and growing within your present firm www.emba.pitt.edu | 412-648-1600
- 54. Worldwide Impact www.emba.pitt.edu | 412-648-1600
- 55. Global Executive Forums • Delivery of core course content in a global context and in-depth study through elective courses. • Insights into regional business practices and political, economic and social conditions. • Integration of global class and enhancement of global network. www.emba.pitt.edu | 412-648-1600
- 56. Immerse Yourself Spring 2014: Pittsburgh, PA – Global Executive Forum I Organizational Behavior Fall 2014: Europe – Global Executive Forum II Business Ethics and Public Policy Negotiations in Business Spring 2015: South America – Global Executive Forum III Strategic Visioning for a Global Future Strategic Leadership for Change Fall 2015: Pittsburgh, PA USA – Global Executive Forum IV Faculty selected topics, to be announced *Topics and schedule are subject to change. **Students are subject to the rules of the Schengen Visa agreement and are expected to have the appropriate documentation needed to travel for the EMBA program. www.emba.pitt.edu | 412-648-1600
- 57. Return On Investment www.emba.pitt.edu | 412-648-1600
- 58. Return on Investment • EMBA graduates received a 17.3% average salary increase by the end of the program. • Over 60% of students are likely to recommend the program to a friend or colleague. • Over 54% say they are extremely likely to support the program as alumni. -Executive MBA Council 2012 Student Exit Benchmarking Survey www.emba.pitt.edu | 412-648-1600
- 59. Program Details www.emba.pitt.edu | 412-648-1600
- 60. Program Overview • 18 months in duration • Classes held on alternating weekends (Friday and Saturday every other weekend) • Tuition includes: • University fees, all books and course materials, hotel accommodations and select meals at the Global Executive Forums • Financial aid: www.oafa.pitt.edu/gradlist.aspx • Next class begins May 2014 www.emba.pitt.edu | 412-648-1600
- 61. 2013/14 Class Profile • 71 students among the three locations • 13 years professional experience, average • 36 years of age • 7 years of management experience, average www.emba.pitt.edu | 412-648-1600
- 62. Industry Sectors • • • • • • • Manufacturing Pharmaceutical Health Care Technology Consumer Products Financial Services Others including Consulting, Nonprofit and Energy www.emba.pitt.edu | 412-648-1600
- 63. Requirements • Minimum five years full-time work experience or equivalent military experience • • Application form at www.business.pitt.edu/katz/emba/admissions Résumé • University degree & transcripts • • Personal Statement (self-recommendation) Interview • Two letters of professional recommendation • GMAT (optional in some cases) www.emba.pitt.edu | 412-648-1600
- 64. EMBA Webinars Coming Soon! Navigating Your Career – March 25, 10:00 a.m. EST Presented by Ned Sherry, Executive in Residence Available for Download Strategy as a Wicked Problem Presented by Dr. John Camillus business.pitt.edu/katz/emba/webinars www.emba.pitt.edu | 412-648-1600