Page 67 - Grow from Within Mastering Corporate Entrepreneurship and Innovation

54 grow from within

address a $2 billion opportunity. The project retained the
same basic product design; what changed was the overall
business system.
Similarly, in Chapter 1, we mentioned a heavy industrial
company that leveraged its internal technology to address a
problem in medical diagnosis, noting the CEO’s fear that Wall
Street might punish the company for pursuing such a “dis-
traction” from its core business. Another element of that story
is a similar failure to consider the business system up front.
An analysis that we performed for the company, after hun-
dreds of thousands of dollars had been spent on technology
development, showed that markets other than the initial tar-
get were more promising. In addition, the decision to license
the technology rather than to pursue it through a spin-out or
joint venture—a decision that came down from the corporate
legal department, based on liability concerns—would greatly
limit the upside potential. Had these business system factors
been considered up front, the company might have saved a lot
of valuable internal development dollars (as well as avoided
the CEO’s ire).
Fortunately, we are witnessing a growing recognition of
the importance of business system innovation. In the intro-
duction, we noted IBM’s 2006 global survey of CEOs that
found that those companies that spend relatively more on
business model innovation achieved higher returns. This
means thinking about how you organize your operations,
where you engage with customers, and how you earn rev-
enues in an indirect way; combining all of these things into
an interoperating system represents the challenge for the cor-
porate entrepreneur.
As Michael Porter’s work on corporate strategy indicates,
the sustainability of a strategy has much to do with the diffi-
culty competitors have in replicating the range of integrated