Chapter 2: AT&T Corporate Entrepreneurship Characteristic
1) General Information of Corporate Characteristics Sustainable Competitive Advantage
Adaptability - the ability to adjust, on a timely basis, to new technologies, new customer needs, new regulatory rules, and other changes in conditions without losing focus or causing significant disruption of core operations and commitments.
Flexibility – the ability to design company strategies, processes, and operational approaches that can simultaneously meet the diverse and evolving requirements of customers, distributors, suppliers, financiers, regulators, and other key stakeholders.
Speed – the ability to act quickly on emerging opportunities, to develop new products and services more rapidly, and to make critical operational decisions without lengthy deliberations.
Aggressiveness – an intense, focused, and proactive approach to eliminating
competitors,
delighting
customers,
and
growing
employees.
Innovativeness – a continuous priority placed on developing and launching
new
products,
services,
processes,
technologies, and on leading the marketplace.
markets,
and
Companies that are more adaptable, flexible, fast aggressive, and innovative are better positioned not only to adjust to a dynamic, threatening, and complex external environment, but to create change in that environment.
Corporate Venturing Corporate venturing includes various methods for creating, adding to, or investing in new businesses. There are three type of corporate venturing that is internal corporate venturing, cooperative corporate venturing and external corporate venturing. Internal corporate venturing – with internal corporate venturing, new businesses are created and owned by the corporation. These businesses typically reside within the corporate structure but occasionally, may be located outside the firm and operate as semiautonomous entities. Among internal corporate ventures that reside within the firm’s organizational boundaries, some may be formed an exist as part of a pre-existing internal organization structure and others may be housed in newly formed organizational entities within the corporate venturing. Cooperative corporate venturing – also known as joint corporate venturing
and
collaborative
corporate
venturing
refers
to
entrepreneurial activity in which new businesses are created and owned by the corporation together with one or more external
development partners. Cooperative ventures typically exist as external entities that operate beyond the organizational boundaries of the founding partners. External corporate venturing – refers to entrepreneurial activity in which new businesses are created by parties outside the corporation and subsequently invested in (via the assumption of equity positions) or acquired by the corporation. These external businesses are typically very young ventures or early growth-stage firms.
Motives for Corporate Venturing The leveraging motives: a) To exploit underutilized resources, build a new business around internal capabilities that remain idle for prolonged periods; the new business becomes the vehicle for outsourcing those to others capabilities to others. b) To extract further value from existing resources – build a new business
around
corporate
knowledge,
capabilities,
or
other
resources that have value in product market arenas not currently being served by the firm. c) To apply competitive pressure on internal suppliers – build a new business that becomes an alternatives supplier to existing internal supply sources.
d) To spread the risk and cost of product development – build a new business whose target market promises to be larger than that for which the core product to be offered by the business was initially developed. e) To divest noncore activities – build a new business to pursue business opportunities that the firm is in a favourable position to exploit and that the firm has no strategic interest in.
The learning motives can be broken down further as well. Three major types of organizational learning tend to receive the greatest emphasis: a) To learn about the process of venturing – build a new business as a laboratory I which the innovation process can be studied. b) To develop new competencies – build a new business as a basis for acquiring new knowledge and skills pertaining to technologies, products, or markets of potential strategic importance. c) To develop managers – build a new business as training ground for the development of individuals with general management potential.
Strategic Entrepreneurship Strategic entrepreneurship constitutes a second major category of approaches to corporate entrepreneurship. While corporate venturing entails company involvement in the creation of new businesses, strategic
entrepreneurship corresponds to a broader array of entrepreneurial initiatives that do not necessarily involve new businesses being added to the firm. All forms of strategic entrepreneurship have one thing in common: They all involve organizationally consequential innovations that are
adopted
in
the
entrepreneurship
pursuit
involves
of
competitive
simultaneously
advantage.
Strategic
opportunity-seeking
and
advantage seeking behaviours. Strategic entrepreneurship can take one of five forms; there are strategic renewal, sustained regeneration, domain redefinition,
organizational
rejuvenation,
and
business
model
reconstruction. Strategic renewal – is type of entrepreneurship in which its markets or industry competitors by fundamentally altering how it competes. As originally defined by Guth and Ginsberg, the label strategic renewal referred to “the transformation of organizations through renewal of the key ideas on which they are built”. Yet strategic renewal has a more specific meaning and focus. Sustained
regeneration
phenomenon
whereby
–
the
refers
firm
to
the
“regularly
entrepreneurial
and
continuously
introduces new products and services or enters new markets”. With this form of strategic entrepreneurship the firm in constant pursuit of entrepreneurial opportunities. Sustained regeneration is most commonly
employed
as
a
basis
for
attaining
or
sustaining
competitive advantage under conditions of short product-life cycles,
changing technological standards, or segmenting product categories and market arenas.
Domain redefinition – refers to the entrepreneurial phenomenon whereby the firm “proactively creates a new product-market arena that others have not recognized or actively sought to exploit”. Through domain redefinition, firms move into uncontested markets, or what Kim and Mauborgne have called “blue oceans”. These are product-market
arenas
in
which
new
product
categories
represented. A product category refers to a group of products that consumers view as substitutable for one another yet instinct from those in another product category. Organizational rejuvenation – refers to the entrepreneurial phenomenon whereby the firm “seeks to sustain or improve its competitive standing by altering its internal processes, structures, and/or capabilities”. With organizational rejuvenation, the focus of the innovation effort is a core attribute or set of attributes associates with the firm’s internal operations. When pursued successfully, organizational rejuvenation enables a firm to achieve a competitive advantage without changing its strategy, product offerings, or served markets. Business
model
reconstruction
–
finds the firm applying
entrepreneurial thinking to the design or redesign of its core business models(s) in order to improve operational efficiencies or otherwise differentiate itself from industry competitors in ways
valued by the market. Business models have been described as “stories that explain how enterprises work”.
2) AT&T Corporate Entrepreneurship External Corporate Venturing American Telephone and Telegraph (AT&T) itself were formed by the acquisition
from
the
Southwestern
Bell
Corporation
(SBC)
Communications. SBC has purchased the AT&T and took on its branding, with the merged entity naming itself AT&T Inc. and using the iconic AT&T logo and stock trading symbol. The current AT&T reconstitutes much of the former SBC system. So, basically the current AT&T are formed by using the external corporate venturing term and definitions. The external corporate venturing not only happen from its new form, but also from the acquisition of the DirecTV on 18 May 2014 and becomes AT&T subsidiary on July 2015. DirecTV is an American direct broadcast satellite service provider and broadcaster in California. There are several acquisition that being made by AT&T from 2004 until 2015, such as YellowPages, Dobson Communications, Edge Wireless, Wayport, Sterling Commerce, Nextel Mexico, and others.
Cooperative Corporate Venturing AT&T has done various cooperative corporate venturing or joint venture. One of their famous joint venture is with the Philips N.V. that formed
AT&T/Philips Telecommunications Systems in 1983. This joint venture formed to; (1) manufacture and sell network switching equipment in Europe, (2) manufacture and sell digital exchanges for public telephone networks outside the United States, and (3) offer cable and microwave transmission networks that carried phone messages. This joint ventures won a contract from British Telecom in 1985 for specialized switching equipment. They expended the joint venture domain to provide turnkey telecommunications systems for newly industrialized countries and cable systems and microwave technology. AT&T/Philips Telecommunications Systems sought to be the preferred second source vendor in sales to European
governments.
This
success
are
from
both
companies
technological expert. AT&T provided most of the underlying technology and technical know-how used in developing the next digital switching equipment. Philips, while also contributing technical skills to the joint development work, concentrated its resources on its comparative advantage
in
marketing
and
production.
There
are
also
several
cooperative corporate venture that being or was done.
Internal Corporate Venturing Internal corporate venturing is the most corporate venturing type that happen in AT&T. Like others company or organization, AT&T internal corporate venture or intrapreneurship also start from the innovation within the corporation. One of their famous innovation strategy is The Innovation Pipeline (TIP). TIP is a dynamic online crowd-sourcing platform that brings
together the creative talent of AT&T employees to drive innovation. Participants share their ideas through an online platform. Ideas are then refined with real-time feedback from peer participants and AT&T leaders and, ultimately, project funding is secured for the development of selected ideas. TIP involve four phases including Social Innovation, Prototype, Production, and Commercialization. Social innovation phase is where participants sourcing, vote on and discussing the ideas. The platform is open 24/7/365, so innovation can “follow the sun”. At the end of each TIP Season, which typically three months, the top ideas based on votes, comments, and advisor approval are selected for pitching to AT&T senior executives. Second phase is prototype where after a brief incubation period, top idea founders build proposals and develop business cases, before pitching their idea to AT&T senior executives. AT&T senior executives act as venture capitalists, with real money to fund ideas of their choice. Successful founders leave with funding and the green light to develop their ideas. Third phase is production, where successful ideas are eligible for a second incubation period in which the ideas are moved from prototype to production, and toward deployment to customers. TIP Champions will help idea founders allocate budget and move ideas through the appropriate business unit for launch. The last phase is commercialization where the successful project could be; implemented by an AT&T business unit, spun off into an external company, or maybe sold to a third party.
Since its establishment in 2009, TIP has attracted 130,000 active members from all 50 states and 54 countries. More than 28,000 ideas also have been submitted into the TIP community since its inception. Until 2014, this program has landed more than 75 projects for development and allocated $44 million to fund ideas raging from customer-service enhancements to new technology offerings. One of their notable launches included AT&T Toggle, AT&T DriveMode, and SmartMic. AT&T Toggle is a bring-your-own-solution (BYOD) solution that help maintain end user personal privacy while enabling organizational control of enterprise applications in a highly secure workspace on employee-owned devices. It allows users to have both corporate and personal accounts on a single phone or other mobile device. AT&T DriveMode is an app developed to help reduce the dangers of distracted driving. SmartMic utilizes WebRTC technology and Wi-Fi to give event and conference attendees the equivalent of a personal, wireless microphones.
Innovativeness AT&T innovativeness can be understand from the “Six Degrees of Innovation”. Six Degrees of Innovation is a study that commissioned by AT&T to the University of Cambridge Judge Business School to help companies innovate and make the most of technology. The results shows that innovation happens where companies have one or more of six business model traits. The study also shows how new technology and market demand combine, resulting in business innovation.
The first degree of the innovation is tailor-made products and services that meet customers’ individual needs, such as downloading personalized apps to a mobile phone. The second degree is sustainability, where companies minimize waste and manage resource costs. The third degree is jointly owned assets, such as peer-to-peer business. The fourth degree is only paying for service that is used, such as car-share companies. The fifth degree is effective monitoring of supply chains, such as business which use handheld tracking systems to better monitor their operations. The sixth degree is using data to easily adapt to customer needs, such as clothing companies that can quickly produce new designs to meet fashion trends. From these six model characteristics, AT&T have establish their Innovation Space Blog, AT&T Labs, AT&T Foundry, The Innovation Pipeline, Innovation Showcase, and Software Defined Network. Their innovativeness become a result by being the leader in the Internet o Things (IoT), one of the fastest-growing technology trends, where all types of devices and machines are connected and “talk” to one another. AT&T Labs Advanced Technologies goes beyond today’s current solutions to invent disruptive technologies that will drive future innovations. Their research programs are at the tip of the spear in creating advanced technologies in Data Analytics, Cloud Services, Intelligent Systems, and Networking and Service Quality Management. AT&T Labs draws on a rich heritage of innovation, including eight Nobel Prizes, and a strong culture that encourages openness, teamwork and collaboration across AT&T and within the industry.
Sustained regeneration Sustained regeneration, seen as the most recognized and common form, is the process where organizations ‘regularly and continuously introduce new products and services or enter new markets,’ the firm is in constant pursuit of entrepreneurial opportunities. Unlike the other forms, sustained regeneration cannot be presented by a single type of event; it is an ongoing process of introducing new products and services or entering a new market. Therefore, it will often result in incremental innovation and occasionally resulting in new business creation. Firms engaging in sustained regeneration as an innovative organization consisting of cultures, systems, structures and competencies which support innovation. It is conclude that these firms often happen to be learning organizations. Organizational learning is the process of improving actions through better knowledge and understanding. So it is about creating knowledge and using this to improve or develop new products or business processes. Learning is important for significant change and innovation because it enables people to deploy new opportunities and create new options without
becoming
frozen
in
a
rigid
environment
that
disables
advancements. It is important that the acquired knowledge through organizational
learning
is
communicated
properly
throughout
the
organization in order to facilitate the innovation process without deteriorating the message/knowledge.
AT& is obviously always done an innovations over and over again. The idea of innovation never going ‘dry’ in their corporate because of their tons of initiative. They have encourage all of their employee or any member in their organization to give an idea of innovation. Through The Innovation Pipeline (TIP) and AT&T Foundry, there is no more barrier between top management and the front line or between the senior executives and the front line employee to share and communicate their idea of innovation. This concept can help AT&T to create a new product and/or create a new market which as a whole can create a new business from diversification strategy.
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and
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Cengage
Learning
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Organizational