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Case Study 1

The Four Models of Corporate Entrepreneurship


Submitted by: Subhabrata Das (A0109984N)

Objective
The case study at first tries to measure the similarities and differences between the four models of
corporate entrepreneurship and then explain in details as to which model the company Phillips
Carbon Black Limited, India fit well into.
Corporate Entrepreneurship
Corporate entrepreneurship, which is also defined as intrapreneurship or corporate venturing, is
normally a process by which individuals inside an organization undertake opportunities which are
unrelated to the job portfolio they currently control. This largely involve coming up with a new
product innovation or innovation in services or brands that is discrete from the main organization,
however make use of parental companys assets, market reputation, or amenities. Corporate
entrepreneurship expands the degree of competence and subsequent opportunities in an established
company by in-house creation of new resource combinations. Organizations who encourage their
employees to work as entrepreneurs can develop profit-making innovations by allowing sufficient
freedom and flexibility in the workspace. This can in return help the organization to maintain a
good organic growth even in difficult times when the core business of the company begins to wave
down. A broader definition of corporate entrepreneurship was suggested by Guth and Ginsberg,
who emphasized that corporate entrepreneurship largely circumscribes two major phenomena:
new venture creation within an existing organization and the transformation of organization by
strategic renewals [1]. Renewals here refer to formal or informal activities which creates new
business opportunities in well-established companies at the corporate, business or project levels
[2].
Four Models of Corporate Entrepreneurship
R.C. Wolcott and M.J. Lippitz through their research recognized two facets of organization which
can help to categorize companies on how they undertake corporate entrepreneurship. The aspect
is organizational ownership: refers to an individual or a group within an organization who takes
the primary leadership, responsibility or accountability for the spin-off of a new business model
with-in the company. The second aspect is the resource authority: it indicates whether the
concerned company allocates a fixed amount of fund for new business ventures or it has to provides
funding when the need arises through corporate budgets or additional supplementary funds.

Combining the both aspects we can develop a 22 matrix with four major models such as, the
opportunist model, the enabler model, the advocate model and the producer model.

The Opportunist Model


Most of the company commence their corporate entrepreneurship journey as an opportunist. In an
opportunist model, the company does not have any defined person or group for organizational
ownership, neither do they allocate any funds or resources for new business model development
and spin-off. However, in this kind of scenario the corporate entrepreneurship progresses due to
the hard work and dedication of serial innovators or project champions. These individuals
have the capability to identify and solve vital problems through breakthrough which can generate
millions of dollars as revenue for the company. In this way serial innovators can affect millions of
lives every day, starting from the workers who are employed to produce the breakthrough product
to the customers who get benefit from them. These champions work extremely hard against all the
difficulties and often without the formal help of the organization to transform their unconventional
business model into a successful commercial product.
Tom Osborn, is a Serial Innovator at Procter & Gamble (P&G). He is the inventor of the
technology behind the Always Ultra feminine hygiene pad in 1980s, one of P&Gs billion dollar
brands [3]. However, Toms this breakthrough innovation almost got him fired. The Always Ultra
concept was latter fully supported and globally launched by P&G which was largely accepted by
women across the globe due to its thin and comfortable nature. Still in its third decade, Always
Ultra continues to provide comfort and protection to women and huge profits for P&G.
This kind of opportunist model works positively in organizations like P&G, where the
management is open to new business opportunities and innovative solutions and organizational
culture does not discourage lower-level employees to form relationships with higher management
in the company. This kind of surrounding supports innovative ideas to strive and not get lost within
organizational cracks. The organizational model is the first step in corporate entrepreneurship,
when the management realizes the potential of serial breakthrough innovation on organic growth,
they start taking pragmatic steps to encourage the development of leaders within the company and
also provide them sufficient funds to spin-off more business models.

The Enable Model


The enabler model is applicable for those company where the organization set aside a fair share of
resources for the employees to explore new business models as long as they remain aligned to the
vision of the parental organization. The parental organization here do not take any organizational
ownership during the product development process, that means the individual or a group who has

innovative idea can tap into the resource pool provided by the company to bring about the
innovation as a breakthrough product or service. The parental organization has a clear structure to
select the ideas to fund, application guidelines for seeking project funding, transparent decision
making managerial machinery and employees who have an entrepreneurial mind-set. In this kind
of model, the employees are allowed to spend a certain part of their working hour to pursue a
project of their interest. In the process, employees form groups depending on their needs and
expertise to develop their prototype. With the developed business model and prototype, the
employees can apply for funds, and successful projects receive significant resource help from the
organization to help them in the journey of product development and commercialization. However,
these companies put significant effort in selecting their employees as they believe their employees
to be their assets, who in the long run can help the organization to either develop a breakthrough
product or guide a product development process. Greatest example for this model is Google.

The Advocate Model


The advocate model falls in the spectrum of corporate entrepreneurship where the organization
takes full responsibility and accountability for the innovative product development and new
business model building. However, here the major challenge is the amount of fund dedicated for
the entrepreneurship process. In an advocate model, the company acts as a campaigner and
innovation expert who helps the corporate entrepreneurship to work hand-in-hand with the
business wing of the organization. In this model the company appoints a group of employee who
formulates a program to develop employees in the organization into a corporate entrepreneur
through different seminars and workshops. During this phase, the leaders teach the employees the
way to develop business models and innovative products. After this, the employees work in teams
to develop a detailed business model, which is pitched in front of business development unit
comprising of experienced and respected leaders of the company. The organization funds mainly
the workshop and seminars, which help the employees to gain more insight on corporate
entrepreneurship and business development. However, they need to arrange for their funding to
continue their developed business. DuPont serves as an excellent example for the advocate model.
The Producer Model
The producer model has a tick on both the aspect of corporate entrepreneurship. The companies
following this model provide both organizational ownership and resource pool for the development
of new breakthrough business model for innovative products and services. In this model the
organization designates a group of mentors who actually trains the employees or provides technical
and managerial support to help them develop their business idea. Once the idea is formulated, the
business unit or the program managers screen the projects depending on their potential and then
fund the most exciting and sustainable project, which they believe to align with the companys
vision and also has the potential to generate huge revenue for the company. During the innovation

process, the developed ideas are diligently worked upon by business developer wing of the
company. Then the project approval is seeked from the board of directors of the company for
finding and supervise projects growth. Finally, the project is validated by testing on real
consumers.

Comparison between The Four Models of Corporate Entrepreneurship


Each of the four models of corporate entrepreneurship differs from the other depending the
combination of the two aspects as discussed earlier: organizational ownership and resource
allocation.
The four models have different vital goals. The opportunist model depends on a specific individual
champion or a group for product development and innovation as they receive no help from
organization. While, the enabler model assists the employees and teams with independent funding
and guidance from top executives to nurture future business leader with in new and innovative
ideas. The advocate model the company spends money to develop a support team for the corporate
entrepreneurs. These teams conduct seminars and workshops to educate and infuse interest among
the employees to pursue new business opportunities within the organization. While the strategic
goal for the producer model is to capitalize on breakthrough innovation by providing full support
of organizational funding, coaching and accountability.
In opportunist model, there is no significant input from the organization in terms or resources,
however depending on the entrepreneurship potential of the employee, the organization can
generate huge revenue if the employee is able to develop a breakthrough product through his
innovation. This contributes a lot to the organic growth of the company, which then can push the
corporation to move to another model of corporate entrepreneurship depending on their vision.
The enabler model infuses a lot of dedicated funding into the system to develop the business model,
along with executive guidance and proper recruitment of employees to get well developed products
and services within the goal and vision of the company. The advocate model typically makes use
of veteran leaders to train the employees to become successful future leaders with the capability
to develop new business ideas. The producer model is the most resourceful and organizational
intensive model, where the employees receive the guidance from well-established and successful
veteran company leader to formulate their business models and also sufficient funding to build
prototypes and proper nurturing to commercialize the product.
The major positive of an opportunistic model is the real example of an entrepreneur who works in
an established company, as he has to fight with all the odds of corporate environment to finally
develop and commercialize a product within the company. The success outcomes of an enable
model include flexibility among groups as, depending on the basic need the employees prepare
their group. The selection criteria are well defined and the application procedure is hustle free. The
advocate model teaches employees to become experts in building business models through

workshops and seminars. Support is received from executive bodies for product development.
While the producer model comes with a leadership group which looks after the project and
business model development. Special importance is given to people who opt for entrepreneurship
executive career incentives.
The major challenge faced by the opportunist model is the unconventional approach by the
employer for the innovative process, which can create dissatisfaction within the company, during
product development which can lead to losing of job. For the enabler model it is extremely
important to innovate within the scope and vision of the company, as anything out of this domain,
the company will not be willing to fund. It is also extremely important to maintain a good
relationship with the management, else the project can be shelved and not provided any
importance. For the advocate model, getting over the pressures associated with the training session
is quite troublesome. It is extremely difficult to find a suitable advocate for the specific business
model. For the producer model the major challenges are leadership succession, lack of businessunit support and successful pitching of idea in front of the board of directors to get funding for the
venture.
The opportunist model and the advocate model share similar resource funding strategy, where both
the models do not provide significant or no budget for product innovation, business development
and breakthrough product and services innovation. The enabler model and the producer model
share similar organizational funding level for innovative projects, where the enabler model lack
organizational accountability but producer model share the benefits of organizational responsibly.
The advocate and producer model on the other hand have strong organizational accountability, yet
the advocate model do not have enormous funding opportunity for the process while the producer
model have clear funding schemes like the enabler model.

Phillips Carbon Black Ltd.


Phillips Carbon Black Limited (PCBL), part of the RP Sanjeev Goenka Group, pioneered the
carbon black industry in India. It is now the leading producer of carbon black in the country. PCBLs
trade name is Orient Black. Phillips Carbon Black has come a long way since its inception in 1960.
PCBL started production from December 1962 by the oil furnace technology; the most widely
accepted manufacturing process of carbon black patented by its then collaborator and world carbon
black leader, Phillips Petroleum Company, USA. The collaboration ended in 1978. However, PCBL
continued its progress by virtue of the ingenuity of its technologists, engineers and sustained R & D
activities. In 1988 PCBL entered into a technical agreement with Columbian Chemicals Company,
USA, and acquired access to the modern state-of-the-art Carbon Black technology. This resulted in
the company gaining flexibility, product range, production capacity and energy conservation. The
company is not only the largest exporter of Carbon Black from India but also one of the largest in
Asia in its field. It is a part of RP-Sanjeev Goenka group, pioneered the carbon black industry in
India. RP- Sanjeev Goenka is one of the Indias top five industrial houses with annual turnover of

US $1.6 billion. Its asset exceeds US $2.1billion. PCBL is having four plants in India, which are
located at Durgapur in West Bengal, Palej in Gujrat, Baroda and Cochin in Kerala. It is the ISO9001 certified, and is the only carbon black manufacturer in Asia to achieve the distinction.

Fig. 1. Four models of corporate entrepreneurship


I worked in the Durgapur plant of the PCBL company as an intern for four months. During my
internship I did a project To study the effect of flame temperature and air-pre heat temperature on
the reactor efficiency for carbon black production. Carbon Black is a quasi-graphite form of
elemental carbon fused together in a grape like Agglomerate structure. The extremely dark color
and fine particle size have made it an ideal material for pigment application. Carbon black is a
material produced by the incomplete combustion of heavy petroleum products such as FCC tar, coal
tar, ethylene cracking tar, and a small amount from vegetable oil. The highest volume use of carbon
black is as reinforcing filler in rubber products, especially tires. I worked mainly in the engineering
and research and development division of the plant during my internship. My main objective was to
check the effect of process parameters on the reactor efficiency to get a greater yield and better
product of carbon black.

Based on the current reading and previous work experience, I feel the PCBL, India followed an
opportunistic model. As discussed earlier, in an opportunistic model there is no organizational
accountability for the corporate entrepreneurship program, neither any specific funding or
resources is set aside by the company for new business models. There is no dedicated team in the
company looking into new ventures. Most innovative idea came from the senior management, and
employed a top-down approach. Employees did not feel the urge to come up with innovative ideas
to improve processes or products, and did not take the initiative to suggest new ideas out of their
scope of work.
However, the company shares a very open and trusting corporate culture, which is open to
innovation. The lower-employees do have the opportunity to meet higher-level management
authorities during office meetings and cultural functions. This allows the opportunity for
innovators to get guidance in management champions to develop their business idea and product
innovation. During my work as an intern, my supervisor Mr Sisir Nayak had great innovative
skills. With his guidance I was able to determine optimum operating parameters of the reactor for
different feeds to get the best quality of carbon black at higher yield. The innovation was divided
into two steps, where we went for a developmental approach where we worked on the current
reactor to improve product yield and quality. In the second stage we, designed a new reactor, which
required less feed stock and energy and produced maximum product yield and premium quality at
the optimum process condition. This reactor was scaled up for pilot plant testing which gave
promising results, which impressed the board to directors. The board based on the research
findings commissioned to set up a new plant using the developed reactor. However, I left the
company after the completion of my internship. From this experience I was able to experience a
corporate entrepreneurship in a developed organization which follows an opportunistic model of
corporate entrepreneurship. As the vision of the company is to cutting-edge solutions to partners,
I hope the company evolves from an opportunistic model towards another model of corporate
entrepreneurship, like to begin with an advocate model at first then to an enabler model and finally
to a producer model.

References

1.
2.
3.

Guth, William D., and A. Ginsberg. "Corporate entrepreneurship. Special issue." Strategic
Management Journal 11.1 (1990).
Hisrich, Robert, and Claudine Kearney. Corporate entrepreneurship: how to create a
thriving entrepreneurial spirit throughout your company. McGraw Hill Professional, 2011.
Griffin, Abbie, Raymond Price, and Bruce Vojak. Serial innovators: How individuals
create and deliver breakthrough innovations in mature firms. Stanford University Press,
2012.