Online Theme 2 - The Organizational Context of Entrepreneurship

The whole online study period is divided into several 1-week-long sessions, and we're supposed to read A LOT of stuff during just one week, and share our views with fellow students.

Last week we've had a VERY interesting theme on Cultural context of entrepreneurship. It was very intense to me, because I only came back to Moscow on Friday, and we really need to wrap up all discussions on the theme on Monday. I didn't get normal access to the Internet while travelling (though I did make a few forum posts while going on the train from Edinburgh to London), so I really had to act fast on my arrival to Moscow - read, think & communicate.

The cultural theme was very rewarding - we all come from all over the world, so we really learnt a lot from each other. I found the Spanish and Malay examples particularly interesting (probably because I know very little about those countries), and India is very inspiring too - I now I should go there at some point. The thing here was that you don't typically get to learn about entrepreneurial culture from a textbook, and not that many people think about it, but if you do you would actually be pretty amazed to realize how much your cultural environment influences the way you do business. Amazing!

Now we're all about organizational context of entrepreneurship - and I feel that we're down to some more formall stuff - we're doing some bits & pieces from Organizational Theory, but in a very casual way. Well, we're not MBA's after all. Which is good, IMHO.

I just finished my forum post on ARM's contextual factors, so for you to just get an idea of what it's like, I'll re-post it here:

Unfortunately we didn’t ask that many questions about “contextual factors” during our visit, but I’ll try to make a few educated guesses here.

First of all, I’d like to note, that we’ve been in a rather unique position as compared to other visits, because we actually visited a very mature company, but we talked to the people who had been there since the very beginning, so we can give opinion on two sides here: SME and large company.

The early days of ARM demonstrated a very evident set of contextual factors for SME’s:

· Strategy aimed at gaining a large market share.

· No real cash-flow challenges (the company was a pretty well financed JV), but quite capital constrained (once the initial investments burnt out they had to sustain themselves, so it was crucial to secure the deals and deliver in time).

· Organizational structure was more than flexible: with an initial team of just 12 engineers + CEO there were no other options. People had to try multiple hats, and there was no clear hard structure in place.

· Decision making was super-fast.

· On the culture side: VERY customer-focused (and having browsed around a bit after the visit I have a feeling that ARM is still one of the most customer-focused companies on the market these days).

· Innovations: I think the most innovative thing about ARM was the business model (the designs themselves are innovative by definition, so it’s not really an innovation in the sense I mean here).

· Entrepreneurial thinking & action – definitely went to securing strong competitive advantage (quite successfully).

Currently ARM is a large multinational company, and I got the feeling that a lot of the “entrepreneurial spirit” is gone.

From the contextual factors ARM is a typical large company: focused on profits and market share, established assets & cash flow, hierarchical decision making (the process of analyzing and evaluating new opportunities is very formalized, and smaller and uncertain initiatives definitely look hard to pursue), new products and services are mostly introduced due to competitive pressure (nice article in Fortune about ARM with some insights about the competition and overall ARM history - http://brainstormtech.blogs.fortune.cnn.com/2009/07/16/the-chip-company-that-dares-to-battle-intel/.)

The only VERY important difference about ARM and a “typical large company” is that ARM is still rather focused on customers, and I think that is what makes them so successful, and actually helps them to sustain their competitive advantage and market share.