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The Entrepreneurial Business 167

These are key questions. The answers to them are not to be found
in books. Yet they cannot be answered arbitrarily, by hunch, or by
fighting it out. Entrepreneurial companies do know what patterns,
rhythms, and time spans pertain to innovations in their specific indus-
try, technology, and market.
The innovative major bank mentioned earlier knows, for instance,
that a new subsidiary established in a new country will require invest-
ment for at least three years. It should break even in the fourth year,
and should have repaid the total investment by the middle of the sixth
year. If it still requires investment by the end of the sixth year, it is a
disappointment and should probably be shut down.
A new major service—leasing, for example—has a similar though
somewhat shorter cycle. Procter & Gamble—or so it looks from the
outside—knows that its new products should be on the market and
selling two to three years after work on them has begun. They should
have established themselves as market leaders eighteen months later.
IBM, it seems, figures on a five-year lead time for a new major prod-
uct before market introduction. Within another year the new product
should then start to grow fast. It should attain market leadership and
profitability fairly early in its second year on the market, have repaid
the full investment by the early months of the third year, and peak and
level out in its fifth year on the market. By then, a new IBM product
should already have begun to make it obsolescent.
The only way, however, to know these things is through the sys-
tematic analysis of the performance of the company and of its com-
petitors, that is, by systematic feedback from innovation results to
innovation expectations and by regular appraisal of the company’s
performance as entrepreneur.
And once a company understands what results should and
could be expected from its innovative efforts, it can then design
the appropriate controls. These will both measure how well units
and their managers perform in innovation and determine which
innovative efforts to push, which to reconsider, and which to aban-
don.
5. The final structural requirement for entrepreneurship in the
existing business is that a person or a component group should be
held clearly accountable.
In the “middle-sized growth companies” mentioned earlier, this is
usually the primary responsibility of the chief executive officer (CEO).
In large companies, it probably is more likely a designated and very