Corporate entrepreneurship, radical innovation, and cybersecurity

Prior to the 1960’s we could see in management science a mostly command and control, hierarchical approach. In the 1960’s, we started to see corporate innovation concepts emerge with the taking of ideas to a profitable reality within firms, and later with changing consumption behaviour. My sense is we are seeing, and needing, a similar shift in approaches to cybersecurity that are disruptive to cybercrime.

Perhaps we could start with looking at some definitions from the academic literature: yes, corporate entrepreneurship/ innovation and ideas/invention has been studied and peer-reviewed since at least the 1960’s when Schon[i] used the term ‘Champion’. Those principles were further engaged and popularised by NASA in the 1970’s[ii]. Independent entrepreneurship, however, is argued by some as appearing in the literature since the turn of last century with Schumpeter and economic analysis of entrepreneurship and innovation[iii]. This is important because as we will later see, the definition of entrepreneurship can be argued to include both independent and corporate entrepreneurship.

A background to innovation.jpg

I studied entrepreneurship, innovation, internet marketing, and ecommerce as part of my MBA at the turn of this century and completed a doctorate in the space soon after – the role of the corporate entrepreneur in the radical innovation process. It was in this thesis that I successfully argued that Schon’s term Champion is used in the context of a corporate entrepreneur: someone who takes an idea to a profitable reality within an existing firm.

In taking ideas to a profitable reality: 1) definitions of profit can be financial eg. Pounds, Dollars Euros etc, and/or non-financial, eg member satisfaction, patient outcome, much-less-insecure etc; and,the distinction between idea/invention and entrepreneurship/innovation is key to success.

Pinchot (1985)[iv], who coined the term intrapreneurship, discovered this distinction between invention (idea) and innovation, and their associated activities and roles, from the failure of ideas to commercialise out of the R&D department of organisations. The process of each of invention and innovation require different skillsets, which may or may not exist in a single person.

Sharma and Chrisman (1999) [v] argue the definition of entrepreneurship, give or take a few bells and whistles, culminates in the job of the entrepreneur being to take an idea to a profitable reality – within or independently of an existing firm. I would further argue that after a certain turnover and assets even an independent entrepreneur becomes a corporate entrepreneur because they have resources and assets to leverage in the innovation process. It is further worth noting here that an entrepreneur then does not have to come up with an idea, an inventor does. The job of the entrepreneur is to innovate – to take an idea regardless of whether it is theirs or a 3rd party inventor’s – to a profitable reality, however profit/success may be defined. Further, that definition of success is critical to measuring the achievement, and progress against achieving, success. This innovation benchmarking process is important to ‘managing up’ to the parent firm for their comfort and risk management. This approach makes the corporate entrepreneur’s leash likely to be longer, life easier, thereby increasing the likelihood of success.

One of the primary concerns for corporate entrepreneurs is overcoming the issues associated with leverage to capitalise on the advantages of parent firm resources, toward achieving their definition of success at a lower marginal cost. In negotiating shared benefit and marginal cost allocations to P&L’s etc, and as identified by Stevenson et al (1999)[vi], a corporate entrepreneur is seeking to pursue opportunity – innovate – without regard for resources, while the people they are leveraging those resources from are concerned with the most efficient use of the resources under their control. As also identified by Miles and Covin (2002)[vii] this adds an extra dimension to corporate entrepreneurship that is less a consideration for independent entrepreneurship unless they are collaborating with third parties, which is a related topic for a different article. For the purposes of this article, it is this extra dimension of activities in leveraging parent firm resources that form a good swathe of my doctorate.

This brings me to disruptive innovation, which Christensen (1995) [viii] coined in the 1990’s. This is where traditionally good-guy startups communicate and collaborate to dint the profits and market share of traditionally big-and-good-guy market encumbents, ultimately disrupting them. This is the model I overlay with cyber security and communication and collaboration disruptive to cyber crime. That is, instead of trying to disrupt good guy market encumbents, we are seeking to disrupt cybercriminals as the encumbents. Disruptive innovation may or may not, however, require a change in consumption behaviour. If it requires a change in consumption behaviour then it is a radical innovation, the role of the corporate entrepreneur within which is my specific area of expertise and contribution to the body of knowledge and practice in management science and now overlaid to form my contribution to the cyber security industry.

Radical innovation takes an idea to a profitable reality by changing consumption behaviour[ix]. It has the propensity to sustain, if not increase, mature firm profits. The academic texts use McDonalds as an example, versus Ma and Pa Deli with a new sausage line[x]. There are perhaps three radical innovations that have occurred only in my lifetime enabling the possibilities of my life experiences as a well-travelled, international business person, with creative interests, educated to doctoral level, writing this article to you and delivering talks along a similar vein: 1) Taking the idea of the commercialisation of internet to a profitable reality required the change in consumption behaviour of information and functionality to become online; 2) Taking the idea of equal education, rights and pay of women to a profitable reality required a changing in consumption behaviour of women’s and men’s roles in society and the workplace to become equal; and 3) Taking the idea of commercial international air travel at scale to a profitable reality of required a change in the consumption behaviour of laws, trade and diplomacy to become international and accessible to the masses.

Similarly, cyber security is a radical innovation. Taking the idea of cybersecurity to a profitable reality requires a change in the consumption behaviour of information and functionality online to become much-less-insecure. At the moment the cybercriminals are highly incentivised to communicate and collaborate and trade our information, functionality and more online – and are very effectively doing so. We need to disrupt these bad-guy market incumbents. This is why I, and my business, focus on fostering communication and collaboration disruptive to cybercrime. We help multiple stakeholders work together to commercialise the idea of cyber security placing it in the hands of all of us who use the information and functionality.

Dr Sally Ernst I UK and Australian Cyber Security Networks I info@csns.co I https://www.linkedin.com/in/sallyernst I @DrSallyErnst

Further reading and references

[i] Schon 1963 The displacement of concepts, Tavistock

[ii] NASA Dilemmas of Leadership By Tudor Rickards https://books.google.com.au/books

[iii] Schumpeter The International Handbook on Innovation By Larisa V. Shavinina http://tinyurl.com/z359fcd; and, Schumpeter, EB (1954,;1984) History of Economic Analysis : capitalism, socialism and democracy Harper Torchbooks.

[iv] Pinchot, III, G. (1985) Intrapreneuring Harper and Row New York. See also Pinchot G and Pinchot ES (1978) “Intra-corporate entrepreneurship” Fall 1978 URL: http://www.intrapreneur.com/mainpages/history/intracorp.html <<last accessed 12 June 2006>> and Pinchot III, G., and Pellman, R. (1999) Intrapreneuring in action Berrett-Koehler San Francisco

[v] Sharma, P and Chrisman, J (1999) “Toward a reconciliation of the definitional issues in the field of corporate entrepreneurship.” Entrepreneurship: Theory and Practice Vol 23 (No.3): 11

[vi] Stevenson, H.H, Roberts, M.J, Grousbeck, D.E & Bhide, A (1999) New Business Ventures and the Entrepreneur Richard D Irwin Homewood.

[vii] Miles, M. & Covin, P (2002) “Exploring the practice of corporate venturing: some common forms and their organisational implications” Entrepreneurship: Theory and Practice Vol 26 (No. 3): 20-21

[viii] http://www.claytonchristensen.com/key-concepts/ and Christensen, Clayton (January 1995). “Disruptive Technologies Catching the Wave”. Harvard Business Review: P 3.

[ix] ODMA (2006) “Product Management Glossary: The PDMA Glossary for New Product Development” URL: first accessed 2006 www.pdma.org

[x] I can’t find a citation for this point. If you coined this analogy please let me get in touch and we can update this citation.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s