400 ENTREPRENEURSHIP
Although this all seems quite rational when described in a textbook, the process is
actually quite messy and risky, as illustrated by the technology funnel. For every 3000
raw ideas, corporate innovators will submit around 300 detailed proposals to top man-
agement. Of these, top management will fund about 125 demonstration projects. A
demonstration project does just what it says: It attempts to demonstrate the benefits and
features of the innovation. Only an estimated four demonstration projects of the 125
might be adopted by top management as a major new initiative. Of the four initiatives,
two products will be launched and only one will succeed. The odds are 3000:1 against.^44
To succeed, technological innovators need the same sort of incentives as innovators
in other areas:- They need the support and recognition of top management and an organizational
culture that favors corporate entrepreneurship. - They need slack resources like skunk works and time to develop and evaluate their
projects. - They need autonomy, as Christensen suggests, to make decisions free from the core
rigidities of the organization. - They need—whenever possible—financial incentives: promotions, stock ownership,
and bonuses.^45
Blue Ocean Strategies
A recently published book, Blue Ocean Strategies(2005), has both creatively summarized
much of the previously understood ideas and actions about corporate venturing and
offered important new insights. The book offers executives and intrapreneurs a set of
tools and principles which clarify the content and process of creating internal corporate
ventures.^46 More information about this book can be found at http://www.blueo-
ceanstrategy.com/index.htm.
The title refers to the place where venturing should occur—in the Blue Ocean, the
competitive area that has no competitors. It is open water, clear, pristine, and abundant
with fresh opportunities. Compare this to the Red Ocean, which is bloody with the bat-
tles of competitors. The water here is crowded with predators and their prey. As the
resources of the Red Ocean dwindle, the struggle for existence intensifies—and there are
no winners. The Red Ocean strategy is “better, faster, cheaper,” the race to lower levels
of profitability for the venture. The Blue Ocean strategy is value innovation, the leap
into uncontested space where utility is raised, price is lowered, and costs are reduced.
This recalls the Innovator’s Dilemma in which the disruptive technology comes to mar-
ket with high utility and a lower price/cost ratio.Tools of Analysis. Blue Ocean Strategy offers seven or eight tools, depending on how
they are counted. These tools begin with understanding where the market is now, move
on to aid analysis for finding Blue Ocean, and then implement the corporate venture.- Thestrategy canvasillustrates graphically the current state of the market. The
authors of Blue Ocean strategy used the wine industry of the late 1990s as their
example and discussed the launch of [yellow tail] wine. Figure 10.1 shows how the
identification of market factors graphed against market segments (premium versus