Page 171 - ENTREPRENEURSHIP Innovation and entrepreneurship

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164 THE PRACTICE OF ENTREPRENEURSHIP

manager remains in charge until the project is either abandoned or has
achieved its objective and become a full-fledged business. And until
then, the project manager can mobilize all the skills as they are need-
ed—research, manufacturing, finance, marketing—and put them to
work on the project team.
A company that engages in more than one innovative effort at a
time (and bigger companies usually do) might have all the “infants”
report directly to the same member of the top management group. It
does not greatly matter that the ventures have different technologies,
markets, or product characteristics. They all are new, small, and entre-
preneurial. They are all exposed to the same “childhood diseases.” The
problems from which the entrepreneurial venture suffers, and the deci-
sions it requires, tend to be pretty much the same regardless of tech-
nology, of market, or of product line. Somebody has to have time for
them, to give them the attention they need, to take the trouble to under-
stand what the problems are, the crucial decisions, the things that real-
ly matter in a given innovative effort. And this person has to have suf-
ficient stature in the business to be able to represent the infant proj-
ect—and to make the decision to stop an effort if it is going nowhere.
3. There is another reason why a new, innovative effort is best set
up separately: to keep away from it the burdens it cannot yet carry.
Both the investment in a new product line and its returns should, for
instance, not be included in the traditional return-on-investment
analysis until the product line has been on the market for a number of
years. To ask the fledgling development to shoulder the full burdens
an existing business imposes on its units is like asking a six-year-old
to go on a long hike carrying a sixty-pound pack; neither will get very
far. And yet the existing business has requirements with respect to
accounting, to personnel policy, to reporting of all kinds, which it
cannot easily waive.
The innovative effort and the unit that carries it require different
policies, rules, and measurements in many areas. How about the com-
pany’s pension plan, for instance? Often it makes sense to give peo-
ple in the innovative unit a participation in future profits rather than
to put them into a pension plan when they are producing, as yet, no
earnings to supply a pension fund contribution.
The area in which separation of the new, innovative unit from the
ongoing business is most important is compensation and rewards of
key people. What works best in a going, established business would kill
the “infant”—and yet not be adequate compensation for its key people.