TheBusinessChallengeofTheDayFudanUniversity1.TheymustbecomeJanus-like,lookingintwodirectionsatonce,withonefacefocusedontheoldandtheotherseekingoutthenew2.Corporateentrepreneurshipis,however,ariskypropositionTwochallengestomeetTheTwo-CulturesProblemIt’snosecretthatcorporationsaredesignedtoensurethesuccessoftheirestablishedbusinesses.Buthowaboutnewbusinesses?Newbusinessesarequitedifferent,withculturesalltheirown.ThreeChallengesChallenge1emergingbusinessesusuallylackharddata.Challenge2newbusinessesrequireinnovation,innovationrequiresfreshideas,andfreshideasrequiremavericks.Challenge3thepoorfitbetweennewbusinessesandoldsystemsWhyTraditionalResponsesFailChallengesVSApproachesDiffusedResponsibilityFizzlesoutInanorganizationwhereeveryexecutivesharesresponsibilityfornew-businesscreationtheCEOexpectsemployeestobeascommittedtoturningnewideasintonewbusinessesastheyaretoexpandingmatureones.Themaindrawbackofthisapproachisthatit’seasyfortraditionalbusinessestodominatenewones.CentralizationisolatesWhatdidmanycompaniesdo?Theydecidedthatthewisestcoursewastocompletelyseparatenewventuresfromexistingdivisions.Howabouttheapproaches?TheyfocusonnurturingnewbusinessesintheirformativestagesIsthereanychallenge?Thechallengescomelater,whenit’snecessarytointegratefledglingbusinesseswiththemainstream.BalancingActsWhatshouldcompaniesavoid?either-orapproachestocorporateentrepreneurshipbecausetheyplacetheoldandnewculturesinconflictwitheachotherBalancingactsinthreeareasstrategyoperationsorganizationDevelopStrategybyTrialandErrorNewbusinessesoperateinhighlyambiguousenvironments.uncertainenvironmentsVSambiguousenvironments.Whentakentoextremes,however,thisapproachcanbecounterproductive.Managersmustbeginwithhypothesesaboutwhatwillworkandwhatwon’t;Theyshouldsearchforwaysofvalidatingorinvalidatingtheirpreconceptions,knowingthatfirst-cutstrategieswillchangeovertime.OperatewithSomethingOld,SomethingNewExistingcompanieswillenjoyanadvantageinnew-businesscreationonlyiftheybuildontheirstrengths;otherwise,theywillbenobetteroffthanstart-upsthatmustbeginwithacleanslate.Inmostcases,thebestcombinationoftheoldandthenewentailsablendofexperienceandinvention.IntegratewithAutonomyAttimes,newbusinessesdevelopstrategicandoperationalinnovationsthat,shouldtheysucceed,areexpectedtobepassedontootherpartsofthecompany.Integrationworksbestwhenitbeginsearlyinthelifeofanewbusiness.Text(2)HowIBMStrikesaBalance

OnecompanythathasappliedtheseprinciplesisIBM.TheteamconcludedthatIBM’sdifficultiesinstartingnewbusinessescouldbetracedtosixrootcausesamanagementsystemthatrewardedexecutionandshort-termresultsratherthanstrategicbusinessbuildingapreoccupationwithIBM’scurrentmarketsandexistingofferingsabusinessmodelthatdidn’temphasizeonactionstodrivehigherprice-earningsratiosanapproachtogatheringandusingmarketinsightsthatwasinadequateforembryonicmarketsanabsenceofprocessessuitableformanagingnewgrowthbusinessesalackofentrepreneurialskillsEmergingBusinessOpportunitymanagementsystemToovercometheseobstacles,executivesrecommendedthatIBMbuildadistinctEmergingBusinessOpportunity(EBO)managementsystemtocomplementitsexistingsystems.Afterseveralmonths,Gerstnerremainedconcernedabouttheextentoftheorganization’sacceptanceofthetaskforce’srecommendationsGerstnerannouncednewappointment,andithadanimmediateimpact.ThompsonmovedimmediatelyonseveralfrontsWhatdidThompsondo?Hesawhisroleasthatofanevangelist.Heconsolidatedresponsibility.Hestartedcreatingthedevelopment,oversight,andreviewprocesses.LeadershipThompsonthereforedecidedtochooseEBOleadersfortheirexperienceandskillinworkingthesystem,aswellasfortheirentrepreneurial,business-building,andcreativetalents.IBM’ssenior-mostexecutiveshandpickedthefirstEBOleaders.Thetopbrasswasinvolvedintheprocess.EBOleadersreportedtotherelevantbusinessgroupheads.StrategydevelopmentThompsonchargedEBOleaderswitharrivingat“strategicclarity”.Toresolvestrategyissues,IBMencouragedEBOteamstoengagewiththemarketplacebydoingexperiments.Astheresultsoftheexperimentscamein,EBOshadtorevisetheirstrategiesandbusinessdesigns.Monitoringproject-basedmilestonesfinancialsassessmentsofbusinessmaturityThompsonandHarreldperiodicallyevaluatedeachEBOusingthreeparameters.Theproject-basedmilestonesweretheprimarybasisonwhichEBOswereevaluated.LessonsfromIBMcaseThetruemeasureofanysystemisitsresults.Successisnotaneither-orproposition.AsIBM’sEBOmanagementsystemshows,whencompaniesmustc