Written By: Stephanie Williams – Corporate Finance
When it comes to organizational growth, there must be innovation and sustainability. Without innovation, there is nothing to sustain; and without sustainability, there is no need to innovate. From a business perspective, the primary goal of innovation is to maximize shareholders’ wealth. For this to happen, the innovation must provide long-term value by helping the organization meet its most superior goals. This cannot happen without sustainability, which includes the management of the social, environmental and financial frameworks within an organization.
While sustainability has been the primary focus of organizations today, rapid innovation is proving to be the key driver of survival and growth. The influx of new technologies into the market has fueled a fierce competition that is enough to drive even the most well-established firms out of business. For instance, Motorola, the first company to build and sell a mobile phone, was once a leader in its industry but lost almost all of its market share due to a lack of rapid innovation. In the business environment of today, every firm must be ready to embrace change and act fast to remain competitive.
If an organization is to remain at the top of its industry, it must be ready to nurture the culture of innovation and leadership among its human resources. This is the concept of corporate entrepreneurship. It involves encouraging employees to come up with entrepreneurial ideas and champion them in the best interests of the organization and its stakeholders. Corporate entrepreneurship is not just about individual employees; it should involve teamwork, in which employees come together to create, implement and follow through on an idea to success. It is a culture that instills confidence in employees to make entrepreneurial decisions within the organization and take responsibility for their actions.
When employees are empowered to make effective decisions, they develop high expectations and become motivated to perform beyond expectations. This self-dedication improves productivity and integrity thus enhancing the long-term performance of the organization. The corporate-entrepreneurship culture develops change agents to steer the organization towards growth. The culture develops employees into leaders who bring the change they want to see for the betterment of the firm. The attitude in the organization is that passion and dedication are the key elements of productivity and growth.
According to a research study by Gallup, disengaged employees cost US businesses more than $450 billion in lost productivity. The study shows that more than 70 percent of employees in the United States feel detached from the organizations for which they work and do not care about their long-term goals. Corporate entrepreneurship ensures that employees are highly engaged in their work by making them the leaders of their inventions. When entrepreneurial employees are motivated, they are likely to take charge and manage their organizations’ projects as if they were their own. This dedication is crucial in fostering survival and growth.
For large organizations, the biggest challenge in this age of technology is to create new businesses. Without corporate entrepreneurship, an organization is left to hang on its old inventions and models, hence inhibiting growth and exposing the firm to the risk of losing its market share to its innovative competitors. Due to aging product portfolios and maturing technologies, it is paramount for companies to create, develop and sustain new businesses. The days when organizations could shrink their way to growth by downsizing and cost-cutting are long gone; today they either keep the pace of innovation with the rest of the industry or go out of business. Corporate entrepreneurship offers the best platform for leadership and innovation, which are vital ingredients for competitiveness.
Even when it is evident that corporate entrepreneurship is the lifeblood of growth in all organizations, it does not come without challenges. Research shows that innovations even in well-established companies fail. It is, therefore, necessary to balance new inventions and the management of old and proven products and models. While it is a good move to invest in innovation, risk should be calculated, and funds should be allocated to the projects with the highest probability of success. An organization that is looking to invest in a corporate-entrepreneurship culture should invest in managers who have experience running big firms and reputations for innovation.
This type of leader understands the risks and rewards of innovation and has the skills to mentor employees with an entrepreneurial mind. Activities such as scenario-planning can help promote shared understanding by getting employees to visualize the future and therefore develop a spirit of growth and innovation. For instance, leaders such as Bill Gates are known to organize retreats for senior executives at which discussions revolve around competitive threats and technological advancements. When there is a balance between innovation and sustainability, there is growth.