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Case Study: you are a young professional and you
have the option to join a corporate startup
Situation:
• You are an employee of a midsize/ large enterprise.
• You have discovered an opportunity to join a small startup within the corporation.
• You consider grasping the opportunity by becoming part of the team.
Complication:
• Many ventures fail for many reasons. Startup failure can result in career limitations.
• Startup success may boost your career. You think it’s critical not to let (rare) opportunities pass by.
• Staying in your regular corporate job instead of taking the challenge to develop a new business will lead to
“what if” remorse
Key Question:
How can you drive startup success while hedging against the risk of startup failure?
Page 2
3. © Friedrich Bandulet
What it means to be entrepreneur in a corporation:
taking on risks in the hope for profit within an enterprise
Page 3
Sources:
https://www.google.de/search?q=entrepreneur+definition&rlz=1C1CHBD_deDE696DE696&oq=entrepreneur+definition&aqs=chrome..69i57j0l5.5508j0j7&sourceid=chrome&ie=UTF-8
http://dictionary.cambridge.org/de/worterbuch/englisch/corporation
4. © Friedrich Bandulet
Checklist for an employee who considers
joining a corporate startup
1. Don’t just analyze the business opportunity. Check if you, your manager, and key team
members exhibit essential characteristics of a corporate entrepreneur.
2. Expect that reality will deviate both from business and from personal plans. Train your
ability to endure stress and to rapidly adapt. Learn to question your own mental models and
those of others.
3. Be aware that you will become emotionally involved throughout the process. This
impacts your ability to identify dead ends and to act accordingly.
4. Control your risk by pre-defining exit criteria and laying out an exit plan. Controlling
your emotions and impulses also helps to avoid a crash landing.
5. Do not “burn the ships”. Instead maintain your personal network and look for mentors
who can help you throughout the process.
6. Try to work smart and play joyfully. You will face excessive workload, so decide wisely on
what to focus. Balance efforts and personal well-being. Try to stay cool.
7. Innovate for your customer and learn for your future. Write down lessons learnt and
create your own checklist.
Page 4
5. © Friedrich Bandulet
What sets great corporate entrepreneurs
apart from others?
Page 5
Essential
capabilities
Decisive
characteristics
to watch out for:
Warren
Buffett
Francis
Underwood
Deception
Integrity
Rent Seeking
Profit Seeking
Narcissism
Empathy
Stupidity
Intelligence
Laziness
Diligence
6. © Friedrich Bandulet
Empathy is not wishy-washy fluff, but an
essential skill for driving innovation
Page 6
Definitions:
• Empathy: “the action of
understanding, being
aware of, being
sensitive to, and
vicariously
experiencing the
feelings, thoughts,
and experience of
another (…).”1
• “From a scientific (rather
than a popular)
standpoint, emotional
intelligence is the
ability to accurately
perceive your own and
others’ emotions; to
understand the signals
that emotions send
about relationships; and
to manage your own
and others’ emotions.”2
Emotional Intelligence comes
with five components:
• Self-awareness
• Self-regulation
• Motivation (defined as “a
passion for work that goes
beyond money and status”)
• Empathy for others
• Social skills, such as
proficiency in managing
relationships and building
network”3
Role of empathy in innovation:
• There is a correlation as high
as 80% between departments
with higher empathy and those
with high performers.4
The 10 Most Empathetic Companies, 2016:4
• Empathy quotient measured by three components:
customer, employee, social media. 5
Sources: 1) Webster dictionary: https://www.merriam-webster.com/dictionary/empathy
2) John D. Mayer quoted by Andrea Ovans: How Emotional Intelligence Became a Key Leadership Skill.
https://hbr.org/2015/04/how-emotional-intelligence-became-a-key-leadership-skill
3) Daniel Goleman: What makes a Leader?. https://hbr.org/2004/01/what-makes-a-leader#
4) Belinda Parmar: The Most Empathetic Companies, 2016. https://hbr.org/2016/12/the-most-and-least-
empathetic-companies-2016
5) Belinda Parmar: Corporate Empathy Is Not an Oxymoron. https://hbr.org/2015/01/corporate-empathy-is-
not-an-oxymoron
7. © Friedrich Bandulet
How to identify non-empathic, narcissist
managers/ executives: hints
Page 7
• A manager who uses “I” instead of “we” or “team”
when naming achievements suffers from exaggerated
self-esteem and will not appreciate employee
contributions.
• Manager hands down individual tasks to single
employees but does not communicate the big picture.
• Manager is often times not punctual and arbitrarily
exceeds scheduled meeting times – without anybody in
the meeting room commenting on that.
L’enterprise
c’est moi
8. © Friedrich Bandulet
Integrity is an efficient governance principle
for organizations – and not (just) a virtue
Page 8
How to apply integrity:
• To be a person of
integrity all you have to do
is ‘honor your word’,
which means you keep
your word, and when you
will not, then you say
you will not and clean
up any
consequences.”1
• “Treating integrity as a
matter of cost/ benefit
analysis guarantees
you will not be a
trustworthy person […].
Best
description of
the dark side
of leadership
Sources: 1) Jensen M. et al.: Integrity: Without it Nothing Works. , E. et al.: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1511274; http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1542759
2) Machiavelli, Niccolo (1955): Der Fürst: "Il Principe" - übersetzt und herausgegeben von Rudolf Zorn. Stuttgart 1955. http://www.gutenberg.org/files/1232/1232-h/1232-h.htm
3) Sun Tzu: Art of War.
4) Williamson, Oliver E. (1993): Calculativeness, Trust, and Economic Organization. In: Journal of Law and Economics, Vol. 36 (1993), No. 4, 453-486.
Definitions:
• “Integrity is a
state of being
whole, unbroken,
sound, etc.
• An individual (…) is
whole and
complete when
one’s word is whole
and complete.
• As such integrity is
a purely positive
phenomenon. It
has nothing to do
with good vs.
bad, or right vs.
wrong behavior.”1
Role of deception in business politics:
• „Therefore a wise lord cannot, nor ought he to, keep faith when
such observance may be turned against him, and when the
reasons that caused him to pledge it exist no longer. If men were
entirely good this precept would not hold, but because they are
bad, and will not keep faith with you, you too are not bound to
observe it with them.“2
• “All warfare Is based upon deception.”3
• “Machiavellian grabbing is not implied if economic agents have
a more farsighted understanding of the economic relation of which
they are a part than myopic Machiavellianism ascribes to them.”4
• “When I am not serious about my word to myself, it will show up
consistently as various problems and difficulties in my life, the
actual source of which I will obscure with various explanations and
justifications. Moreover, I will show up for others variously as
inconsistent, unfocused, and unreliable.[…]”1
9. © Friedrich Bandulet
How to identify lack of integrity with
managers/ executives: hints
Page 9
• Not showing up for lunch appointments and not even
trying to make up for it seems a minor thing. Yet, this
is a clear hint for a lack of integrity.
• Deception is difficult to identify. Watch out if
managers avoid written meeting preparation and
formal decision making. This makes it much easier to
spread different messages on the same topic.
• An always smiling manager who never seems worried
should make you as employee very worried. Watch out
if there is no straight talk, no sharing of (mixed) results.
Sunshine talk and “we are best in class” speeches are
clear signs of a deceptive communication strategy.
Netflix’
opinion on
effective
teamwork …
Source of Netflix reference: https://de.slideshare.net/reed2001/culture-1798664/36-Brilliant_Jerks_Some_companies_tolerate
10. © Friedrich Bandulet
Damage done by rent seeking within
corporations and famous fraud cases
Page 10
Illustrations:
http://www.accounting-degree.org/scandals/
http://www.handelsblatt.com/finanzen/maerkte/b
oerse-inside/anlagebetrug-em-tv-mit-heisser-luft-
zur-luxusyacht/6816760-2.html
“Im Unterschied zum Schumpeterschen
Unternehmer versucht der unproduktive
Unternehmer, Innovationen auch in Bereichen
durchzusetzen, die keinen Unternehmergewinn,
sondern eine volkswirtschaftlich unproduktive
Rente versprechen. Diese Rente wird definiert
als Vergütung eines Inputfaktors, der zu
keiner Erhöhung des Outputs der
Volkswirtschaft führt.“1
Sources:
1) Bandulet, F. (2005): Zur Theorie der Finanzierung technologieorientierter
Unternehmensgründungen: wirtschaftshistorische und institutionenökonomische Erklärungsansätze
von Schumpeter bis Williamson. Wiesbaden 2005.
2) Friedrich Bandulet: Software-as-a-Service as Disruptive Innovation in the Enterprise Application
Market: An Empirical Analysis of Revenue Growth and Profitability among SaaS Providers (2005 –
2015).
McLean/ Elkin: The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron.
“In a corporate environment, there is a risk
that funding is secured and preserved by
political maneuvering, leveraging of personal
board connections, fake product demos and,
simply put, by professional acting.”2
11. © Friedrich Bandulet
How to identify rent seeking managers/
executives: hints
Page 11
• Rent seekers often come from board assistant/ strategy consulting
jobs. Check whether such managers have also served in field roles or in
small, independent startups. Look for managers who have served
customers in the front line.
• Rent seekers do not focus on customer (lifetime) value, but on
headcount and revenue growth. Often times circumventing corporate
approval processes, they provoke reactions of the corporate immune
system.
• Market research done by talking to analysts, VIPs, and customers
with inroads to the board. There is no anonymous, quantitative
research like A/B testing. If customers are interviewed, then these
customers are hand picked and not randomly chosen. Research is just a
framing tool to solidify positions and opinions.
No
environment
for rent
seekers…
