Page 22 - Grow from Within Mastering Corporate Entrepreneurship and Innovation

Entrepreneurship, Innovation, and Organic Growth 9

Any new, independent company that reaches a milestone like
$100 million in revenues is quite remarkable. For a large firm,
$100 million from a new business might be considered a com-
mendable but modest accomplishment. For the public, it can
be buried in the company’s overall performance.
This is the nub of the corporate entrepreneurship problem.
If you’re with a multibillion-dollar company, it seems that you
must always hit home runs in order to matter. Of course,
you’ve got to take a lot of swings and suffer a number of strike-
outs to get those home runs, but some companies are notably
increasing their batting averages.
IBM’s Emerging Business Opportunities (EBO) group
reported to Alan Deutschman of Fast Company in 2007 that, as
of 2005, it had achieved $15 billion of annual new revenues
from 22 of 25 EBOs. The group figured out how to find
and develop the most promising ideas in markets where the
company could differentiate itself. Between 2003 and 2008,
Cargill’s Emerging Business Accelerator (EBA) evaluated
more than 450 opportunities and invested in 13, of which 2
have “graduated” into ongoing businesses, 2 were sold, 4
were discontinued, and 5 remain in the EBA portfolio. EBA
businesses have produced hundreds of millions of dollars in
new revenues for Cargill.
If the fruits of corporate entrepreneurship and other sub-
stantial innovation efforts were measured more carefully,
many people would be surprised. In addition to IBM’s suc-
1
cesses, Apple’s iPod, iTunes, and iPhone are clearing nearly
$10 billion annually and generating billions in profits. The
2006 return on investment reported by the 1,860 U.S. venture
capital and private equity partnerships tracked by the
National Venture Capital Association was about $100 billion.
IBM and Apple are remarkable companies, but they are not
simply anomalies in the realm of corporate entrepreneurship.