Executive Interviews: Interview with Gaurab Bhardwaj on Corporate Entrepreneurship
April 2007 - By Dr. Nagendra V Chowdary

Gaurab Bhardwaj
Assistant Professor of strategy and management
Faculty Director of Babson's Executive Education Program,
at Babson College in Massachusetts, US.

deal of such innovation takes place within established firms. As I studied innovation, I soon realized that the effort did not end with it but also involved lots of creative moves in the market to make the innovation successful. Because of the time and effort required in creating products and markets, the stories behind raising funds were just as compelling. So, my interest evolved to looking at the entire CE process. I was also interested in understanding how firms pursue longterm growth, so all of these curiosities just came together. My work now is about investigating the ongoing, continual process of CE for long-term growth. Although I have emphasized science and technologydriven companies, the processes are just as relevant for other kinds of companies.

• What are the benefits of corporate entrepreneurship? What are the costs and risks associated with it?
  Broadly, continual CE is the process by which a firm innovates, grows, responds or anticipates important market needs, and changes directions as the external environment evolves. Corporate entrepreneurship is pivotal to creating competitive advantages and sustaining superior performance. The benefits are inextricably tied to risks and costs. The latter are especially greater when potential gains are higher. While CE is essential to a firm's long term survival and growth, it will not be successful in each of its endeavors. That is why it is important to put a lot of thought behind CE and recognize that it has to be an ongoing process where no single effort is assured to be a winner but over time the continual efforts will lead to a series of successes. And the learning that comes with a continual process will help improve the chances of success over time. The biggest risk to long term is not treating CE as a continual process and being demoralized by early failures and inadvertently creating an environment where CE is choked.

• Building a new venture within the walls of an established corporation is a decidedly unnatural act. So, perhaps it is unsurprising that any corporation presented with low hanging fruit that is, growth opportunities that are less difficult to capture would naturally seek to avoid the risk and complexity of entrepreneurship. If stock markets demanding growth and profitability expectations can be met with low hanging fruits, why should a corporation risk a significant portion of its earnings on a risky new venture? When would a corporation risk a new venture, especially when the going is good?
  If a company can take advantage of low hanging fruit then it should certainly do so. But there are a few cautionary points worth making. It may also be a low hanging fruit to competitors who may be able to quickly imitate you, taking away some of the potential benefit. Low hanging fruit sort of ventures often do not provide high, sustainable returns. But, they are nevertheless worth exploiting because lots of such efforts can generate substantial returns, they may be essential as that is what customers are demanding, they can provide learning advantages, and the easy victories can lift morale and raise confidence. They are thus an integral part of a continual program of CE. The danger arises if a company hopes that it can continue to grow with superior performance, and sustain it solely on the basis of low hanging fruits. That is unlikely. Over time, every firm will have to reach out beyond low hanging fruits to riskier efforts that change the rules of competition or redefine markets. It is essential to take a portfolio approach over time. To your last point, undertaking risky ventures when the going is good and taking them proactively is far more likely to be successful than finding oneself having to undertake risky ventures when a companys performance is not strong and competitive pressures make it impossible to delay taking them on any further.

• From your research, can you give us examples of successful and failed initiatives?
  Examples of successful CE among widely recognized companies are Apple and Google, who have shown strong corporate performance and a stream of innovations. Both are also positioned well for continued success for at least a few years. The story of Reliance from its inception onwards is a wonderful example of continual CE and longterm growth. A lesser known example that I like is that of a subsidiary of DuPont's called Qualicon which was founded against great odds and made important contributions to customers and society.

  Among failures, a memorable recent example is that of the company TiVo. Despite its pioneering innovation of a digital video recorder, the company did not do enough to educate customers to create and capture a market. The Big 3 Detroitbased automakers, General Motors, Ford, and the Chrysler division of Daimler Chrysler, are examples of companies that have failed at innovation and CE. Similarly, the attempts by traditional (legacy) airlines in the domestic US market at creating low cost subsidiaries and turning around their steadily poor performance are instances where innovation and CE have not worked. There are many instances of failed CE but they often dont make the news so, except for those involved in the efforts, most people remain unaware of them. However, failure is inevitable with CE. The question is what kind of failure is it and does the company learn from it and avoid the same mistakes again? Some failures are due to predictable mistakes that could have been avoided. That reflects a badly managed process. As does the repetition of mistakes, and the not changing of processes that contributed to such failures. It is useful to separate the content of CE from its process to analyze successes and failures.

1. Leadership and Entrepreneurship Case Studies
2. ICMR Case Collection
3. Case Study Volumes