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XYZ CORPORATION AND CORPORATE ENTREPRENEURSHIP

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XYZ Corp. was a Fortune 500, high-technology company, listed on the NASDAQ. The
company was founded in the 1960s and had witnessed extraordinary growth during the period
between 1960 and 1998. The product lines of the company, however, were largely concentrated
in one related technology platform.

Over the previous several years the company had been trying to foster an entrepreneurial

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climate in the organization with a goal of developing vibrant new businesses from within. The
program, called “Growing Green Businesses,” suddenly became an urgent need because senior
management believed that its main product lines were slowly but surely becoming
commoditized. The timing for green businesses was also opportune because the company had
several billion dollars in free cash flow for investment purposes.
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The company had historically been more successful in acquiring new or existing
businesses than in generating its own. Part of the problem, top management believed, was that
the incentive systems, the culture, the mindset, and the climate necessary to generate
entrepreneurial startups were not appropriate within the organization. Others believed that too
many people had become too rich with stocks and stock options and that there was simply no
incentive either to take risks or to push the envelope. Although top management believed that
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success could result from introducing proper systems and structures to promote entrepreneurial
behavior, others believed that drastic measures were required.

Recently, Peter Hake had been appointed as senior vice president in charge of developing
the green business side of the company. Hake had a support staff of five managers reporting to
him, and their collective responsibility was to promote entrepreneurship within XYZ. Hake saw
his central mission as creating a robust portfolio of new initiatives for the organization.
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After taking the job, Hake and his team tried valiantly to encourage the young talent in
XYZ, both engineers and managers, to take some risks and to pursue promising new
technologies and businesses. After a year of such activities, their efforts had not shown good
results.
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This case was prepared by Sankaran Venkataraman, MasterCard Professor of Business Administration. It was
written as a basis for class discussion rather than to illustrate effective or ineffective handling of an administrative
situation. Copyright  2006 by the University of Virginia Darden School Foundation, Charlottesville, VA. All
rights reserved. To order copies, send an e-mail to sales@dardenpublishing.com. No part of this publication may be
reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—
electronic, mechanical, photocopying, recording, or otherwise—without the permission of the Darden School
Foundation.

This document is authorized for educator review use only by Umamah Hashemi, Karachi School for Business and Leadership (KSBL) until Oct 2025. Copying or posting is an infringement of
copyright. Permissions@hbsp.harvard.edu or 617.783.7860
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Hake had, however, learned several features about XYZ and its people. First, the best
engineering talent aspired to the title of “star designer” (especially in the corporation’s core
product lines). Hence, the best engineering talent of the company gravitated toward interesting
design challenges in the mainstream business. Second, there was a pronounced bias toward
quantifying data and information among company managers. There was tremendous pressure to

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produce such precise and quantifiable information about all activities, new and old, and anything
that could not be measured was not worth thinking about. Unquantifiable information was taken
as a sign of ignorance and lack of knowledge. Naturally, such a bias proved hostile to any new
business initiative. Third, the company had been tremendously successful in breaking down and
rationalizing the manufacturing process of their mainstream product line, a product they
practically invented, to an incredible level of precision, so that any new activity appeared
primitive by contrast. That rationalization had been achieved over a 20-year period at the price of

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keeping the entire organization focused on the scientific principles of getting higher and higher
yields from their raw materials and inputs.

In 2005, the company enjoyed a significant cost advantage compared with all its
competitors in the world. The managers brought the same zeal to solving all problems through a
precise, methodical, scientific approach—some in Hake’s staff believed that promoting
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entrepreneurship in such a climate was going to prove impossible. Initiatives that involved
imprecision were simply not appealing to the young talent within the company. Finally, there
was a distinct bias toward large size within the company. Used to product lines that generated
several billion dollars of revenue, the mangers seemed incapable of dealing with small volumes
and value. Managers were impatient with new businesses that could not ramp up demand or
production to a billion-dollar level within a year or two of startup. That put considerable pressure
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on new business managers, and there were few in the organization who wanted to take up such a
thankless task.

Faced with the idiosyncratic features of XYZ, Hake resolved to invite some of the best
consultants in the corporate venturing field to help him make progress within XYZ. Specifically,
Hake was looking for advice on two fronts. First, he wondered how he could bring about change
in XYZ—did it require drastic measures or would incremental change achieve the goal? Second,
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whichever approach he chose, where and how would he start? What were the three or four most
crucial things he could do now in order to create an entrepreneurial firm from this large, but
highly successful, and somewhat opinionated organization?
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This document is authorized for educator review use only by Umamah Hashemi, Karachi School for Business and Leadership (KSBL) until Oct 2025. Copying or posting is an infringement of
copyright. Permissions@hbsp.harvard.edu or 617.783.7860