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What Is Corporate Entrepreneurship

Corporate entrepreneurship is best defined as setting up a startup within a larger organization. 

The objective of a corporate entrepreneurship project is to pursue innovation or the launch of a new business unit without being bridled by the traditional bureaucratic constraints that such organizations face.

Segmenting offices for corporate entrepreneurship

Operation + Ad-Hoc Initiatives: The company doesn’t really have a deliberate approach to pursue corporate entrepreneurship.

The employees try and explore different opportunities but due to lack of proper support and structure for CE, most of the ideas fizzle out eventually.

Isolated and focused initiatives: In contrast to the above, dedicated time and resources are allocated for research and development in these organizations.

They are extremely aggressive in promoting new ideas and there is a well-defined fund and time allocation to promote new businesses within the company.

Hybrid: A few companies have a hybrid corporate entrepreneurship structure in place. 

Companies like 3M still follow the 15% rule which was introduced by William McKnight, General Manager back in 1914, who also rose to the chairman of the board later on in his career at 3M. 

He instituted the philosophy of “Listen to anybody with an idea”. 

The 15% rule is still followed to date through which the company allows its employees to dedicatedly spend 15% of their time for coming up with new business initiatives.

But having said that, corporate entrepreneurship does not have to be executed completely in-house. If your organization does not have the bandwidth, you may choose to outsource as well.

Jeff Gapinski, the cofounder of Huemor, a New York-based web design agency says that since the pandemic began, a lot of traditionally offline businesses have set-up corporate entrepreneurship projects to launch online variants of their product offerings.

Such businesses have opted to outsource the web designing and certain development components outside since they do not have the necessary skills in-house. Such businesses tend to hire full-time positions once their entrepreneurship project takes off and is seen by their management as a viable revenue stream.

To better understand how to adapt and drive the concept, prominent business leaders have also devised 4 models of Corporate Entrepreneurship.

                                              Source: flevy.com

There are 2 dimensions that are under prime focus here.

  1. Organizational ownership
  2. Resource Authority

Organizational ownership determines how focused a company is in promoting corporate entrepreneurship within the organization.

The further down the axis, the more the focus.

Resource authority determines how well the particular venture is funded and resourced.

The most ideal state to be in is the producer wherein the company is high in focus in promoting new ideas and at the same time, has dedicated funds allocated to fuel these concepts.

One of the better examples of a producer is Cargill Inc. the $75 billion food corporation, based in Wayzata, Minnesota, United States.

They have an Emerging Business Accelerator (EBA) program in place which clearly defines processes for pursuing opportunities that fall outside the scope of its existing units and functions.

Examples of Corporate Entrepreneurship successes

Google is a prime example that has emerged out with flying colors with their CE initiatives. 

Just like 3M’s 15% model, Google too allows its employees to allocate 20% of their time in coming up with new innovative ideas and bringing them to reality.

Google is always focused on constant innovation and with this model, it costs nothing more than 20% of employee time to fuel these innovations.

Successful projects that emerged out of this rule are Google AdSense that contributed to over 70% of Google’s revenue in 2019 and Gmail that now has over 1.5 billion active users.

Google also focuses a lot on acquisitions. 

Google Drive originated from 2 different products originally. Writely and XL2Web.

Google has made it extremely simple for its users to seamlessly connect their google accounts with drive making it one of the go-to options for people who use cloud storage services.

Following the suite, there are a host of different players that have entered the space that act as cloud storage alternatives to Google Drive and is just as reliable!

An organization’s front line employees (such as customer service reps) also act as a catalyst to boost new innovations within the company.

They are the first ones to actually come to know about any sort of shortcomings or a need to completely introduce a new product/service.

Mailchimp, an email automation tool, when it first started, went ahead with a minimum viable product of just sending bulk emails.

As Mailchimp itself was a small business back then, it understood the needs of other small businesses and was quick at innovating and introducing new products and services.

As of today, it competes with as many as 30+ alternatives in email marketing automation which continue to give some serious competition to their business.

What to expect?

By corporate entrepreneurship definition, a company can expect the breeding of new ideas and innovations at an amplified pace.

But there’s much more to that.

With its adoption, a company can definitely expect a change in its corporate climate.

A change for the better.

When people work for new ideas, they feel more empowered.

They get a sense of importance and feel that they are directly contributing to the company’s growth.

When a certain product comes into existence from CE, they get a sense of accomplishment that it was because of them that the project came to reality.

The employees are more satisfied and would be more than glad to talk about their work with others, how the ideation took place and their entire journey from conceptualization to implementation.

This, in turn, creates positive employee advocacy and more talent would be willing to work for the company.

More satisfied employees = more revenue.

Once the people at the organization see that their very peers made something out of scratch and how it made them feel, an increased number of employees would be willing to dedicate their time to come up with new innovations and ideas.

This results in boosting the productivity levels at the company to a great extent, without having to spend much apart from employees’ time!

Wrapping up:

It is hard to find companies that match the level of dedication towards corporate entrepreneurship like some of the examples that we mentioned above.

However, with small but significant efforts, any company, be it big or small, can integrate the institution of Corporate Entrepreneurship in its DNA which can work wonders for them in the long learn.

Invest in ideas, invest for the future!