Corporate Entrepreneurship: Top Managers and New Business Creation

By Vijay Sathe | Go to book overview

8 The small-is-beautiful corporate philosophy

This chapter examines how the small-is-beautiful corporate philosophy influences new business creation (Table 8.1).


The attraction of the small-is-beautiful corporate
philosophy

The small-is-beautiful corporate philosophy encourages the pursuit of many small opportunities because it assumes that the division, not corporate headquarters, is the primary center for corporate entrepreneurship. It is assumed that every business is a growth business,1 and that innovation and entrepreneurship can create repeated waves of growth in so-called mature businesses. Corporate executives exit an existing business only when there is considerable evidence that the business cannot be profitably grown over the long term, as DGM Buddy March at 3M said when this study began:

Don't use the word "mature" in this company. We have grown huge profitable
businesses from product lines that others called mature, by vigorously developing
new products and new markets. We do divest businesses occasionally, but it is as
difficult to convince corporate executives to divest as it is to persuade them to
acquire.

The small-is-beautiful corporate philosophy also limits the financial risk to the corporation by requiring each division to self-finance its new initiatives. As Ray Thorngate, DGM of 3M Engineering Products, pointed out, "The tradition in 3M is that each division funds its own growth. Corporate is not going to give you any money."


The five principles of the small-is-beautiful corporate
philosophy facilitate new business creation

Corporate executives pursuing the small-is-beautiful corporate philosophy follow five key principles in managing a division, which they regard

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