Strategy

The Four Models of Corporate Entrepreneurship

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How can established organizations build successful new businesses on an ongoing basis? In their study of nearly 30 corporations as diverse as Google, DuPont and Cargill, the authors identified two dimensions under the direct control of management that consistently differentiated how companies approach corporate entrepreneurship. The first is organizational ownership: Will the primary ownership for the creation of new businesses be focused in a designated group, or will it be diffused across the organization? The second is resource authority: Will projects be funded from a dedicated corporate pool of money or in an ad hoc manner, perhaps through business-unit budgets? Together the two dimensions generate a matrix with four basic models of corporate entrepreneurship: the opportunist, the enabler, the advocate and the producer.

In the opportunist model (example: Zimmer Holdings), the company has no deliberate approach to corporate entrepreneurship, and new businesses are built mainly from the grassroots efforts of a few “project champions.” Enabler companies (example: Google) provide funding and senior executive attention to prospective projects. In the advocate model (example: DuPont), the company strongly evangelizes for corporate entrepreneurship, but business units provide the primary funding. Lastly, producer companies (example: Cargill) establish and support a full-service group with a mandate for corporate entrepreneurship.

Each of the four models has a different objective, function and set of challenges. Whichever model is chosen, the crucial thing to remember is that corporate entrepreneurship needs to be nurtured and managed as a strategic, deliberate act.

Robert C. Wolcott is a fellow and adjunct assistant professor of innovation and entrepreneurship and Michael J. Lippitz is a research fellow with the Center for Research in Technology and Innovation at the Kellogg School of Management, Northwestern University in Evanston, Illinois. Wolcott is also a co-founder of the strategic consultancy Clareo Partners LLC. Comment on this article or contact the authors through smrfeedback@mit.edu.

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