The Generation of Betapreneurs

FROM COMPANIES TO STARTUPS AND BACK: NEW ENTREPRENEURSHIP IS INCREASINGLY BORN WITHIN EXISTING CORPORATE AND GOVERNMENT ORGANIZATIONS, A PHENOMENON BEING STUDIED BY BOCCONI RESEARCHERS

by Carlo Salvato, Dept. of Management and Technology

Something has changed in the world of entrepreneurship. A new generation of entrepreneurs has sprouted from within companies: they can be employees, and sometimes customers. They suggest intuitions for new products or processes, which, through trial and error, lead to the introduction of radical innovations in every field of human endeavor, from science to technology, from art to medicine. It’s a new way of thinking about entrepreneurship that is shaped by the knowledge of the web, and its tremendous potential to launch speedily effectively beta versions of products and services. These betapreneurs are becoming more and more noticeable within consolidated corporations, which seem to have great need for their contribution to creativity and innovation.

Internal entrepreneurs, also called intrapreneurs, are people who identify and try to seize entrepreneurial opportunities not individually with the creation of a startup, but within an existing organization. Some were the founders of the same enterprise in which they subsequently try to develop other entrepreneurial ideas, while other entrepreneurs are employees and associates of the company at their first entrepreneurial experience. Not all entrepreneurs, however, pursue their vision within the company that employs them. Their strong entrepreneurial orientation sometimes leads them to create new organizations, giving rise to innovative companies that are called spinoffs or spinouts. A spinoff is created when an intellectual property (for example a patent), technology, or any kind of coded or tack knowledge is transferred from a given source to create a new organization. The source can be a company, a university, but also a research center or public lab. The type of knowledge source (enterprise, university or public research center) on which a spinoff is based, but also the characteristics of the intrapreneur and his/her team (managers, academics, or public employees) determine the spinoff’s chances of survival, by affecting the capability to attract financial resources from venture capital and other financial sources, to fund future growth and profitability.

With reference to the source of knowledge, spinoffs that originate from an existing company generally have a greater market orientation, a shorter time-to-market, a more focused application of knowledge, and hence a lower perceived risk with respect to those based on university and government research centers. However, spinoffs that are born in companies tend to be more focused on uses already seen in the industry in which they operate, while those emerging from universities can more easily develop out-of-the-box business ideas. Spinoffs of public and government research centers, on the other hand, may in some cases be more related to the logic and dynamics of areas of greatest interest to the public, such as defense or energy.

With reference to the characteristics of the business team, the spinoff founders who come from existing companies benefit from market and network experience in the previously developed industry and are therefore able to develop hypotheses and plans for the most realistic business development and feasible. Spin-offs created by universities benefit from the high level of training and scientific expertise of academic entrepreneurs. Conversely, entrepreneurs born from government agencies may not have the managerial experience and the technological expertise required, but have strong and direct links with administrations that are potential buyers of their products.

The success or failure of a spinoff is therefore strongly linked to the sources of knowledge on which the new products and processes are created, the previous personal and professional experiences of the intrapreneurs and their teams, as well as the pathways that knowledge has traveled before being transformed into an entrepreneurial opportunity. By following the paths of the creation and recombination of innovation, researchers and investors can anticipate some of the features and results of new firms that take their vital lymph from innovative entrepreneurship.

Read more about this topic:
Spinouts Increase Relations Between Their Creators and the Rest of the Firm
The Scientific Method and Business: Entrepreneurs Who Emulate Galileo Do Better
Spinoffs: Grow Your Business but Minimize the Risks
Spinouts that Originate from Downstrean Users Have Better Prospects