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Developing a "corpreneurial" strategy for fostering business growth and revitalization.

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, .... it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us..."

Charles Dickens' introduction to Tale of Two Cities may also characterize the corporate arena during the 1990s. This is a time of ironic contrasts. Never have the challenges for existing businesses been more formidable or the opportunities for new ventures greater. it is a time when a record number of firms have failed, yet it is a time when a record number of new ventures are being started. It is an era of maturing markets and frenzied efforts to be more efficient, yet it is an era of emerging markets and technological advances. It is a period marked by the sunset of a number of firms and industries that were founders of the Fortune 500, yet it is a period marked by the dawn of the Inc. 500 as new ventures are being created and new industries are being born. It is also an epoch when executives are desperately trying to find ways to revitalize their firms so they will not slip into mediocrity.

Many of the firms that survived the near constant barrage of challenges over the last decade are now trying to catch their breath in anticipation of a new wave of challenges. They were able to survive by utilizing various stop-gap measures. Executives implemented restructuring efforts to minimize the overhead associated with middle management and staff positions, undertook reductions in the labor force to make their firms lean, sold off divisions to free up capital and launched belt-tightening campaigns to remain competitive with foreign competition.

Executives who successfully negotiated their firms through the competitive minefield are now faced with a dilemma. They did what was necessary to keep from being listed in the corporate obituaries, but now they ask, "what do we do now?" In business, as in sports, a strong defense may keep a team in the game. However, it usually takes a strong offense to be victorious. The time has arrived for executives to direct their attention, time and resources to moving their firms ahead rather than to slowing their retreat. To paraphrase a Citicorp ad, "People want to succeed, not just survive."

Most executives have focussed their attention on how to insure their firms will have a future, idenfying the type of firm They should be as they enter the 21st century. The 1990s may be viewed as a decade of transition; the decade when executives deliberately transform their firms from what they were to what they win need to be.

If firms are to grow and remain vibrant, they must be able to cultivate and capitalize on the myriad opportunities that lie ahead. The traditional incremental approach of making minor modifications in present products, processes, services and markets will not guarantee success or even survival. Existing firms will have to be more than efficient and resourceful. According to Robert Cooper, professor of marketing at McMaster University in Canada, "America is in a product war, and the management of innovation is the strategic weapon ... Our ability to get better at the innovative process - to drive new products from idea to market faster and with fewer mistakes - is the key to winning this war." Lewis Lehr, former CEO for 3M, reinforced Cooper's point. Lehr stated, "Creating a culture of innovation is the best competitive tool a company can have today, and the best weapon American business has in the increasingly global marketplace." Today's firms will not only have to be more innovative, they will have to demonstrate an entrepreneurial proficiency that few established firms exhibit today.

Entrepreneurial growth strategies

Most growth strategies are based on H. Igor Ansoff's Product-Market Matrix. Ansoff's matrix is a reflection of the 1950s, the time when it was developed. The matrix identifies four strategies for business growth. Existing firms can grow by (1) penetration - trying to get more mileage from their present product and target market(s), (2) market development - taking present products and finding additional target markets, (3) product development - developing additional products for present target markets, or (4) diversification - developing additional products and entering additional markets.

These strategies helped firms grow during what most veteran executives view as the "good old days" of the 1960s. These four strategies were successful because it was an era of prosperity and global economic growth. In many respects, firms grew because almost every market was experiencing unparalleled growth. However, as the 1960s came to a close, executives were rudely awakened by the accuracy of Ted Levitt's assertion, "There is no such thing as a growth industry ... Industries that assume themselves to be riding some automatic growth escalator invariably descend into stagnation."

In the 1960s, growth came fairly easy. In some cases, firms grew even without good management. Consumers were eager to buy almost anything within reason. As long as a firm was not totally out of touch with the marketplace, it could sell its products and services. As firm approach the 21st century, it is clear that future growth will have to be earned. Anticipatory and opportunistic management will be prerequisites for sustained growth. Executives must be willing to accept the risks associated with entrepreneurship as they develop strategies for positioning their firms to cultivate and capitalize on the emerging opportunities that will come with the dawn of the 21st century. The era of consolidation must now give way to the new era of corporate growth and vitality ... the era of corpreneuring.

A close look at the four growth strategies identified by Ansoff reveals the matrix does not incorporate the entrepreneurial types of growth strategies that may be essential if firms are to harvest the almost infinite opportunities that lie ahead. Entrepreneurial growth strategies are different from the four traditional strategies used by most firms for increasing revenue. The traditional strategies have merit, but none reflects the true nature of entrepreneurship.

The antithesis of entrepreneurship

Penetration strategy simply tries to develop more customers in the same type of market with minimal product modification or technological change. There is nothing entrepreneurial about this strategy. Penetration may have some merit in the short run if the market is growing, but the firm is likely to encounter intense competition as the market matures. Most executives consider penetration to be the least risky strategy because it involves the least amount of change. The ultimate risk for this strategy is that the market will dry up. As someone once observed, "If you stay in one business long enough, you will be out of business."

The penetration strategy is nothing more than management by braille. By concentrating only on existing markets and existing products, the firm is only dealing with what it can touch, what is within its reach. This strategy can often produce tunnel vision and therefore it can limit management's perceptual field.

Robert Hayes and William Abernathy noted in their classic Harvard Business Review article, "Managing Our Way To Economic Decline" that success in most industries requires an organizational commitment to compete in the marketplace on technological grounds; to compete over the long run by offering superior products. They observed, "Our managers still earn generally high marks for their skill in improving short-term efficiency, but their counterparts in Europe and Japan have started to question America's entrepreneurial imagination and willingness to make risky long-term competitive investments."

Marla Ottenstein, a manufacturer's representative based in Washington, D.C., recently echoed Hayes' and Abernathy's concern about America's commitment to innovativeness. In an interview in Fortune magazine she exclaimed, "American manufacturers aren't creative anymore. They're afraid of failure. They aren't willing to spend the money to develop, manufacture and market new products. I think the Europeans and Japanese are more creative. Every year the Europeans and Japanese bring out new products, no matter how bad the market seems. Too many American manufacturers repeat the same line. They don't even change the packaging." Penetration appears to have the least risk, but it may be a high-risk strategy for four reasons. First, the firm is likely to encounter intense competition unless it has a strong proprietary position. Second, the management team tends to get caught up in operational matters rather than spend its time searching for emerging opportunities. Third, a major shift in consumer interests could cause the market to dry up. Fourth, a major technological breakthrough could render the firm's product/service offering obsolete almost overnight. The fourth type of risk was particularly evident in 1967 when the quartz movement for watches was invented. Until then, the mainspring watch controlled sixty-five percent of the world market. One year later, only 15,000 of the 60,000 Swiss watchmakers still had their jobs. The quartz breakthrough may not be an everyday occurrence but it does illustrate the devastating effect innovation can have to firms that are out of touch with technology and market trends.

Market development

The market development strategy is more venturesome than penetration strategy. Even though the firms may not be making any major changes in its product offering, at least the firm is trying to create new customers by expanding into other markets. This strategy forces managers to open their eyes, broaden their perceptual field and modify the firm's marketing mix. Market development has some merit, but it still is a shortterm strategy. The firm has not reduced the risk of declining consumer demand or technological obsolescence.

This strategy is similar to a mother letting her child leave the yard to play with other children in the neighborhood. The yard can be viewed as penetration strategy. The neighborhood can be viewed as using the market development strategy. The child may grow a little by encountering new faces, but he will lead a fairly sheltered life. Market development is nothing more than extending the length of the leash on the child. It holds the child back, limits his experiences and fails to prepare the child for the dynamic and multi-dimensional nature of the real world. Market development may be more adventurous than penetration, but it cannot be considered an entrepreneurial strategy.

Product development

Product development involves the firm's use of technology to broaden its product offering for its present market. This strategy is based on the premise,Since the firm already understands its present customers, then it should be able to develop additional products to meet one or more of their other needs."

This strategy has shades of entrepreneurship to it. New product development encourages the firm to experiment. It may also bring new people into the firm who may have different perceptions of what the future may hold and where the firm should go. This strategy also has merit because it reduces the firm's vulnerability to technological obsolescence. Nevertheless, the firm has still limited its perceptual field. The firm's potential will always be limited by the opportunities that can be found in one set of customers. The major drawback to this strategy is the opportunity cost associated with not pursuing other markets, particularly emerging markets, which may have more potential than the present market.


Diversification is the most venturesome of the four traditional strategies for growth. It implies dealing with a different set of customers by expanding into different markets as well as developing different products to meet different needs, broadening its reach on two fronts. In the short run, this strategy appears to have the greatest risk. The firm is venturing where it has not gone before. The firm is thereby placing considerable strain on its cash flow and profitability by committing a substantial amount of its resources to entering different markets and developing different products. Executives are also increasing the likelihood they will make mistakes. Diversification requires learning about different markets and developing different products and processes. Diversification thereby increases vulnerability of executives who will be committing resources to markets and technology where their firms have limited first-hand experience.

Diversification may be more entrepreneurial than the other three strategies but it still has an intermediate-term and defensive theme to it. Diversification usually involves developing additional products and entering different markets as well as continuing the firm's involvement in its present markets and its present product/service offering. This is an important distinction.

Corpreneurial growth strategies involve going wherever the opportunities may be without regard for where the firm has been before. Most management teams that try the diversification strategy view it as something to do in addition to what they are already doing. The amount of management's time and the firm's resources that are devoted to diversifying the firm's reach tend to be limited. Diversification tends to be an incremental rather than an entrepreneurial strategy for most firms.

Executives who are responsible for preparing their firms for the 21st century should look beyond the traditional growth strategies. All four of Ansoffs traditional growth strategies of penetration, market development, product development and diversification are more incremental than entrepreneurial. Ansoff's model needs to be updated to reflect the dynamics of emerging international markets, changing consumer and institutional needs and the accelerating rate of technological change.

Lasting success

Many firms are in dire need of growth strategies that will instill the spirit of entrepreneurship, or in this case corpreneurship, in management's efforts to foster growth and revitalization. Corpreneurship is not the same as Gifford Pinchot III's concept of intrapreneurship. Intrapreneurship tends to be viewed as an effort to improve corporate performance by unleashing the innovative talents of the firm's human resources. In many cases, intrapreneurship represents management's efforts to improve the firm's internal operations rather than capitalize on external opportunities and/or to develop technological breakthroughs.

Intrapreneurship also tends to have an incremental theme to it. Attention is directed to funding better ways to do what the firm is already doing.

Corpreneurship is more entrepreneurial than intrapreneurial. It means management is prepared to slough off yesterday and today in its effort to prepare for a different tomorrow. Intrapreneurship appears to be based on the premise that there is always a better way to do things. Intrapreneurial managers concentrate their attention on improving the firm's present situation. Corpreneurship is based on the premise that there is always something better to do. Corpreneurial managers concentrate their attention on creating the firm's future. Intrapreneurship implies improving present products and processes. Corpreneurship means creating corporate ventures to capitalize on emerging market opportunities and to develop new technologies. Just as the entrepreneur creates a business to capitalize on an untapped opportunity in the marketplace, the corpreneurial firm creates new business units to enter new markets and to develop revolutionary products, processes and services.

While the intrapreneur does things that the firm has never done before; the corpreneur does things that no firm has done before. The entrepreneur and the corpreneur operate with a similar philosophy. They exemplify the prelude to Star Trek, committed to "boldly go where no one has gone before!"

Just as there is a clear distinction between people who start a new business and the true entrepreneur, there is a fundamental distinction between traditional growth strategies and corpreneurial growth strategies. Most new ventures tend to be clones of existing businesses. They rarely bring anything markedly innovative to the marketplace. Entrepreneurs stand out from the crowd because they bring something new to the marketplace. Their new ventures are more than a repackaging of existing components. Entrepreneurs add "value" to the marketplace by shaking it up. Corpreneurial firms also add value to the marketplace via their perceptiveness and innovative capabilities.

Entrepreneurs accept the risk associated with introducing something that is much more than a minor modification of the present. The same is true for corpreneurs. They are committed to being at the cutting edge and are willing to accept the risk associated with breaking new ground by going where no firm has gone before.

Timothy Tuff, as president of Alcan Aluminum Corp. in 1989, demonstrated many of the qualities that must be infused into more traditional corporations if they are to capitalize on the opportunities that lie ahead. Tuff developed a team to foster an entrepreneurial culture, to promote new ideas and to make product development as simple as casting an ingot. Business Month reported that Tuffs team was responsible for funding the technology, funding the project, developing the market and even digging up customers for products that did not yet exist. Alcan set a goal of having 25 percent of total corporate revenue by 1995 come from its new ventures. Tuff's team spurred the development of dozens of new ventures.

Adding corpreneurial strategies

Ansoff's model worked well during the period of dramatic, across-the-board, global economic growth. Firms could grow by modifying existing products and moving into related markets. There was little need to be corpreneurial. Times have changed and new strategies must be initiated to capitalize on new and different opportunities. Any firm that wants to be a leader as it enters the 21st century must be willing to invent its future rather than just fine tune its present products and milk its present markets.

Ansoff's 2x2 matrix should be expanded to a 3x3 matrix to incorporate corpreneurial growth strategies. The 3x3 growth matrix adds five strategies to Ansoff's conventional growth matrix.

Product innovation strategy

This strategy goes beyond the traditional product development strategy. The firm may still be directing its attention to the needs of the people and/or institutions in its present target market but it attempts to introduce a markedly superior product or service by developing new technology. The basic product or service may have been around for years, but the corpreneurial firm uses state-of-the-art technology to create a new generation of the product.

Yamaha provides an excellent example of product innovation. Yamaha had 40 percent of worldwide piano sales, yet overall demand was declining by 10 percent per year. Instead of setting for a stagnating or declining market, Yamaha management sought to find ways to foster growth through technology. They knew that growth would need to come by offering the market a piano that could do things that no other piano could do. Yamaha combined digital and optical technology to develop the means whereby a conventional piano can be retrofitted for $2,500 to play great works. The people at Yamaha took the original player piano concept and matched it with state-of-the-art technology so that a 3.5-inch diskette stores recorded music and programs the piano.

Yamaha was already committed to the production and marketing of pianos and other musical instruments. Management chose product innovation as its primary strategy for revitalizing the market. Yamaha did not pursue all the usual routes for turning its situation around. Kenichi Ohmae indicated, "It didn't buckle down to prune costs, proliferate models, slice overhead or all the other typical approaches. It looked with fresh eyes for chances to create value for customers." According to Ohmae, Yamaha recognized that people's interest in and appreciation for the piano has continued to grow over the years, while the decline in piano sales has come from the reluctance to spend years learning how to play it. Yamaha thereby looked to technology as a way to speed the learning process and illustrate the true beauty of the piano. As Robert Allio, author of The Practical strategist, observed, "Technology is a powerful ally in the global game, particularly if it enables a business to improve its product offering." Allio noted that in the competitive arena, "Losers hang on to old technology in the mistaken belief that incremental improvements can forestall the effect of a technological breakthrough."

Product invention

The product invention growth strategy tends to be more entrepreneurial than the product innovation growth strategy. Whereas product innovation introduces technologically superior products to the firm's present markets, product invention represents a two-dimensional change strategy. The firm is inventing a product that no other firm has ever offered. The firm is also entering a market that it has never served. This strategy exemplifies the risk/reward nature of entrepreneurship. The firm is halfway toward corpreneurship in its truest sense. The firm is introducing a first generation product to an existing market. The firm is taking two risks: the risk associated with the uncertainty of whether the new product, is in tune with the wants of the prospective customers and the risk associated with entering a market with limited first-hand experience. Any time a firm introduces a dramatically different product or service it is taking a risk; to do it in a market that it has not operated in before reflects a corpreneurial approach to fostering business growth.

The rewards for inventing the first generation product will hopefully outweigh the risks. If the product is markedly better from a technological perspective and the market is searching for something clearly better than what is presently provided by the firms already in the market, then the firm using the product invention growth strategy may be in an excellent position to harvest the market and gain considerable market share. This will be particularly advantageous if the firm is able to secure a proprietary position.

A stellar group of firms have established themselves as leaders by utilizing the product invention strategy. Merck and 3M have been recognized as two of the most admired companies in the fortune magazine survey because of their introduction of new products. Merck is currently developing the drug Proscar, which is formulated to shrink enlarged prostates and thereby eliminate the need for surgery. This new drug will provide a completely different alternative to prostate treatment according to U.S. News and World World Report, some 400,000 men who face surgery each year to remove an enlarged prostate may soon be able to take a daily pill instead of undergoing surgery. This one-dollar-per-day drug represents a much better alternative to the additional operation that costs $10,000 to $12,000.

Yet, Proscar is just another chapter in Merck's book of new product successes. Proscar looks like Merck's next blockbuster, with expected annual revenue of one billion dollars by 1998. Merck's cardio-vascular drug, Vasotec, has generated over one billion dollars in sales in its first two years on the market. Merck's Chairman, P. Roy Vagelos, attributes his company's success to, "the ability to spot early those areas that might lead to breakthroughs, by being very good at the scientific side - biology and chemistry - while also being able to recognize the medical importance of what we discover."

3M also demonstrates a similar propensity to utilize the product invention growth strategy. 3M has consistently demonstrated its desire to venture into different markets and to develop new technology. 3M's bioelectronic ear, which helps restore hearing for people with inner ear damage, reflects the company's willingness to go where it has not gone before and to develop products that no one has developed before. 3M's ability to bring varying levels of technology to market to meet established needs is the hallmark of the inventive organization.

Market transfer

The market transfer growth strategy is designed to take the firm's existing product/ service/technology mix into markets that are not being served by any firm. Firms using the market transfer strategy look for markets that are just emerging. This strategy is particularly appropriate for third-world and emerging countries.

Emerging countries may represent lucrative opportunities for a firm that is willing to be the first to serve them, yet, this strategy has its inherent risks. The firm's success will be directly related to its ability to tailor its existing marketing mix to the uniqueness of the emerging target market. The risk associated with market transfer tends to be higher than found in the market development strategy. The newness of an emerging market means little market data may be available and that the infrastructure for introducing and supporting the product/ service offering may be limited.

Emerging countries may provide high levels of profit in the years to come for firms that are willing to take their products and services where no other firm has gone before. As third-world and emerging countries improve their domestic productivity and increase their exporting activity, their disposable income and desire for a higher standard of living will also increase. Their people may then be interested in purchasing goods and services that are common in more developed countries.

As emerging countries develop an infrastructure capable of facilitating importing, firms operating in established and mature markets will attempt to transfer their marketing efforts to the emerging economies. The market transfer strategy is already being used by numerous small firms. There has been a noticeable increase in exporting by small U.S. firms to emerging countries. Smaller firms may be better prepared to enter emerging markets, because larger firms tend to look for large markets and view emerging markets as not worth their time and effort. Large firms also tend to stay away from markets that are fairly nebulous.

Ironically, many of the successful smaller, entrepreneurial firms that use market transfer strategy have received some of their initial funding from smaller, regional banks and investment companies. Larger banks are often reluctant to offer commercial loans for less than one million dollars. The same may be true for many larger businesses not being interested in emerging markets until they are big enough to harvest. This myopic perspective is one of the reasons why smaller firms have been able to take the wind out of the sails of larger firms in recent years.

The market transfer growth strategy appeal rests in the fact that it may require only a minimal initial capital outlay. The firm may test an emerging market by exporting its existing products or services with minor modification. If the emerging market responds with sufficient vigor, then the firm may consider additional modifications in its marketing mix to meet the emerging market's particular needs. The firm may also investigate the merit of establishing facilities or joint ventures in the emerging market.

One U.S. aquaculture firm provides a good example of the market transfer strategy. Management is looking into exporting its fish filets to an emerging country and entering into a joint venture with that respective government to build fish farms and processing facilities if their product is accepted and demonstrates economic viability.

Market creation

Market creation represents a more entrepreneurial strategy than market transfer. Market transfer assumes the risk associated with entering an emerging market that is not being served by any firm. If the goods and services are being provided at all, they tend to be provided by local cottage-type micro businesses that operate on a hand-to-mouth level or by the consumers providing for themselves. Market transfer risk is primarily one-dimensional in nature because the firm is familiar with the product/service/technology mix. Market creation involves a two-dimensional risk. The firm is entering a virgin market and it is getting involved in products/service/technology in which it has limited or no experience.

Market creation involves identifying an emerging market and developing products and/or services that are offered by other firms in established markets. The firm will be involved in different products, but it does not have to develop new technology. Instead of trying to develop products from scratch, the firm may secure licensing rights from another firm for the products. The firms may also consider a joint venture or even acquiring that firm to speed the process.

A leading hotel chain provides an example of the nature of the market creation growth strategy. Management is looking into establishing teleconferencing facilities in numerous emerging countries. They have recognized that emerging countries lack sophisticated means for linking themselves with other countries and companies.

The hotel chain has already established itself as a leader in the hospitality field; now it is investigating the economic feasibility of securing telecommunications technology and licenses so it can build and operate facilities where people can have a hospitable environment for communicating with parties all over the world. The management of this firm recognized that firms will substitute teleconferencing for airline traveling the years to come due to skyrocketing airfares and possible terrorism, as well as the relative inaccessibility of some locations. This firm's strategy is built on the same concept as the fax machine. Businesses are now more accustomed to using fax machines instead of air-express. A similar situation may soon be the case with business travel. Teleconferencing is certain to displace a larger percentage of business travel in the years ahead. The marketing research firm of Frost & Sullivan projects that the $1 billion teleconferencing market will grow to more than an $8 billion industry by 1995.

Another example of the market creation growth strategy would be for a firm involved in pest control to broaden its product/service offering into radon gas measurement and reduction. The growing concern about radon poisoning and the need for houses to meet acceptable radon levels before the title can be transferred has created a sizeable business opportunity. It would make sense for a business that is already accustomed to making residential calls, inspection and correction to expand into the emerging radon field by developing, licensing or acquiring radon monitoring equipment.

Pure corpreneurship

This strategy combines market creation and product invention. Pure corpreneurship thereby represents a bold strategy for positioning the firm to capitalize on the almost inevitable changes that will occur in the marketplace. With the adoption of this strategy, management is committed to having the firm be the first to enter an emerging market with products/services/technologies that did not previously exist for that or any other firm.

The question may be raised, "Which comes first, technological development or market surveillance?" Some firms are technology driven while other firms are market driven. 3M is known for its emphasis on developing technology even if no market is immediately present. This strategy has worked for two reasons. First, underneath 3M's technological prowess rests a keen sense for what the market may want. Second, 3M has the enviable position of having thousands of products at various stages of maturity. This puts 3M in a position where it does not have to force its newest technology on the market. It can wait until the time is just right to introduce its newest products.

Rubbermaid appears to operate with a market-driven strategy. It attempts to identify needs that have not been met well enough or at all. Rubbermaid then tries to develop products to fill present and future gaps in the marketplace. The company has a goal of introducing over two hundred new products per year.

Corpreneurship is neither a technology-driven growth strategy; nor is it an exclusively market-driven growth strategy. Corpreneurship in its purest form is an opportunity-driven growth strategy that fosters a synergistic effect by anticipating emerging needs with sufficient lead time to develop innovative solutions for them. Jack Welch's crusade to transform General Electric into an opportunity-driven company explains why he boldly sold various established operations. Welch then invested the firm's resources in emerging fields and industries rather than using the more typical strategy of trying to squeeze the last ounce of profit out of highly saturated and mature markets. Welch recognized that only through the synergism associated with keeping at the forefront of emerging markets and by possessing the technological and organizational wherewithal to be at the cutting edge would General Electric have a chance to be a leader in the global marketplace.

Corpreneurship and timing

The two-dimensional nature of the pure corpreneurial growth strategy, which stresses the need to capitalize on emerging market opportunities via imaginative technology, places a premium on timing. Management must have the vision to anticipate the emergence of consumer or institutional needs before there are consumers. The fun must also have sufficient lead time to invent the products and services to satisfy the needs as they manifest themselves.

Rosabeth Moss Kanter may have captured the relationship between being opportunity driven and striving to be a leading firm. Kanter stated, "Staying ahead of change means anticipating the new actions that external events will eventually require and them early, before others, before being forced, while there is still time - and time to influence, shape and redirect external events themselves."

The benefits associated with adopting an anticipatory and opportunistic strategy were highlighted in an interview with hockey superstar Wayne Gretzky. Gretzky was asked to explain how he has been able to score so many goals given that he is not one of the fastest skaters, best shooters or biggest players. His response was simple. Gretzky attributes his success to his ability to sense where the puck will be and to be there to score the goal; most hockey players focus their attention on where the puck is rather than where it will be. A similar situation exists in skeet shooting and other types of hunting where the target moves quickly. If you aim where the skeet is during its flight, then you will always miss the target by being a little late. Success is contingent on sensing where the target will be and leading your shot so that it intercepts die target.

Corporate success has always been contingent on being in the right place at the right time with the right product/service offering. The answer to the proverbial chicken (market) or the egg (technology) question is, "While a few firms have developed a proficiency for one or the other, the best strategy is for both to be synchronized and orchestrated." The marketplace is changing too quickly for firms to operate from a reactive stance by responding only to today's needs. Moreover, what was a technological breakthrough yesterday may be an obsolete product tomorrow.

According to Joseph Marone, associate director of the Center For Science Policy at Rensalaer Polytechnic Institute, Firms have to have the wherewithal, commitment and staying power to take technology to market. Unless American firms improve their ability to reach out and bring technology to market rapidly, U.S. competitiveness will continue to erode." As a recent Fortune magazine article noted, "Honey Nut Cheerios and Diet Cherry Coke are probably not the path to world economic leadership."

As the rate of change accelerates, it will be even more difficult for firms to keep pace. Pure corpreneurship will force managers to think beyond present products, markets and technologies. Management must direct more attention to anticipating future needs and developing technology to meet needs as they emerge. If management wants the firm to achieve and sustain a leadership position, then the firm will have to be markedly better than its present and potential competitors.

The best way to establish a leadership position is to be the first to enter the market and to have a superior product/service offering. After all, leadership means being more than a step ahead of the competition; it means being so far ahead of the competition that they choose not to enter the arena. Ironically, the desire to be ahead of competition needs to be tempered with the realization that a firm could hit the market before the market is ready. This is a common effort for firms that are so technology driven that they fail to recognize whether the market is ready to be harvested. Conversely, firms that are market driven often ignore the importance of having a technological advantage. In their zeal to get something to meet unmet or emerging needs in the marketplace, firms may fail to develop and offer superior products and/or services. The importance of proper timing cannot be overstated.

The pure corpreneurship strategy

Some firms have experimented with the pure corpreneurship strategy as part of their overall strategy as they attempt to position their firms enter the 21st century in a leadership position. Airxchange Inc. illustrates pure corpreneurship in action. Its co-founder Donald Steele recognized that as Americans responded to the energy crisis by insulating their homes they were unknowingly creating a new problem.

Steele knew that by tightening up their homes, indoor pollution was almost inevitable. He also knew that when a problem gets bad enough and is widespread, Congress almost certainly responds by enacting legislation. The 1987 Air Quality Act helped catapult Airxchange Inc.'s growth. Airxchange anticipated the market for quite some time. According to Steele, There's a market when the health and safety codes define one for you." Airxchange has sold over thirty thousand units that it designed to transport harmful gasses and particles to outside the home.

Noise Cancellation Technologies Inc. also illustrates pure corpreneurship. This company recognized the growing interest in noise abatement and that few, if any, techniques were available for eliminating noise. Management also recognized that the elimination of noise would be an integral component in the quality of work life movement that was destined to blossom in the years ahead. Noise Cancellation Technologies Inc. developed a system that electronically analyzes noise sound waves and then produces precisely matching anti-noise that eliminates the noise.

The irony of Airxchange's and Noise Cancellation Technologies' success is that both firms were dealing with what can be considered obvious rather than obscure opportunities. Moreover, management considered the opportunities and success to be almost inevitable. In their minds, they were not embarking on high-risk ventures.


In periods of rapid change, firms with strategies that merely make minor modifications in the present are destined to lose their competitive position and not survive the 1990s. Unfortunately, the sobering attitude, "It's much more difficult to come up with a synthetic meat product than a lemon-lime cake mix. But you work on the lemon-lime cake mix because you know exactly what the return is going to be," expressed by Philip D. Aines, vice president of research and engineering at Pillsbury in 1976 is still too common today. More recently, George Fisher, chairman of Motorola expressed his concern about what he calls U.S. industry's "rifle shot" approach to R&D - focusing on small improvements in product development at the expense of riskier but potentially market-shaping research.

Business Week's annual survey of R&D spending indicates corporate America, bedeviled by Japanese manufacturing wizardry and numbed by recession, "is squinting so hard at cost cutting and tiny improvements in existing processes that it is in danger of missing the big picture." Joseph Marone of The Center For Science and Technology finds that most companies overemphasize incremental innovation - operational fine tuning. According to Marone, "Companies like Motorola and Corning built their leader-ship positions in highly competitive global markets through ambitious. Radical, leapfrog type innovations." The traditional incremental approach to doing business that has been typical for too many firms for too long must be replaced with more corpreneurial growth strategies if firms want to see the dawn of the next century.

In the years ahead, executives will have to demonstrate an entrepreneurial proficiency by concentrating their attention and redirecting a larger portion of their firm's resources to their firm's future. Rather than their firm's present. situation. Any executive who wants his firm to be a leader as it enters the 21st century must develop in it the capability via its competitive strategy and corporate culture to invent its future rather than just the propensity to fine tune its present products and milk its present markets.

The marketplace is changing too quickly for firms to operate from a reactive stance by responding only to today's needs. As Robert Reich noted. "The highest earnings in most worldwide industries are to be found in locations where specialized knowledge is brought to bear on problems whose solutions define new horizons of possibility ... [Cutting edge] businesses are highly profitable both because customers are willing to pay a premium for goods and services that exactly meet their needs and, more important, because they are knowledge intensive businesses that cannot easily be duplicated by low cost competitors elsewhere in the world. Worldwide competition continues to compress profits on anything that is uniform, routine and standard - that is, on anything that can be made, reproduced or extracted in volume about anywhere on the globe." Reich adds, "The evidence shows that successful businesses in advanced nations respond to this dynamic by moving to the higher ground of specialized products and services. Here, as elsewhere. the barrier to entry is not volume or price; it is skill in finding new and ever-more-valuable connections between particular ideas and particular markets." Executives need to adopt one or more of the corpreneurial strategies that emphasize anticipating emerging needs, inventing new technologies, and revitalizing their firms so they will be able to harvest the myriad of opportunities that are just over the horizon.

For further reading

Allio, Robert J., The Practical Strategist, New York: Harper & Row, 1988. Ansoff, H. Igor, "Strategies For Diversification," Harvard Business Revie, September/October 1957. "Are You Ready'?" Success, July/August 1991. "The Breakdown of U.S. Innovation," Business Week. February 16. 1976. Buderi, Robert, "The Brakes Go On In R & D. "Business Week, July 1. 199 1. Carey, John. "Will Uncle Sam Be Dragged Kicking and Screaming Into The Lab?" Business Week. July 15. 1991. Cooper, Robert G., "Stage-Gate Systems: A New Tool for Managing New Products." Business Horizons, May/June 1990. Davenport, Carol. "America's Most Admired Corporations." Fortune, January 30, 1989. Dumaine, Brian, "Closing The innovation Gap," "Fortune. December 2, 1991. Hayes Robert H. and William J. Abernathy."managing Our Way To Econownic Decline." Harvard Business Review,. July/august 1980. Kanter, Rosabeth M., The Change Mastery, New York: Simon & Schuster, 1983. Kritz, Francesca L. and Terri Thompson, Pills Instead of Prostate Surgery". U.S. News and World Report. June 17, 1991. Lehr, Lewis W., "A Hunger For The New." Success. September 1988. Levitt, Theodore, Marketing Myopia," Harvard Business Review, July/August 1960. Moline, Julie, "Managing Business Travel Costs: Preparing for 1992," Fortune, advertising supplement. January 1992. Ohmae, Kenichi. "Getting Back To Strategy," Harvard Business Review. November/December 1988. "100 Ideas For New Business." Venture, November 1988. Poe, Richard, "The Uncanny Think Tank," Business Month. November 1989. Reich, Robert B., "The REAL Economy," Atlantic Monthly. February 1991. Roman, Mark, "New Niches For The 90s." Success, April 1989. Weber, Joseph, "Merck Needs More Gold From The White Coats," Business Week, March 18. 1991. What I Want U.S. Business To Do In 1992." Fortune, December 30, 1991.
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Title Annotation:Business Strategies
Author:Harper, Stephen C.
Publication:Industrial Management
Date:Jul 1, 1992
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