employee engagement in internal corporate venture incubation1470655/fulltext01.pdf · internal...

INOM EXAMENSARBETE TEKNIK OCH MANAGEMENT,AVANCERAD NIVÅ, 30 HP

, STOCKHOLM SVERIGE 2020

Employee engagement in internal corporate venture incubationA case study on Ericsson ONE´s venture managers and entrepreneurs

FREDRIK VÄLME

KTHSKOLAN FÖR ELEKTROTEKNIK OCH DATAVETENSKAP

Degree project – Fredrik Välme KTH, June, 2020, Stockholm, Sweden

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Employee engagement in internal corporate venture incubation

A case study on Ericsson ONE venture managers and entrepreneurs

Fredrik Välme MsC Media Management

Electical Engingeeting & Computer Science KTH- Royal Institute of Technology

Stockholm, Sweden [email protected]

ENGLISH ABSTRACT

This paper examines the pre-requisites for employees to go into corporate entrepreneurship and join an internal corporate incubator. It examines how intrinsic and extrinsic motivations relates to employees ideas on becoming corporate venture managers, and submitting innovative ideas to a corporate incubator. The research is carried out through examining a Swedish international telecom company and their employees. The focus has been on venture managers, that are driving corporate ventures in the internal corporate incubator at the moment and entrepreneurs that has been employed by the touched company, but started their own ventures or started working for startups. The research method used is qualitative interviews through online video calls. 10 employee venture managers have been interviewed and 5 entrepreneurs. The study finds that the most important thing when submitting an idea is that the venture manager believes that the idea will benefit from being developed internally and also that it is a need for a trust towards the organization and the incubator that is dependent on the organizational structure of decentralization of the corporate incubator. It has also found that venture managers change their view on what incentives that is important throughout the process, starting with intrinsic incentives going to extrinsic later in the process.

SWEDISH ABSTRACT

Denna rapport undersöker förutsättningarna för anställda att engagera sig i företags entreprenöriella satsningar och ansluta sig och sina ideer till företags interna inkubatorer. Fokus ligger på att se vilka incitament och motivationsfaktorer som påverkar anställda i olika faser av entreprenörskapsprojekten. Både interna och externa incitament och motivationsfaktorer är utredda. Undersökningen är gjord i samarbete med det svenska telecombolaget Ericssons innovationsdel BTEB, ”Business area Technology and Emerging Businesses” och mer specifikt avdelningen Ericsson ONE som hanterar ideer och projekt i tidiga stadier. Forskningen har utgått ifrån aktuell relaterad forksning och Victor Vrooms motivationsteorier. Forskningen är utförd genom kvalitativa intervjuer med både interna entreprenörer (intraprenörer) och med tidigare Ericssonanställda som numera driver startups eller jobbar med innovation och startups. 10 intraprenörer som representerar de olika innovationsavdelningarna i Asien, USA och Sverige (Europa). Rapporten kommer fram till att den primära faktorn för att skicka in ideer till Ericsson ONE är att idéen gynnas av att utvecklas internt på Ericsson. En kartläggning av intraprenörers förändring av inställning till incitament och motivation i och med projektets fas presenteras även. Denna kartläggning säger att interna incitament är viktigast i de initiala faserna för att sedan övergå till att externa incitament som bonus och ägandeskap är av vikt senare.

KTH – Royal Institute of Technology – School of Electrical Engineering and Computer Science -EECS.

INTRODUCTION In today’s everchanging and quickly accelerating

economy, big corporations need to form their organizations to be constantly innovative. This does not mean to purely focusing on developing the current core business and technology, known as incremental innovation. Also corporations are required to continuously explore new areas for business and growth which can be referred to as disruptive innovation[1]. When speaking of innovation we mostly discuss product innovations, but it could also be regarding processes or market innovations[ 2], this requires companies to be versatile and open for trying new things and being open for failure[3].

When combining the terms innovation, corporation and entrepreneurship we end up with “corporate entrepreneurship which can be summarized as the activities that a company engages in in order to enhance it´s business areas and product portfolio [4]To find these potential areas is a risky and complex task and can primarily be done through two different approaches; external corporate venturing meaning that corporations invest in external entrepreneurial ventures. Internal corporate venturing refers to companies investing in internal ideas from employees to build and develop its own venture entities [ 5 ]. In order to simplify this process a lot of actions can be made, for example establishing an internal corporate incubator to nourish, push and support development[ 6 ]. The design of an internal corporate incubator is a complex task which involves enabling capital resources, organizational strategy, internal communications, choosing potentially profitable ideas and incentivizing venture managers and intrapreneurs. The initial challenge of this is finding the ideas internally, or enabling a climate where ideas are taken forward, the employees with ideas act as internal entrepreneurs, and are therefore referred to as “intrapreneurs”[ 7 ], and when finding an idea and intrapreneur, how do we get these to engage in building the idea internally?

The attention of scholars on corporate venturing and internal corporate venturing has grew rapidly since the 1990s[ 8]. But most literature and research has been on how to manage an internal corporate venture accelerator, and make the ventures successful and profitable, but not much attention has been put into how corporations should attract and retain employees to engage in corporate entrepreneurship and intrapreneurial activities from an employee perspective. This thesis have examined the internal corporate

1 Christensen,1997 2 Tidd & Bessant, 2013 p.26 3 Tidd & Bessant, 2013, p.267 4 Garvin & Levasque, 2006

venture accelerator of Ericsson called Ericsson ONE and the intrapreneurs and venture manages engaging in it.

The Ericsson ONE process

Ericsson ONE is the name of the venture entity aiming to accelerate internal ideas. This department goes under the Business Unit Technology and Emerging Business that hosts several corporate ventures in different areas. Ericsson ONE is responsible for the initial phases of creating new internal business ventures. The process relies on the employees to submit ideas in an idea platform called ideadrop. Ericsson ONE communicates that they invest in ideas that inhibit a general strategic fit with Ericsson or relate to the strategic areas which are autonomous vehicles, smart manufacturing or connected logistics and supply chain. Ideas can be submitted in the general home page of ideadrop or in relation to a posted challenge in idea drop, this could be for example “how do we create the best remote workforce?” or “how do we diminish emissions from transportation?”. Within ideadrop ideas are reviewed and given feedback from the internal Ericsson ONE community, Ericsson ONE employees and Ericsson ONE ambassadors network. The ideas with potential are reached out to by members of Ericsson ONE and then put forward to the first milestone for investment, Angels Room. In angels room there should be an initial idea pitch and brief market analysis and the ideas pitch for a seed investment of $15000. If accepted the idea become a part of Ericsson ONE, and the phase is called ideation. In this and the previous phase the venture manager is responsible for allocating time to work on the project. After this the idea needs to be further validated until the next milestone pitch event called Dragons Den where the venture manager pitch for maximum $300 000 and if passing they are going into the incubation phase where the intrapreneurs are to validate

5 Miles & Covin 2007 6 Shankar & Shepherd, 2017 7 Pinchot, 1985 8 Hill & Birkinshaw 2006

Fredrik Välme- MsC Media Management KTH - Royal Institute of Technology - Stockholm

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the idea further and develop a minimum viable product. In this phase a smaller team is often integrated, the venure can also bring in developers internally. The project should also have a customer validation, signed partners and early adopters/customers. In this phase the venture manager can go into working full time on the idea and paus his/hers day-to-day job, with a formalized short term assignment (STA). These two initial phases is where the focus of this research is. There are no formalized monetary incentives to this phase, only the means and support for realization of the idea as well as an opportunity for personal development and learning.

After this phase the project moves to the Pioneers Nest which moves the project into the grander BTEB organization here awaits more investments and from here the venture manager is employed as a driver/CEO of the venture. They are now able to hire a bigger team and have to make the venture financially successful. If this is reached the project goes into the Acceleration Board. Which means it becomes its own entity within Ericsson, and a registered company. If reaching this level the Venture Manager and founding team can get a pioneers award in the form of a financial bonus, of maximum 100% of yearly salary [9].

THEORY

Vroom´s expectancy theory

The expectancy theory of motivation correlates the variables individual efforts, individual performance, organizational rewards/work outcomes, and personal goals. These variables are put together by different relationships[10] . Expectancy, which is the relationship between effort and performance. Instrumentality defines as the relation between performance and rewards/outcomes, and finally valence which is the relationship between rewards/outcomes and personal goals [11]. The expectancy relationship can be explained through the notion of once knowledge or belief that one’s effort is translated into performance, the more effort one will put in the stronger will the performance be. This can be viewed as motivation is strongly tied to information and belief, to make someone put in the effort they need to understand their value for the project’s success. The second relationship is that a person has the belief of performance and rewards/outcomes are well aligned, that the project and individuals bound to it will be rewarded for performance. And the last relationship is between reward/outcomes and personal goals, the

9 Ericsson ONE, 2020 10 Parijat & Bagga, 2014 11 Vroom, 1995 12 Parijat & Bagga, 2014 13 Vroom, 1995 p.38

valence tells us that if the rewards are not aligned with what one actually require need or whish for in a reward, the reward will not be of value [12]. Vroom discusses both financial rewards as well as alternative rewards and renumeration, it is found that wages is an important aspect for work, but it is also a natural consequence of work. It is found through experiments that social rewards of work is appreciated [13]. even though the experiments are hard to execute to see what effect financial rewards or social interaction has on ones preference for work it is found that there are five properties of work roles,

1, they provide financial renumeration 2, They require expenditure of energy 3, Involve the production of goods and services 4, Permit or require social interaction 5, affect the social status.[14]

Both the properties of work, and the relationships of expectancy, instrumentality and valence have been a strong foundation for work motivations research and leadership[ 15 ]. The choice of Vrooms model of expectancy is motivated by the way it gives a more holistic view of motivations and drive. It connects the foundation of work from a employees perspective, and how a manager can get to know the employee in order to motivate the employee to perform better. It is a great model for examining internal corporate venturing since these projects often require for the employee to push themselves to work more, and harder in areas where they are not comfortable, to create success for the idea and organization.

RELATED RESEARCH

Open/Close Innovation

As explained Ericsson ONE is an organization aiming to get ideas from employees, they do though strive to have strong collaboration with both internal and external stakeholders. One effort to keep strong bounds to external actors is through integrating partners and Ericsson customers in formalized early adopter programs to gain a more efficient go to market strategy. This way of balancing internal and external actors in the innovation process can be referred to as open or close innovation. Since Ericsson relies on ideas to come from inside it is a closed process but the integration of partners and customers can be viewed as an effort towards what is commonly referred to as open innovation[ 16 ]. Research have shown that having an

14 Vroom, 1995 p51 15 Parijat & Bagga, 2014 16 Chesbrough,2003


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open approach is a better way to innovate, it is though also shown that it inhibits several challenges for firms[17] Therefore a lot of research has been made in this area to how open the innovation process should be. Wallin and Krogh suggests that it is a question of knowledge management. They found that companies should benchmark and follow the needed knowledge for certain innovation projects and create the process to find these capabilities internally or externally [18]Another notion for this is that there are different types of open innovation. Dahlander and Gann found through examining other scholars from this area that there are 4 types of open innovation and all have its benefits and disadvantages for the company and the process [ 19]. These are built on four aspects; outbound/inbound innovation and Pecuniary/non-pecuniary. For example Ericssons strong connection to telecom operators as customers, and their collaboration for innovation and distribution is a type of outbound pecuniary innovation process.

Another important aspect of corporate innovation is the relationship between exploitation and exploration [20] this means if companies should aim to exploit on the current capabilities or explore into other business and areas. Earlier research have regarded this as a trade-off balance for firms, but later the term ambidextrous organizations balancing these are successful in keeping the company and products innovative. One of the important terms in this is integration or differentiation, or in other words centralization/de-centralization explaining that it is found that the exploratory innovation should be made more decentralized, and the exploitation should be continuously integrated in everyday work [21]. This also ads that companies need to attain an ambidextrous organization, choosing what areas should be decentralized and not [22]. One can see that Ericsson ONE is a closed innovation aiming to ad open innovation aspects, that are more centralized rather than decentralized even though they aim to explore new areas of innovation.

Internal Corporate venturing When Miles and Covin[ 23] define different types of

corporate venturing they define one as the direct-internal, which is what Ericsson ONE are focusing on, as the simplest form of Corporate Venture where internal resources and capital are allocated to support employee

17 (Wallin & Von Krogh, 2010 18 Wallin & Von Krogh, 2010 19 Dahlander & Gann, 20 Probst & Tuschman, 2009 21 Raisch et.Al, 2012 22 Hill & Birkinshaw, 2006 23 Miles & Covin, 2002 24 Miles & Covin, 2002

ideas. This area can be beneficial in regards of control and gain learnings but can be most costly in regards to managerial involvement[ 24]. A lot of research has been made on the comparison of venture capital firms and corporate venture units. It is shown that this is a hard task to design a process for corporate ventures, and that most corporate ventures actually fail. this can be explained by that new ventures seldom blend smoothly with an established firms processes and culture[ 25]. To reach success in this companies have historically created these de-centralized divisions. Which ads on to the previously mentioned theories of ambidextrous organizations. It is interesting to examine the perceived organizational structure of Ericsson- BTEB and -ONE. A way to formalize the value creation and integration of internal ventures is through corporate incubation units (CIU). A CIU is a department that works with ideas, hatches ideas and ventures with resources and support in order for these to develop and grow into its own entities, this is what Ericsson ONE is [26].

When going into an internal venture as an employee one must know that there are three possible outcomes to take in consideration for the venture. The first outcome which Ericsson has put most effort into is retaining the venture. This meaning that the venture will be developed and commercialized within the mother organization. The second outcome is that there is always a risk for termination, that the ventures investments get stifled and the venture gets shut down. The third outcome is through a spinout organization, meaning registering the company outside of Ericsson, this can either be through a general spin-of or through acquisition[ 27].

Chesbrough who is one of the prominent researchers of corporate ventures found that creating successful corporate ventures can be more challenging in comparison with venture capital firms, but what is needed is for companies to focus their corporate ventures to strategically beneficial areas for the investing company. It is therefore a hard task to find the best ideas, while VCs can be more free in their choice of investments [28].

Incentives Incentives has been of great interest for researchers

examining corporate venturing [29]. But this area has in most cases examined what incentives that lead to success from a managerial point of view and not from the

25 Garvin & Levasque, 2006 26 Selig, Gasser & Baltes 2018 27 Burgelman, 1984. 28 Chesbrough,2000 29 Block & Ornati 1987, Chesbourogh 2000.


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employees perspective. When looking at how corporates compensate venture managers Block & Ornati found in their study of fortune 500 companies that most of these companies did not compensate venture managers differently from other employees [30], though it is found by Manso that the incentives schemes for innovation should be different than regular employment incentives [31] Manso found that it should be a different setup for innovation activities, for example tolerating or even rewarding failure and also permit rewards for long-term success. It is also of important to give feedback on performance [32]. A lot of articles that examine venture capital firms and corporate venturing look on how to utilize VC-strategies to corporate venturing. Lucent and Bell Labs is a case that have blended the VC models process with the corporate mission, for example they had stronger compensation for venture managers, but not ownership like VCs, also they imposed a small risk to the employees pursuing a venture project [33 ]. One of the important articles that this paper ha s had as a foundation is by Monsen, Saxton and Patzelt who through experimenting on mba students found that depending on motivations, different incentive packages should come. For example they examined if one ads a chosen risk, is it something that people would chose if the potential reward can be bigger, and this was true for the ones with a need for higher extrinsic motivations [34 ]. An interesting article is an article by Nikolov and Urban who examined incentives for going into corporate venturing, but primarily external corporate venturing, which found that it is a mix of intrinsic and extrinsic incentives that is the key35.

30 Block & Ornati 1987 31 Manso, 2011 32 Manso 2011. 33 Chesbourough,2000 34 Monsén, Saxton, Patzelt, 2007 35 Urban Nikolov,2013

RESEARCH QUESTION

The theories and introduction to the problem presented gives us following research questions;

RQ: What incentives is needed to be motivated to submit ideas to a corporate incubator?

Sub-question: How should the perception of the organization be to join a corporate incubator as an employee?

Sub-question: How does the view of incentives change during a corporate venturing process?

Sub-Question: How could a corporation retain entrepreneurial employees?

Method

The data will be of qualitative matter. The choice of qualitative data is to cover the need of getting a deeper understanding of a venture manager or entrepreneurs thoughts motivations, and opinions [ 36 ]. It has been done with a grounded theory [37]The choice of method was qualitative semi-structured interviews which allows for the researcher to get closer to the interviewee and gives a better opportunity for personal and insightful conversations [ 38 ]. The reasons for not choosing a quantitative method and do the research through a survey or other data is because that would give me more binary answers that would not explain the process, thoughts, motivations and values that is needed to be understood when doing a research like this. The research would have a better representative amount of data if done through a quantitative survey, but the understanding and analysis would not be as deep and versatile as it can be with a quantitative method of interviews.

10 interviews with Ericsson ONE following referred to as VMs or Intrapreneurs (venture managers), and 5 interviews was made with entrepreneurs who had previously been Ericsson employees. The venture managers where only drivers of early stage projects in Ericsson ONE, 5 projects had passed Angels Room and 5 had passed Dragons Den. The interviews were even distributed between the geographical hubs, with 4 interviews with intrapreneurs bound to the Sweden (EMEA) hub. 3 interviews with the Hub in Beijing representing Asia, and 3 interviews were made with Silicon Valley VMs representing America. There where 1 female and 9 male interviewed. For further info on the

36 Denscombe, 2014 37 Robson & McCartan,2015 38 Robson, McCartan 2015


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interview objects please see appx 2. The choice of interview subjects was made through a purposeful sampling in collaboration with the Ericsson ONE executive team. Purposeful sampling means that the researcher has chosen participants that are suiting for what is to be examined and should represent a cross-section of the large group [39]. This was done in order to be certain of getting traction to these interviews, and also to get a diverse group that could give an academically valid representation [ 40 ]and also aim to represent several groups of potential venture managers. The interviews have all been made one on one and online. 7 interviews was through videoconference and 8 audio calls. During the interviews excessive notes where taken and after the interviews these where structured and thematized [41]. The interviews where then analyzed through a simplified grounded theory [42].

The sample aims to represent the people deciding to submit ideas, but it do not represent the pool of Ericsson employees that are the target group for internal corporate venturing units like Ericsson ONE. It is critical that only one female was interviewed, but she represents the only female that currently drives projects within Ericsson ONE.

The structure of the interviews was based on the presented theory and related research. Mainly Victor Vrooms expectancy theory [43]and the peer-reviewed articles Compensating Corporate Venture Managers by Block and Ornati [44] and Employee perceptions of risks and rewards in terms of corporate entrepreneurship participation by Urban & Nikolov [45]The questionnaire started with a section on personal background and entrepreneurial experience, with a focus on understanding if and how entrepreneurial drive and ambition has changed, before/after jointing Ericsson and Ericsson ONE. The next section was on the idea and internal corporate venturing process, here the focus was to examine idea triggers, submit triggers and idea utility maximization aspects. The last and major part of the interview examined different incentives. The questions also concerned effort, performance and success[ 46 ]. Both intrinsic and extrinsic rewards are presented and compared to understand the interview objectives, motivations, and personal goals. The interviews for the entrepreneurs where structured equally, but for going externally and trying to compare with staying at Ericsson, aiming to see what is the driver to start a

39 Bolderston,2012 40 Polkinghorne, 2005 41 Robson, McCartan, 201 42 Robson, McCartan, 2015 43 Vroom, 1995

venture externally, and what is lacking with the employer firm.

RESULTS & ANALYSIS

The result part is structure through first presenting the

findings from interviews with the internal venture

managers where the findings are presented in the order

of first, personal traits and entrepreneurial drive, idea

utility maximization, intrinsic motivations and then

extrinsic motivations followed by ownership and

trust/distrust to the organization. The Entrepreneurs

section follows with a focus on the same areas but

presented more dense.

INTERNAL VENTURE MANAGERS

Personal traits and entrepreneurial drive before and after Ericsson ONE

This sections begin with explaining a bit more of the

background of the venture managers, why they started

working for Ericsson and how they perceive the

organization. The second section explains how the idea

of becoming an entrepreneur changes from before

joining Ericsson ONE where most did not saw a future as

entrepreneurs to seeing it as a potential next step in their

career.

Background

Most of the venture managers of Ericsson ONE represents the Ericsson workforce in the sense that a strong majority has an engineering background. Over 80% of the interview objects has a background in electrical, computer, telecom or physical engineering.

The median time that the VMs has been with Ericsson is 10y. A majority was employed with Ericsson directly after graduating or within 1-2 years, and had been with the company since. There was a clearly observable trend that the VM joined Ericsson because of it being a large corporation, in a field of great potential, development and growth in a high tech environment. Several of the participants referred to them joining Ericsson because of the opportunity to have an international career with a lot of traveling. They all felt like they had good, innovative and fun jobs before the venture.

44 Block & Ornati, 1987 45 Urban & Nikolov, 2013 46 Vroom, 1995


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Entrepreneurial ideas before and after Ericsson ONE.

Most of the VMs did not perceive themselves as entrepreneurs or saw that they would build their own venture in the future.

“I am not the entrepreneurial type, I like coding and solving problems not really driving a business” VM5

Few of the VMs had any startup experience, though one of the interviewees started on Ericsson through an acquisition of a startup where he was one of the first employees. 2 VM had worked with startups during their studies, and explicitly said they were tired of startup organizations and therefore wanted to experience a big corporation like Ericsson.

4 out of the VM referred to the Ericsson ONE process as an entrepreneurial education, with less risk than going external, these all saw it as a process to become mature in starting ones own venture, some day. 6 of the interviewees that had no idea on starting their own company before joining Ericsson or Ericsson ONE now saw it as a potential career development, because of the Ericsson ONE process. And 4 VMs saw the project as a fun part of their time with Ericsson, and as a way to get a broader internal network and gain learnings, and competencies to develop more within Ericsson.

This is one of the questions where it was noticed that some of the participants where passive in revealing their future career plans. This can be explained by them being afraid of the level of anonymity towards me and their employer Ericsson.

Idea utility maximization

This section explains the ideas from the venture

managers that there idea benefits from being developed

within Ericsson ONE.

Through looking at the ideas in the Ericsson ONE pipeline and portfolio one can see that the most of the ideas are highly technological and a major part of the ideas that has gone far in the process are ideas bound to connectivity and networks with different areas of applications. The projects often started out as a part of the VMs day-to-day work. Through the interview it is found that most interviewees feel that this particular idea suited explicitly well with Ericsson and Ericsson ONE process. VM3 told me about other ideas that they would not submit to Ericsson one hence, Ericsson ONE require work on spare time, and why would one give ideas to Ericsson for free, or even pay for it. 7 interviewees had the same opinion about the reason why they submitted their idea to Ericsson ONE, summarized it was a notion that this particular idea had a good match

with Ericsson current technologies. 3 interviewees noted that one important reasons why to take this idea through Ericsson is because the benefit of the Ericsson brand. 2 VMs in the later Ericsson ONE stages, said that they have started thinking more and more that this idea could have been taken externally, that the initial thoughts was that Ericsson was beneficial or even needed in order to develop this idea but throughout the process they have found other potential alternatives, but it is considered to late at the moment.

Another way in to submitting ideas to Ericsson ONE was through posted challenges in the platform ideadrop. This way of submitting is something that does not start with an idea of driving a project with ONE. It is rather a tool for idea generation and a call to the Ericsson employees to solve real life problems. 2 of the VM interviewed are results from submitting ideas through challenges. This is a group that are competitive and natural idea generators, the problem is that the ideas coming through the challenges are not considered realizable when submitting, and it is not something that are considered as something the VM would like to drive in the beginning. The VM submitting ideas in challenges needs to be more pushed into the pipeline than general submitters.

One important quote from a VM was that

“I got the idea related to my day to day job, so I wanted to keep it related to it.”

“I think it is much harder to pursue an idea that does not connect to Ericsson technology.”

“To me the only reason for submitting this idea to Ericsson ONE was because I think it needs the resources and brand of a big company, and is to complex to create externally”

These quotes is something that represented a large number of the interviewees thoughts on why they joined Ericsson ONE and not started the idea externally.

Some of the participants pushed that they wanted to use the brand of Ericsson, some pushed that they wanted to get access to the technological ecosystem of Experts within Ericsson in order to realize their idea.

“I would not submit an idea related to any other area than related to Ericsson core technologies, not for Ericsson but for the realization of the idea”

It is noted that the projects that have proceeded longer in the process are more bound to the success of the idea. They speak more about potentially taking it externally if Ericsson ONE would not take it forward.

Intrinsic motivations/incentives


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Intrinsic rewards are the inner motivations. It is based on softer values, such as self-fulfillment, feeling of accomplishment, contribution to the society and also learning experiences. This section explains that it is in the initial stages this is most important and that learning experience, self-fulfillment and contributing to technology and society have an impact on the employees engagement.

One of the areas discussed is the will to push and contribute to the society or technology. This is something that some VMs push when speaking about their drive, several venture managers and entrepreneurs acknowledge the passion needed for a project and idea. This is spoken of with different approaches, one is towards the idea, which goes into the idea utility focus. But some also discuss it as the drive to contribute to the greater whole, and the society. It is also emphasized by a few VMs that it is needed to have a drive and a passion for once idea, which generally derives from a will to contribute. VM2 explained that his belief was that the most of Ericsson employees feels that Ericsson as a whole contributes to society and that this is one of the reason for working there, some of the projects are striving to help people with disabilities for example and they are driven by society contribution.

“I would not say that it changes the world for too much better, I am a small player. I might with Ericssons help change the technology though”-VM10

There where some interviews where the VMs explained how they never have viewed themselves or their projects as saving the world, and they expressed it as that would be a bit naïve. These VMs expressed more a drive to change the future of technology, and give his/hers contribution to technology. These where the VMs that came from a pure technical background that also felt a strong drive in just building the project or solution more than driving the market.

“I’m very passionate about electric and autonomous vehicles and the impact that they will have on our society. Having the opportunity to accelerate their arrival with my project is a wonderful experience.” VM5

There seems to be a thin line between contributing to society, the industry or the market, the areas are mixed. One VM felt that contributing to technology and the market was the most important thing.

Giving personal acknowledgement and branding was highly spoken of by several VMs. This was by VM4 presented as one of his biggest drive of the project, to be knowledgeable person within Ericsson. It was described that the VM believed that personal branding would bring success for the project and financial renumeration.

“There would be some type of acknowledgement, like a badge or something” -VM6

A badge for every stage of the Ericsson ONE process was something that should be developed in order to help with acknowledgement and branding. This was thought of as a merit for future job seeking. Regarding job seeking the European and USA hubs VMs thought of this as a great opportunity even if it would be terminated, but the asia hub was more nervous of the risk if it would fail.

“Maybe the project and VM could be invited to international events or meetings as an incentive” VM2

VM2 who did not believe in monetary rewards outside of the employment incentives had the opinion that Events and international conferences are something that many employees see as fun and rewarding to be invited to, to the VM it would be motivating to attend the Mobile World Congress.

The learning opportunities are pushed as one of the main reasons for pursuing an idea to Ericsson ONE. To be able to learn how to drive businesses from all aspects is what drives many venture managers.

Extrinsic motivations/incentives

Extrinsic incentives represent monetary rewards and

career development opportunities. It is found that the

further in the process a project gets the more important

is performance based rewards, stock options and

ownership.

When examining monetary rewards this is the area where almost all participant wanted to lead the conversation to ownership. The potential monetary reward of 100% of salary was not considered amazing, This was something that a majority of the participant saw as nice, but not life changing. The framing of it as not bad was mainly spoken about from the younger generations, who were all more knowledgeable of other firms incentive schemes. All of the younger people who had worked for Ericsson less than 10 years wanted the monetary bonuses to be based on performance, and not if it reached a certain milestone. The VMs who wanted a stake in their projects viewed this as the only valuable way of motivating the VM and way of giving back. These people who spoke of stake, also took up the notion of becoming a spin-out organization of Ericsson, this meaning that their venture would be able to create its own processes but benefit from the bigger corporation on the same time. This always led the conversation to owner ship which will be further presented in the next section. The older VMs had other views on monetary rewards, most of them viewed the Ericsson ONE projects as more of a part of their day-to-day job. They did not feel


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like monetary rewards for ideas of projects or exceeding performance should be any different from the other employee incentives schemes.

It was noted that even though time at Ericsson and age had an impact on the ideas of monetary rewards this was something that the projects in the later stages had given much more thought into than projects in the earlier stages.

Ownership

The findings that follows is that ownership is not too

important in the initial stages of the process, even though

all participants have put some thoughts into it. It is found

that in the later stages ownership is the most important

aspect of taking the project forward. It is found that

ownership is important in order to be able to take it

somewhat externally through for example a spinout

organization, but most important is to have a monetary

stake if the project would be sold or reach great success.

A hot topic is the question of ownership of the idea and venture project. There are 3 different aspects of ownership, that is monetary, control and, spinout. All VMs except for 3 expressed more or less developed thoughts and opinions that it should inhibit an ownership as a venture manager, this was often presented when speaking of monetary incentives but also when speaking of the alternative of going external with the idea.

“When this project has created an MVP it should give me some stake or stocks in the project”VM5

When speaking of monetary incentives a majority of the VMs explained that the existing pioneers award are something that seems too far away and the amount does feel too small, when it entails a lot of work for several years to potentially reaching it. It was then discussed that a more suitable incentive would be to have monetary stakes in the project. This could be in the form of real stocks in a spinout or registered daughter firm, but could also be through virtual stocks. Or the simplest possible way of performance based bonus systems. Which all was expressed by different VMs. It is noted that Venture managers feel a need to realize the idea, and are aware of the potentially financial profit for Ericsson as a whole, but they are not seeing the true monetary outcomes for themselves.

“To me making a business of this is the biggest incentive, I already know it is technologically viable, but the business area is the interesting part.”

This quote also explains the strive of Ericsson ONE and other internal corporate venturing accelerators, that ideas should be made into growth bets and sustainable and financially successful businesses. The VMs explain that this is different than their everyday job, because here they are responsible of all aspects of the problem, for example sales.

“if the venture becomes a million dollar success for Ericsson this should show monetary for the me as a venture manager”VM3

The topic was touched upon when speaking about bonus per stages, or any other set-up. The VMs expressed that the best incentive is a performance based one, where the monetary success of the venture is shown in the venture managers bonus scheme. The aspect of control is also of interest, some of the users have a concern that if Ericsson totally owns the idea they are able to switch VM.

Also here a need for ownership was formulated and well-thought of by the venture managers in the later stages of the process, rather than the earlier ones. This was often discussed in regards to signing deals with customers and also getting further investments. The analysis of this is that when more money is involved in ones venture, the venture manager gets more aware of him or hers monetary rewards from this.

Summarizing matrix of incentives- Representing both intrapreneurs and entrepreneurs. apx:1

Trust and distrust to mother organization

This sections shows the finding that it is of great importance that the employee thinking of submitting his/hers idea feels loyal to the employer. It is shown that these employees often also have a good understanding of the companies capabilities and weaknesses. The innovation department therefore need to balance the branding between centralization being close to the mother organizations resources and


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networks, but also decentralized to brand it as more agile and able to build its own processes.

It is interesting to discuss the loyalty to Ericsson, which often came up with the question of “Do you have a drive to create and drive success for Ericsson?”. Since most of the VMs have worked for Ericsson for several years, many presented a loyalty for the firm.

“I have spent a lot of time with Ericsson, and Ericsson has always treated me and taken care of me and therefore I feel like I want to give back”

“Ericsson is closely bound to my personal life since a lot of my friends work for Ericsson as well, a lot of my life evolves around Ericsson”

“I love Ericsson as a company, it is a lot of competent and smart people and it is a very humble and intelligent culture.”

A big trust to Ericsson´s technology is also presented in several interviews explaining different innovations and how Ericsson have been a force that have moved the society forward. Several of the VMs have worked with both 3g, 4g and 5g and views this as a proof for working for a highly innovative organization. The way of speaking of patents and IPR did come up. Ericsson is the company that file the most technological patents in Sweden which is something that can be viewed as objectively innovative.

There is a surprisingly big trust towards Ericsson as an organization that takes care of its employees but also has a lot of expertise, competent people and are highly innovative.

There is though a worrisome implication of distrust in few of the interviews with the employees, and a grander communication of distrust towards Ericsson from the entrepreneurs.

“Ericsson have empirically shown that they have a hard time handling innovative ideas that do not have to do with networks”

“I have followed the innovation efforts that has been within the organization, and historically it has not been serious efforts to take Ericsson strategically forward, or the ideas”

“We have missed out on ideas that have grown to successful companies outside because of our capabilities as an incumbent”

“I have heard of several ventures in Ericsson and Ericsson ONE where the driver struggle with internal processes and are shut down because the time.”

“why should Ericsson invest in ideas that are not ideas where they make the money.”

These quotes have been said by VMs that require ownership in their ideas, to be able to drive it more freely. These people have also pushed that they want to become a spinout organization. They wish for help to go around the incumbent processes, and be more agile, which is not clear when Ericsson ONE is close to the mother organization. One VM mentioned that in order to realize the idea it probably need to go outside of Ericsson when it reaches the right maturity because of a clash of the brands as a startup and incumbent.

ENTREPRENEURS

5 entrepreneurs where interviewed. All was employed by Ericsson, 2 has started their own companies, 1 of the “entrepreneurs” did not start their own startups but joined a startup company. 2 of the entrepreneurs started their own companies but not as startups but as consultant and investor to startups. 1 of the interviewees where laid off, 1 of the interviewees took an offer of leaving, and 3 of them quit by starting their own companies.

All of which entrepreneurs had ideas that some time they would all start their own business, it was mentioned that this was a will of both the fulfillment of driving one´s own business but also a drive to drive of being free, and ones own boss.

Idea utility maximization

It is noted that the entrepreneurs felt a strong urge to start their own company, and never really thought of driving it internally. The idea of driving it individually creating its own startup venture was the primary driver for taking it externally.

Intrinsic motivations

The entrepreneurs interviewed where confident that the number one factor needed for becoming an entrepreneur is a passion, for the one entrepreneur with more of a business mindset it was expressed that the passion must be in creating a successful business. With the entrepreneurs that had more of a technological focused it was expressed that the passion has to be with the idea, to build and realize it. The will to give something back to sciety was also an important aspect in becoming an entrereneur, and explained by that when driving a startup it is up to own self to contribute to society, while working for Ericsson it was always the company Ericsson who was the main contributor to society, and not the


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individual. This connects to the entrepreneurs being more focused on personal branding as well.

Extrinsic motivations

The entrepreneurs look upon the entrepreneurial way of a road full of risks and therefore it should inhibit a chance for big rewards. The notion of driving a successful business, and then either gain long term on the profit, or at some point sell it is something that all of the interviewees said is something they see as the future if the company succeeds.

“if our company should be sold in a few years, it means so much more money than if we would created it as a corporate venture”

This is in many regards relating to the notion that a person who drives a venture project externally feels a stronger relation between effort, success and rewards, which is found to be motivating.

DISCUSSION

Idea utilization and Trust/distrust to organization As found by Urban and Nikolov the primary reason for

joining a corporate incubation with ones idea is the thought of idea utilization[47]. Even though the investing organization brand it as accepting all types of ideas or focus areas it is only interesting to submit an idea that one thinks benefits from being developed with the organization. This imply that the number one thing that corporate venturing units should be looking at is the right type of ideas and not for potential venture managers with suiting personality traits.

One can see in the interviews that the trust and distrust to the mother organization and the corporate incubator are strongly dependent on the perception of the organizational structure of centralization or de-centralization of corporate incubator and the general innovation units. This is also strongly tied to the potential of driving a more open innovation approach, if the corporate incubation unit is perceived as more de-centralized it is viewed as able to be more agile than the big company and pursue a more open innovation, which is highly valued by the VMs, this goes in direct line with Hill & Birkinshaws findings that in order to succeed there has to be a decentralization48. This is for example when these discuss sourcing of outside resources, external capital and finding customers. For example the ideas reaching for other customers than operators feel a need for a more agile and open approach.

47 Urban & Nikolov 2013 48 Hill & Birkinshaw, 2006 49 Raisch. Et al 2012

There is also another side to this, which is that the VMs feel strongly committed to the mother organization and feel like it is an innovative and competent organization. This is closely tied to the first thought of even driving an innovative idea internally, the employee need to feel trust to the mother organization. This shows on the perception of earlier innovation projects within Ericsson, which by a few have been perceived as too de-centralized from Ericsson and its general strategy and therefore not trustworthy. When the innovation units have been de-centralized it is viewed that it has had a hard time to utilize the corporate resources required to develop a corporate venture.

This is closely tied to Raisch Et. Al 49 findings about organizational structure of innovation units. This also affects the perception of submitting ideas. This gives us that in order to attract ideas the corporate incubation and innovation units need to find the silver lining of being de-centralized and centralized with the mother organization. And especially branding them.

Intrinsic and Extrinsic motivations in general

When discussing designing the incentive schemes and what is preferred by the VMs one can agree with previous research saying that it is a certain mix of intrinsic and extrinsic rewards that are the optimal way for motivating ideas and VMs 50 The research from this paper ads that VMs change in their views of incentives throughout the process. It is found that the VMs that are in the initial stages of the process have only mapped out required and existing intrinsic motivations and incentives, and the VMs with projects in the later stages have stronger opinions and views of the extrinsic motivations. Like Monsen et.al found it is a bound relationship between effort, risk and reward. The VMs with projects in the initial phases have a more relaxed view of their corporate venture, and have only regarded the intrinsic motivations and incentives when looking at their projects 51 . This can be because of a number of reasons, partly because the idea realization is the number one focus for the VM, or because the amount of time invested in the idea and project, and finally it might be because the investments and money involved in the project have so far only been of smaller character.

The VMs with project in the later stages have more ideas and requirements of how the incentive schemes should be designed. The VMs in the initial stages are getting aware of their need for extrinsic motivations when being asked. The more developed the ideas become ideas the VMs have a stronger focus on extrinsic

50 Manso, 2011 51 Monsen et Al. 2007


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motivations and especially on ownership. This is in contrary to the newer VMs because of their investment of time and mind in the projects and also that more money is involved both through investments but also with customers and potential sales. These VMs also have more processed thoughts on their intrinsic motivations. Like what is found by Manso it is evident that it is a mix of intrinsic and extrinsic motivations but the research behind this thesis finds that the mix and the relation between these is bound to be dependent on time with a project, and indirect how invested one is with a project. A scheme of process correlating to required incentives:

apx:2

Intrinsic motivations

It is found that career development and personal branding is closely tied together. Different formalized solutions for personal branding, making it in a way extrinsic, is highly appreciated, this is also especially common amongst the VMs with projects in the latter stages. Regarding job security and risk few feel the risk for their current employment and rather see opportunities in driving their ideas. Some see the idea as something that they are not too certain that they have a drive for managing full time, this can be for reasons that they appreciate their current jobs, would feel limited and narrow in a small corporate venture team, and because the obvious reason of risk of failure and end up in a limbo of no real role. It is interesting to view this in regards to culture, since the only areas where these type of risks where communicated was from the Asian hub, and one from the Swedish hub but in that case a person with Asian heritage.

Extrinsic motivations

The only thing that is common with the intrapreneurs are the will to have an ownership of their own ideas and the drive to realize the idea in the best way possible, this drive generally kicks in later in the process, it is not seen in the same extent in the early process project, they are more hesitant. This explains that if a lot of time is put into a project the driver feels more confidence in the idea and also ownership. This explains that people who pursue and drive their idea with Ericsson also want to do it

52 Victor Vroom, 1995

within Ericsson if it benefits the success of the idea, and also if it helps the career of the intrapreneur.

When looking more into the extrinsic motivations and incentives it is obvious that what is preferred is a different incentive set-up then the everyday jobs. Many look at the monetary aspect as something that should be tightly bounded to the milestones of the pitch events or performance based. It is clear that the motivational model of Victor Vroom52 still holds ground in this area, since especially regarding extrinsic motivations it is obvious that even though there are a set-up for a monetary reward through a one time bonus, it is not something that is viewed as valuable, when it does not interact with the personal goals, or actually the idea goals the rewards are irrelevant. It is also evident that the it is motivating to put in time, in order to deliver success, and performance for the idea. The process of letting the VMs assign their own spare time to the project in the initial phases creates the notion that the more effort put into the project will result in a better performance. It is therefore important for the corporate incubator to bring forward VMs who put in effort, and also be sure to create the right process for ideas to get successful, otherwise, if it is not up to the VMs effort, he or she will not be motivated to build the idea.

General discussion

This paper has had a small number of interviews, that might not fairly represent how employees of other firms look upon incentives and corporate entrepreneurship. It gives a validation to previous research and ads insights in how employees becoming venture managers change their perception of incentives and motivations over time as well as the importance of perception of organizational structure of the innovation unit. The thesis deepens the understanding in the field, and also fills a gap of incentives research and corporate entrepreneurship research that is mostly made quantitative and from a managerial perspective.

To examine further would be to see how many that has gone through the corporate incubation process that actually goes to becoming entrepreneurs. It would be of interest to examine how the perception of entrepreneurship is changed through learning it through Corporate Venturing.

When looking at the ethical part of the thesis and its work it shall be mentioned that several aspect, such as in-equal division of intrapreneurs and fewer projects going forward from the Asia hub could have been further examined and discussed. It is though interesting to see


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that Ericsson ONE as a company are striving to improve the intrapreneurs diversity of background and ethnicity. This should be its own research, to look at how to attract women in particular to innovation projects.

When looking at sustainability issues, it should be mentioned that Ericsson are striving continuously to be more sustainable in the production of goods and services. Also the projects that pass into Ericsson ONE are required to be of a sustainable matter, and make the world better than before. I think that it is important to bring in sustainability to innovation, but I think it would be interesting to see if aspects as such can block some innovations? Are all innovations and new technologies for good?

CONCLUSION

The conclusion of this paper evolves around a number of findings that aims to answer the research questions;

RQ: What incentives is needed to be motivated to submit ideas to a corporate incubator?

Sub-question: How should the perception of the organization be to join a corporate incubator as an employee?

Sub-question: How does the view of incentives change during a corporate venturing process?

Sub-Question: How could a corporation retain entrepreneurial employees?

The first main finding is that the most important thing when submitting an idea to a corporate incubator is that the ideas realization will benefit from being developed within the organization.

The second finding is that the perception of the organization is important, that the employee feels a genuine trust to the employer. Since the employees engaging in innovation is knowledgeable and understand the organizations capabilities and incapability’s it is also important that the relationship between the organization and the corporate incubator have a perfectly balanced branding of centralized and decentralized.

The third finding is that the venture managers perception of motivations, risk, rewards and incentives change with how much time one has put on a project and how far developed it has been. In the initial phases it is less critical and more hopeful and a focus on realization and intrinsic motivations such as learning experiences and self-fulfillment. When the project develops further the ideas on incentives and motivations change to more

focused on extrinsic motivations and incentives such as ownership, performance-based bonus systems and formalized branding.

The fourth finding is that it will be hard to get ideas that the employee do not feel benefit from being developed at Ericsson to stay. It will also be hard and problematic to attract employees who have a strong entrepreneurial ambition. These will rather go to become entrepreneurs or not submit ideas. The entrepreneurs have a strong commitment but also a stronger critical view of the organization and are hard to keep when an idea has arise.


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https://ssrn.com/abstract=1064781

Intrinsic Extrinsic

Incentives

Barriers

Self-fullfillment

Acknowledgement

Idea realization

Contribution to Society

Learning experience

Job variation

Career development

Monetary rewards

Performance based renumeration

Investments

Formalized branding

Distrust to organization

Lack of control

Mismatch in processes

Not keep previous employment

Lack of ownership

To small monetary rewards - not bound to performance

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