Many large established firms currently seem to be trying hard to improve their capacity for managing internal entrepreneurship and new ventures. Companies like Du Pont and General Electric have appointed CEOs with a deep understanding of the innovation process.1 IBM has generated much interest with its concept of "independent business units."2 To head its new ventures division, Allied Corporation has attracted the person who ran 3M's new ventures group for many years.3 These are only some of the better publicized cases.
Most managers in large established firms will probably agree that internal corporate venturing (ICV) is an important avenue for corporate growth and diversification. However, they will also probably observe that it is a hazardous one, and will be ready to give examples of new ventures (and managerial careers) gone for naught.
Systematic research suggests that such apprehension is not unfounded. In a large sample study of firms attempting to diversify through internal development, Ralph Big-gadike found that it takes on the average about eight years for a venture to reach profitability, and about ten to twelve years before its ROI equals that of mainstream business activities.4 He concludes his study with the caveat that new business development is "not an activity for the impatient or for the fainthearted." Norman Fast did a study... To read the complete article, login or sign-up using the form below.
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