Corporate Intrapreneurship

If you were to ask any engineer in UTC if they had incentive to pursue either an innovative new design or large cost savings, you would be hard pressed to find a positive answer. Most people I have talked to say "what's in it for me" mostly referring to the lack of recognition received for saving a large sum of money. I know there is a program in place to receive supplemental rewards but those are few and far between. Once you get away from the personal incentives, you find that in large corporations there are large hurdles to get over to get a new venture to become a reality.

With that said, I know there are teams within the different business units that are solely focused on developing new technologies and ventures to pursue. This is made possible largely because the units establish and supports the group with a mandate for corporate entrepreneurship. This model however, can be slowed due to the gate reviews and focused strategies that are already in place by the corporate landscape. If entrepreneurship could be expanded beyond these focus groups by implementing incentive programs, the cost savings could be huge especially in manufacturing environments.

The book talks about how large corporations often suffer from pressures and controls of existing units within the firm but can be mitigated by urging the team to "forget" the traditional guidelines. In doing so, it allows the large organizations to use their large technical pool to their advantage by finding the correct balance of integration in the groups. I believe if UTC were to integrate the type of system that provides funding and senior executive attention to prospective projects, it would jump start the entrepreneurship spirit that was once the foundation of the company.

Yahoo! Shake Up

So for this weeks case we had to read about Yahoo! and how they got their start. Yesterday I was looking around the New York Times and came across this article saying that the board is going through a complete overhaul following the resignation of Jerry Yang, one of Yahoo's co-founders. Check out the article here. From what I have read, it seems like the other co-founder of Yahoo, David Filo, will remain on the board but it goes to show how it is a different world when you first create a business and then start to run the corporation.

Yahoo was highly criticized back in 2008 when they denied a buy out from Microsoft that would have been worth 44.6 billion dollars. Yang was not only opposed to this deal, he was also criticized by investors that he did not do enough to make the stock grow during the time when he was CEO. I have to imagine he left under poor circumstances and probably did not like the direction the company was headed.

Creative Abrasion

Creative Abrasion is a term that was originally coined by Jerry Hirshberg who founded NDI (Nissan Design International). As we all read in the article, it is a design strategy that entails allowing two people from opposing design ideologies to come together and try to find a common ground for the end product. Nissan design was a good example of how this design method could be effective in a group that was already being funded by a large, established corporation. The success of the company, however, may have ended up differently depending on how the financials were pulled together in the background.

The reason for the difference I believe is that while it has a strong theory behind the practice, in a start up atmosphere it could possibly create larger conflict and risk of failure. I believe when you are starting a company from the ground up, it would be more beneficial to have everyone on the same page and working towards the same goal with similar mind sets. That's not to say it cannot be beneficial in a small organization, it would just need to be managed correctly.

On the flip side, creative abrasion when it relates to intrapreneurship has proven it self to be a highly successful model to follow. For example, when Steve Jobs formed his team that first created the Apple Macintosh, he separated the group from the politics of the corporate offices and let them work as their own entity. Additionally, the diversity of the group was one of the greatest contributing factors to the success of the first Mac. The diversity of view points, talents and backgrounds enabled the creative abrasion to really take form with in the design group.

If you relate creative abrasion to what we do on a daily basis in our every day jobs, you can see that it happens with out us even knowing it. There are many times we are tasked to come up with a solution to a problem and will bounce idea's off of other people and get their view points. We all work for the same corporation so we will all have the same basic framework for our thinking, but beyond that it is possible to create something much more innovative.

FDA Approval And Drug Companies

We have talked about patents on drugs and the market environment for pharmaceutical companies in one of our most recent classes. I saw an article today that was posted on the NY Times (click here for link) saying that the FDA just approved a drug that will treat the underlying cause of cystic fibrosis. According to an article on the same topic on the Huffington Post, the drug will cost a whopping $294,000 per year for treatment for a single patient. As was stated in the article, this will place the drug company (of which now has two FDA approved drugs on the market) among the most expensive prescription drugs sold in the U.S. These specialty drug makers are known to charge $300,000 or more for drugs that treat very small groups of patients. It is a good example of how all the research costs need to be paid for by drugs that end up in approval. What do you think about this price point, is it simply just business?

First Mover Advantage

In a market characterized by high barriers to entry or increasing returns to scale, the first company to introduce a new product or innovation can gain a substantial competitive advantage which is difficult for competitors to overcome. This is referred to as first mover advantage. Some of the largest advantages of being first comes from creating the standards and rules for that innovation. Additionally, consumers will often remember the first brand to enter into a new market category which is priceless in the marketing world. So long as the first movers have the right set of competencies and organizational practice, the first mover can reap the returns from being in the right place at the right time.

Comparatively, A 1993 paper by Peter N. Golder and Gerard J. Tellis suggested that the progression of an idea and new product follows this progression: Innovation > Product Pioneer > First Mover > Fast Follower. The results of a study conducted by the group, found that forty seven percent of all market pioneers ended up failing and the majority of the remaining, had a small market share. Instead, the authors suggest that it is more beneficial to be in the "Fast Follower" category in order to capitalize on others mistakes. Take Amazon.com for example, they were a follower in the market behind books.com but was able to take the market by storm based on their competencies and innovation.

I believe that there is a distinct first mover advantage, however, it is largely dependent on the market need and how quickly the idea is adopted. In order to be a successful first mover, you must have a well thought out business plan that has strategies developed for any issues that may arise. Additionally, the company must be able to adapt quickly to the markets needs in order to properly capture all potential profits.

The iPhone Economy

Check out this interesting video from the NY Times. While I agree with this video for the most part, I have seen a number of companies bringing back shops to the mainland US due to rising shipping costs.

http://www.nytimes.com/interactive/2012/01/20/business/the-iphone-economy.html?ref=business