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The appropriate legal and organizational format used to organize a new venture will vary according to several factors such as context, people, legal and tax consequences, and cultural and social norms. In this chapter, we consider the various organizational and legal forms that entrepreneurs employ to achieve their objectives. New ventures can range from small business or consulting services to high-growth, high-potential enterprises. Other organizations start out operating in a niche market and grow into a broader one. Important social organizations are often established as nonprofit ventures. Two traditional forms include family-owned businesses and franchises. An important contrast to these independent ventures is the corporate new venture. It emerges within larger existing enterprises and is granted autonomy so it can fulfill its promise. Corporate new ventures are an important part of the entrepreneurial world and account for many new innovations. Often constrained by existing commitments and capabilities, corporations can fail to respond to significant new opportunities. Well-planned corporate ventures, however, help refresh and strengthen large corporations.
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3M Optical Systems: Managing Corporate Entrepreneurship
Focuses on the decision faced by a middle-level division manager concerning whether he should support an investment request to support a third attempt at launching a new product developed by a struggling business unit. Describes the long, difficult process by which the unit has developed the product--a computer privacy screen--after years of problems and continuing losses, and its absolute faith in the project. Also presents the division manager's concerns about the need for discipline and control, setting up a tension that is focused on the launch decision. Teaching Purpose: Focusing on the role of the first line and middle-level general manager, the subject matter also allows an exploration of the challenge of creating and sustaining entrepreneurship in large organizations--in a company that has managed it with great success for decades.
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Internal Entrepreneurship at the Dow Chemical Co.
Describes how a corporate entrepreneur shapes an internal growth venture within the company, mobilizes the resources that are needed to implement the venture, and achieves success. Complementing his entrepreneurial behavior, however, is the support that he receives from several senior managers in the firm. Allows a careful examination of the challenges for corporate entrepreneurship in a large multinational firm and the roles that senior executives have to play to support it.
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PlaceWare: Issues in Structuring a Xerox Technology Spinout
Xerox has established a process to spinout technologies it develops that do not fit with its current business needs. To structure these "spinouts," a number of issues arise on how to treat people and intellectual property. PlaceWare is the first technology to go through this process. Teaching Purpose: Commercializing technology, corporate entrepreneurship. |
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New
Schools Venture Fund
A new approach to philanthropy has emerged in the last two
years led by venture capitalists and the "new wealth." They are applying the same accountability criteria from results
as they would their investment portfolio. Teaching Purpose:
To analyze the risks and rewards of applying the venture capital
model to philanthropy. |
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Strategic
Planning at NFTE
Details the four-month strategic planning process of the National
Foundation for Teaching Entrepreneurship (NFTE), a successful
nonprofit poised on the verge of explosive growth. The founders
of NFTE brought it from a small program run out of their apartment
to a $7 million enterprise operating in 43 states and 14 countries.
Yet, it is a loose organization run by mission-driven entrepreneurs
who manage to succeed by grit, charisma, and inspiring others.
For NFTE to go to the next step of its development, it must
radically change the organization and introduce both structure
and discipline. Teaching Purpose:
To prepare students to think about the challenges of strategic
growth planning in nonprofit organizations. |
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(DVD Section 8.2) Kavita Ramdas: Sustainability for Non-Profit Organizations
How should nonprofits think about sustainability? The Global Fund for Women understands the importance of sustainability for its grantees because it must also be a sustainable organization. The GFW helps grantees by discussing up front ways for strengthening and expanding funding in local communities. They create a fundraising "red book" that has been translated into many different languages, and is shared with all grantees. They are also committed to linking grantees to larger funders, such as the Ford and Carnegie Foundations. Smaller organizations can leverage the relationship with the Global Fund for Women. Sustainability is not to be confused with creating a profit-making venture. We must appreciate that nonprofits exist in many countries because the state and private sector have failed to provide basic services to its people. The Global Fund for Women also perceives that funding should continue over longer periods of time--groups should be encouraged to diversify funding base, build more capacity, engage with others in the community. Social issues such as gender based violence are not solved in one or two years.
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(DVD Section 8.7) Geoffery Moore: Class of Innovations in the Product Leadership Zone
Geoff looks at the different classes of innovation that comprise the product leadership zone: Disruptive, Application, Product and Platform Innovation. These innovation zones are driven by the technology adoption life cycle and are very R&D intensive and high-risk. |
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Carol Bartz: Entrepreneurship in Established Companies
How is the internet going to change the market we represent and the world we live in? Being an entrepreneur doesn't necessarily mean that you are the single person who started something--when I joined Sun it had $9 million of revenue, which is not even their average order today...and less than 100 people. 3M and Autodesk. I am of the strong belief that good leaders bring entrepreneurship mainstream. It isn't that you're an entrepreneur in a small company --entrepreneurship in a large company in more important. Companies that survive, survive because they know how to change, take risks, and know how to reward that type of organizational behavior. |
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Carol Bartz: Spinoffs - The concept behind buzzsaw.com
In 1999, Autodesk spun out a company called Buzzsaw.com. The concept was to provide a hosted environment for the construction industry. The problem: There are many people who come together one time for a project--architects, engineers, construction managers, contractors...that combination of people makes a building. They interact infrequently, but their collaboration is essential to the success of the building. This clip discusses Buzzsaw as a spinoff--how the opportunity was recognized, and realized, and the lessons learned. |
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Vinod Khosla: Social Entrepreneurship
In Kleiner Perkins perspective, the traditional model of giving is broken. Social entrepreneurship is very important and the way to leverage dollars--there aren't enough dollars in the world to solve the world's problems,from a giving point of view. But if you apply and multiply, there are, in fact, solutions to some of these problems. Examples of the Gramine Bank, Aprotech. |
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Randy Komisar: The Surge for Social Entrepreneurship
Social entrepreneurship is taking off. There is a group of highly motivated people wanting to make a difference but who are not as concerned with making it rich and are creating drastic innovations in business models. There is an incredible level of commitment from these folks and hopefully a bright future ahead of them. |
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John Doerr: The Impact of Social Entrepreneurship
Muhammad Yunus is one of John's favorite social entrepreneur, and John briefly tells his story, one of trying to cut poverty in Bangladesh. |
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Designing Corporate Ventures in the Shadow of Private Venture Capital
Private venture capital casts a long shadow over corporate ventures, in part because they compete for the same entrepreneurial talent. Corporate venturing may improve its performance by emulating certain practices of private venture capital but will never achieve the structures that private venture capital can create. Instead, the design principles for corporate ventures should embrace potential structural advantages of corporate venturing and leverage those advantages. These potential advantages include: an indefinite time horizon, the ability to commit very large sums of capital, the ability to coordinate complementarities with non-tradable corporate assets, and the ability to retain greater group and organizational learning from failed venture experiences. Lucent's New Ventures Group adopts many useful practices of private venture capital, but retains some of the potential structural advantages of venturing within an established firm.
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