Intrapreneurship and Corporate Venturing 391
vent firms from easily adopting disruptive innovations and forming new corporate ven-
tures. Christensen, like Henry Ford, finds that asking customers about disruptive inno-
vation and revolutionary alternatives is futile. They want faster horses.
Why? They depend on current customers and investors for their success, and disrup-
tive change can upset that balance. The markets for the disruptive new technology or
products are generally very small at first. Why hurt the big successful product in order
to initiate a product in a small and unproven market? Large firms have well established
protocols and processes for market analysis, but it is hard to analyze a new market.
Disruptive innovation often competes against nonconsumption—customers who do not
yet exist. New markets seldom come out of this analysis well. Lastly, disruptive change
frequently enables customers to purchase and consume the new product/service at a
lower cost than the existing product/service. From the viewpoint of the firm, innovation
is a threat to their already successful market.
Christensen’s core recommendation to businesses facing disruptive technology is
essentially to divide and conquer: to set up or acquire an independent division organ-
ized either as an autonomous unit or as an independent company with stock owned pri-
marily by the parent company. He cites Johnson and Johnson as a good example: Its
umbrella of 160 units includes three—disposable contact lenses, endoscopic surgery, and
diabetes blood glucose monitors—that were stand-alone divisions for disruptive prod-
ucts that became billion-dollar success stories. He also advises firms not to commit to
being either a technology leader or follower. Disruptive innovations have first-mover
advantages that sustaining innovations often lack. But his strongest recommendation is
simply to be aware that disruptive technology is counterintuitive to existing programs,
and that disruptive products rarely make sense in the period when investing in them is
critical.^25
THE PROCESS OF INTRAPRENEURSHIP
The most important part of the process for a corporation is the realization that intrapre-
neurship is not optional! For the many reasons delineated above, corporations must con-
tinue to innovate and venture. The real question concerns the locus of that innovation.
Where is the emphasis placed? This section reviews the general corporate processes.
A Five-Stage Process Model
There are five recognizable stages in the process of intrapreneurship or corporate ven-
turing.^26
Problem Definition. Stage 1 is problem definition. Problems—or opportunities—may
come from sources within the company or industry. The key to recognizing intrapre-
neurial opportunities is to be sensitive to change and open to surprise. One source of
ideas is the unexpected occurrence: unexpected successes or unexpected failures.^27 If cus-
tomers demand a product or service into which the corporation did not put much effort
or thought, this success can be the source of an entirely new business once enough
resources are invested. Similarly, if a product is a failure, understanding why and deter-
